Financial advisers offering a single strand of services and who are reliant on collecting ongoing passive income are likely to lose their place as a trusted adviser, a new whitepaper from a non-aligned licensee has claimed.
The whitepaper, How To Thrive in the New Advice World – released by ClearView Wealth owned Matrix Planning Solutions, has called for advisers to shift to offering strategic advice that is not reliant on product advice.
“Time is running out for advisers who limit the scope of their advice to only superannuation and insurance, and collect ongoing passive income paid by the product manufacturer,” the paper stated.
Matrix Planning Solutions Chief Executive, Todd Kardash said the reason for this was due to the growth of automated and omni-channel advice offerings, decreasing customer loyalty and further remuneration changes under the Life Insurance Framework.
“LIF will be a major catalyst for change in advice models because advisers, particularly risk specialists, are set to experience a significant decline in revenue,” Kardash said.
“Time is running out for advisers who limit the scope of their advice…and collect ongoing passive income paid by the product manufacturer”
The paper stated that older style transactional advice models had allowed advisers to build large client books and collect passive income from trail commissions but this model will come under more pressure from other advice models and the need for advisers to demonstrate the value of their services.
“In order for advisers to remain compliant and secure their position as trusted adviser, they must continuously add value. The way to continuously add value is to delve deeper into their clients’ financial lives, expand the scope of their advice and help ensure that their total needs are satisfied,” the paper stated.
This may mean not providing a product recommendation or sale at the end of the advice, the paper added, but rather charging for the advice itself through a strategic advice model that offers services such as debt management, estate planning and aged care.
The paper stated that a strategic advice model would see advisers providing higher levels of advice to fewer clients, probably within the 150-200 clients per adviser range, and the challenge in making that shift would be for advisers to price their services and then ask to be paid for the work done and value added.
“Although there is significant pressure on advisers to either service passive clients or sell them to someone who can, they don’t have to make the leap from transactional product based advice to full-on strategic advice overnight,” the paper stated.
“Ultimately, advisers can journey to strategic advice at their own pace and incrementally add staff and resources as they expand their scope of advice.”
“For a traditional risk-only adviser, that may start by offering coaching on saving, budgeting and cashflow management to clients who want to pay off their mortgage faster. At a later date they may decide to branch out into superannuation and investment advice,” the paper added.
You’re only working this out now Todd!!!!!
WOW!!!!
Here we go again. Another White paper from this time, a “non-aligned” licensee owned by ClearView Wealth, stating their opinion, based on a theory around Life Insurance that is not better for the Industry, it is in fact destructive and based on little facts, or reality.
As an example that people might understand of this type of agenda being pushed
forward, shows how ridiculous this thinking is.
Take the example of a GP.
Dear Doctor, even though you are a medical GP, there is no longer enough work for
you to do as a normal Doctor, so in order to increase your revenues and to be seen as a better service provider, you should start selling all the available pharmaceutical drugs to patients while they are sitting with you and why not add the sale of fruit and vegetables at the reception area, in order to promote good health and increase your bottom line.
It all sounds wonderful in theory, though as with most of these ideological fantasies, the harsh reality is, it is not that easy, adds additional unwarranted burdens and does not need to be done.
The Life Insurance Industry generates 44 Billion Dollars a year and if managed and
guided in the right direction, could easily grow to 100 Billion a year as a standalone Industry, without having to impose more stress, time and cost to the advisers who bring in the revenues that help keep this industry alive.
Telling advisers to retrain in areas they have no experience or knowledge in, increase
their expenses, borrow more, while at the same time, advocating to reduce their
incomes, is quite frankly, stupid.
Can anyone please explain why it seems to be accepted to decimate a vital part of
the Australian economy which is the retail Life advisers who are the only ones who truly represent all Australians, when it is obvious that the solution is so simple and inexpensive when compared to the direction the Industry is currently going.
You do not need to decimate an industry to rebuild it. You just need to listen to what
is really needed and make the changes that will build upon what you have.
The ridiculous statement of saying the Life Industry is not big enough to sustain
advisers and they need to branch out to other areas in order to survive, is self-defeating and shows a closed shop mentality with little understanding of the Life Industry.
When renewal commissions were first put in place in the early 80’s the purpose was to assist the agents transition from an employee basis to a self employed contractor The idea was to take a huge burden off the insurance companies based on the various costs they had to provide from workers comp super etc
They at least realised that to run your own business involved costs that were not required as a tied agent hence a respectful decision to pay a reward to the advisers of this new era to assist in meeting there costs and the services they provided to their clients
This has changed numerous times over the past 35 plus years but the theory of supporting those that support you was predominant
Now we get this rubbish about passive income !! Do any of the so called business advisers on massive salaries ever look any deeper into what there advisers actually do to receive this minimal amount ?? Claims assistance , yearly reviews answering questions and trying to explain why the client should keep their cover when the price just increased 20% are just a few.
If the insurers had it there way there would be no renewal commissions How would they go servicing the clients when there is no one there to do the heavy lifting for them
Talk about stick your head in the sand !!
Here we go again another overpaid CEO “advising” the advisers.
“Passive income” are you serious?? I’ve spent days dealing with claims (without charge) for customers where I may be getting $10 per month trail.
Under LIF we will be paid less but this CEO states that we should put on more staff and head to more “strategic advice”.
What these CEO’s and the FSC fail to see is the current pre-LIF system may not have been perfect but it worked for the best interests of the customer.
Now we have to spend more time on things the customer doesn’t need or want and charge fees for things that were previously cost free to the customer.
Strategically it will be best to move on to other more profitable advice areas and not risk so I agree with that sentiment but the same CEO’s will be scratching their heads in the future and wondering why they are not getting much business!
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