Life Insurance SoA Cost Estimated at $1,500

The cost of producing a life insurance Statement of Advice (SoA) has been estimated to be about $1500 and takes up to ten hours work, according to ASIC.

The regulator made the estimate in a recent response to Questions on Notice from the PJC inquiry into life insurance which had asked about the length of time and cost to prepare an SoA for an ‘average’ family of two parents with full time jobs, two children and a mortgage.

ASIC stated that while most life insurance advice was paid through commissions to the advisers from the insurer, where advisers did charge a fee “…information we have from industry indicates a range of charges for the preparation of the advice, from $550 to $1,500” for the SoA described by the PJC.

“…information we have from industry indicates a range of charges…from $550 to $1,500”

In terms of time required to produce that SoA, ASIC stated, that based on information it had received from advisers, it would take between five to ten hours to prepare.

“This estimate takes into account the time required for the first meeting with the clients, research, data entry, applications, administration and the presentation of the advice to the clients once the statement of advice is prepared,” ASIC added.

“This estimate is a very general one, as there are many variables that may affect the time need to prepare advice,” ASIC stated, adding that these variable included a consideration of existing products, underwriting requirements and dealing with high risk occupations that may need to be individually rated.

ASIC’s comments follow its’ recent defence of an example life insurance SoA, which placed commissions at the front of the document, with the regulator stating it had done so after following instructions from the Government (see: ASIC Defends SoA Disclosure).

  • Old Risky

    Were any RISK ONLY advisers consulted. Hands up, be counted !
    The $1500 refers to the TIME taken to draft the SOA. That’s driven by ASICs compliance rules and the AFSLs interpretation of those rules
    What about a fee for the actual advice.
    And does policy implementation come at no cost to the client?
    About time advisers registered as a charity

    • GregF

      Or may as ‘not for profits’ and then get all the obscene tax perks that employees of industry super funds and unions get!

    • Squeaky_1

      Hi Old Risky. I run with an extensive and wide group of ‘risk-only’ peers in this game and I can tell you I’m not aware of ANY riskie being asked/consulted. These clowns just make up policy on the run – the evidence seems overwhelming that this is the case.

  • Jeremy Wright

    Once again ASIC is showing that they actually know very little about the Retail Life Insurance Industry and what is involved in actually getting a potential client even interested enough to discuss Life and Disability cover, right through to making and doing the 2 to 4 appointments involving Fact Finding, researching, coming up with appropriate recommendations, preparation of the SOA, getting all the relevant applications and documents prepared, discussing and making alterations based on the clients expectations and wants, filling in the applications, lodging and following up medicals, blood tests, doctors reports and the myriad of phone calls and emails that are required to keep the whole thing going to completion.

    If ASIC believe that is 10 hours work, then i dare say, they are taking short cuts that could leave them exposed to breaking their own regulations and laws.

    This is what happens when you try to talk to theorists with NIL practical experience.

    It simply does not work.

    • Ten Beers

      Very much agree. true quality advice that’s also compliant and which is imparted through education processes is nothing like a 10 hour commitment. That’s just a basic sale and run.

  • disqus_sxdzTFJ28Y

    Maybe ASIC also assumes that the quality of the advice from a Newbee adviser and an experienced adviser is identical. It is considered that it takes 10 years to acquire expert status. Part of the skill of the adviser is educating the client so that they actually insure to cover real needs and not just their perceived needs. This skill takes time to acquire. Why isn’t an expert paid more than a newbee?

    • John Scott

      This week, marks my 45 years in the insurance industry. I am not celebrating, instead I am counting down to my leaving in approx 4 years time. My passion is gone, thanks to Government interference for all the wrong reasons. My experience has counted for nothing, except a reduced income and more unpaid paperwork. I’m over it! JS

      • disqus_sxdzTFJ28Y

        I have sold my client base and have turned into the old guy wearing the cardigan working reduced hours. Thank God I can walk any time I want to. The thing that disappoints me most is the parallel worlds of advice, particularly when it comes to ‘intra fund’ advice. What a joke. Then there’s the product floggers on TV and Radio, offering ‘general’ advice that is so dangerous.

        • Squeaky_1

          I hope you find happiness and contentment in your new role –
          you probably deserve it. Cardigans are good, nothing wrong with cardigans. There’s a lot wrong, however, with ACCC saying an SoA only takes 10 hours – as we all know it is multiples of that to do everything Jeremy Wright says in his comment below. it is a travesty here in Australia that we have entities like ACCC and ASIC making these pronouncements (with power to push to legislation) and actions about which they have no appreciable understanding. They are taking their behavioural cues and advice from academics and special interest groups and never a risk adviser of any repute or experience. If they did then it probably wouldn’t gel with what they want to hear and, as they have, disregard it.

      • Ken

        I could not agree more For me it’s 41 years starting as a collection agent for MLC in 1977 21 years old just married and really no idea of what I was doing or why
        But after a few short years I learnt very quickly about the benefits I sold to families and when the spouse died and left a family lost in grief let alone financial difficulties I was there to see and help
        How bitter sweet it was to give them a cheque ( payments always went to the adviser first by cheque in those days) and at least ease some of the pain
        Today’s advisers I fear will never know that feeling of “giving” not “receiving” and the great joy it gave me to be of some help
        It’s not there fault it’s just this political football that gets “bounced” around called FOFA also addressed as being the vessel for the consumers best interest ?? what a load of B £<%#*T
        All advisors that are now starting out need to go out in the real world do those late appointments see the family fabric good or bad and realise what this job is really all about. Money helps but it's not the whole reason we do this I just cannot imagine a claims person in some back office seeing anymore than a cheque being written and posted ( sorry I forget !! Deposited into some obscure persons account ) life has changed no doubt but for the best ?? I doubt it !
        Rant complete

      • Squeaky_1

        John, You completely took the words right out of my mouth – even the 4 years aprox ’til I call it a day. If you are like me then THAT is the day they make experienced guys like us go back to school to waste money and time so that we’ll ‘know enough’ to keep protecting and advising our clients. Just such hogwash it makes me sick. Oh, and save me from the bleeding hearts here who comment saying guys like you and I are against learning new things. Come sit with me an hour – I’ll tech THEM a few new things. Idiots they are!

  • David

    Lets not bring up the time involved when a client makes a claim?
    ASIC you have been sitting in your ivory offices way to long………

  • Reality Check

    Very hard not to spot the irony here. Since the flawed and unethical behaviour implemented the LIF to get risk advice its now likely that “average family” will in the future have to pay a fee of around $1500 where before there was no cost (thanks to commission).
    More ironic is that risk advisers even with a fee and reduced commission will find providing risk advice in the future unprofitable. A lose lose for customers.
    Great work by those concerned to decimate the industry and cause greater underinsurance.

  • Darryl

    Could not agree more! Shortly, I have completed 60 years in the Insurance Industry . Never would I have imagined the changes taking place, mostly NOT for the better of clients or Agents/Advisors. The Life Cartel has so much to answer for, and I wonder whenever they will get their deserving rewards ? Am disgusted with the compliance regime etc. and feel for new entrants to our Industry. It is not easy staying positive and thinking outside the box, however I am still managing. Having experienced the “Old Days” I am thankful for the memories and friendships made.

  • KS

    We completed an analysis only last week on the amount of time it takes to on board a risk client from start to finish.

    Including all meeting and travel times (as we visit clients at home) our time came to 26 hours including all admin, para planning and adviser time. How ASIC came to 10 hours, I have no idea!!! 10 hours would be our quoting and SOA preparation time. Anyone else sitting at this sort of time frame?