December 18, 2018
As the life insurance industry forges head-long into uncharted territory next year, we’d like to know where you stand after twelve months into the three-year Life Insurance Framework reform transition period.
Is your advice business adjusting to what, for many (but not all), has been a lower upfront commission environment this year? To what extent will the legislated reduction in commissions from 80/20 in 2018 to 70/20 in 2019 have an impact on the bottom line of your advice business profitability? What changes, if any, have you made, or will you be making?
Perhaps the ‘kicker’ for many advisers and advice businesses in 2019 may be the impact of the 100 percent commission claw-back…
Perhaps the ‘kicker’ for many advisers and advice businesses in 2019 may not be the further-reduced hybrid commission level but rather the impact of the 100 percent commission claw-back for any risk business cancelled inside one year.
…And perhaps many advice businesses (risk-focused or otherwise) may not really be able to get a true sense of their future viability until sometime in 2021, after the end of the tree-year transition period delivers a 60/20 commission structure from 1 January 2020, and the full impact of the two-year claw-back period has been experienced.
We appreciate there exists the spectre of further reforms, which may stem from the recommendations that will be handed down early next year by Commissioner Hayne, following the completion of the Financial Services Royal Commission hearings. But assuming the status quo for the time being, do you think that 2019 will prove more difficult for you and your businesses as a result of the move into year two of the Life Insurance Framework reforms?
Tell us what you think and we’ll report back to you soon…