TAL Joins Call to Retain Risk Commissions

TAL Life has stepped up to back the retention of life insurance commissions.

TAL Group CEO and MD, Brett Clark …any further changes to the LIF framework beyond the scheduled 2021 ASIC review should be considered carefully

In a statement released to Riskinfo this week, TAL’s Group CEO and Managing Director, Brett Clark, has called for a balanced consideration of all of the issues hovering around the challenges associated with serving client best interests while maintaining a thriving advice sector:

“The sustainability of a financial advice channel that facilitates both choice and good consumer outcomes is critical,” says Clark, adding his company’s perspective that “TAL supports a model which delivers good consumer outcomes through a vibrant financial advice sector now and into the future.”

Clark emphasises the discussion and debate around adviser remuneration needs to be more sophisticated than simply whether a commission or fee-based remuneration model is better. “The stakes are far higher than that,” he says.

In his statement, Clark also details a number of factors he says need to be considered holistically when debating the future of risk commissions, including:

  • Consumer access to affordable financial advice
  • The supply of financial advice
  • The payment for that financial advice that ensures consumers can be confident in its quality
  • Minimising any potential conflicts or risks

Reflecting on each of those elements when viewed collectively, Clark said, “The development of the LIF framework was an attempt to balance these interests and ensure a sustainable, high quality financial advice industry, which is good for consumers.”

Contemplating an advice world without risk commissions, Clark observed the alternative of a user-pays ‘full-fee model’ would undoubtedly lead to the supply and availability of financial advice being much smaller than it is today, and that financial advice would be affordable only for a much smaller population of wealthy consumers: “This doesn’t feel in the best interests of consumers, particularly in the context of banks exiting financial advice services,” he cautioned.

…the LIF commission-based model, alongside a legislated ‘best interest duty’ for advisers, is a good model for both financial advisers and consumers

Addressing the sometimes perceived conflicting agendas of adviser remuneration and client best interest, Clark said, “We believe the LIF commission-based model, alongside a legislated ‘best interest duty’ for advisers, is a good model for both financial advisers and consumers which balances these perspectives. Alternative models which limit consumer access to affordable financial advice, or the supply of financial advice, would need to be carefully examined. Any further changes to the LIF framework beyond the scheduled 2021 ASIC review should also be considered carefully.”

Standing up for the continuation of the existing adviser remuneration model, Clark recognised the integral role of advisers and advice businesses:

“Financial advisers are small business operators, providing local employment opportunities, often trusted members of the community, who work hard to provide competitive insurance products and services for their clients. The parallels with the recent debate on mortgage broking remuneration are very relevant and insightful. We don’t want to depower competition while empowering large financial institutions at the expense of choice for consumer, and financial advisers play a critical role in that.”

  • Concerned

    Publicly supporting the retention of commission is a start, but Simon, you need to do more, and that applies to all insurance companies. You need to fight for the reinstatement of commissions as they were – i.e. 80/20. 60% upfront does not meet an adviser’s costs. You also need to fight and rid the industry of this evil 2 year clawback. Finally, you also need to fight against the nonsense imposed by FASEA. This last point – the requirement that all advisers need to have a degree – will in itself result in a mass exodus of advisers from this industry. I do not know what it will take for this last point to get through!

    • Phil Smith

      Agree Concerned, but his name is Brett – Simon is from ClearView.
      A patient doesn’t need a dermatologist to tell them they have an infected pimple. A GP is fully qualified to tell them that. Just as an insurance client doesn’t need a Financial Planner just to arrange a life and/or income protection policy. FASEA will effectively ‘kill off’ risk advisers and no amount of huffing & puffing will blow down the unnecessary brick wall FASEA has placed in front of us and our clients. $3,000 fee to obtain a $300 per month premium policy contract via our advice. Not in the real world.

  • Ken

    Correct !! one simple word GENERAL dissolves the whole LIF structure and allows people to run amuck and avoiding the law and consequences of providing inaccurate or bad advice
    Commission should be outlawed as a start is it not conflicted remuneration
    While we’re at it to further get it understood by the client who thinks he is getting some “silver bullet” to his or her concerns without having to do paperwork or answer some important questions call it GENERAL INFORMATION not Advice
    Supporting a 60% commission structure is not going to stop the exodus of advisers unless this outrageous FASEA education system is also scrapped and a feasible replacement found that recognised not everyone is or wants to be a fully fledged financial adviser
    Does a GP get pushed to be a specialist in any field ? No if they are good as a GP and want there life and career to operate on that basis then they become the best they can at that
    Come on life companies join the AFA in this communicate with them and do some hard lobbing in the right areas of Government before this industry is gone altogether