Advisers Prepared to Walk Away From Industry

The banning of risk commissions would severely impact Australia’s risk advice industry, according to the results of riskinfo’s latest poll.

Responding to our question, “If risk commissions are banned, what will you do?” 48% of those polled said they would walk away from the industry.

A further 15% say they would stop selling risk and focus on investment and superannuation advice only.

With Australians widely acknowledged to be already chronically underinsured, the departure of so many advisers from the risk insurance market would surely see this problem worsen.

In nominating their most likely course of action should risk commissions be banned, only 23% of respondents to our poll indicated they would change their remuneration structure to charge fees for risk advice.

Only 1% said that the reforms would have no impact on their business.

A large number of comments have been received from advisers, where some consistent messages have emerged.  One of these messages is that people won’t pay a fee for advice about something they don’t think they need, in addition to the premiums they will be paying:

“It will not make commercial sense for an adviser to spend time convincing people who think they are invincible to get insurance, when the people don’t want to pay the adviser to convince them.”

“What a complete waste of time it would be to charge someone a fee to convince them they need to pay premiums.”

Another theme, which has been raised by advisers in previous riskinfo polls is to remove any real or perceived conflict of interest in risk commissions by standardising commissions.  One adviser suggests:

Each and every insurance company should place the exact same commission on each class of product. For example, ALL companies IP could pay 100% U/F and 10% trails.

Another consistent thread referred, yet again, to the notion that those most in need of insurance will be the ones least able to afford to pay an additional fee for the advice they need to obtain cover appropriate for their circumstances:

“Only the wealthy people would be able to pay a fee to an insurance adviser.  Unfortunately the average and less than average Australian will not be able to pay our fees.”

Respondents have also lamented the knowledge that would be lost by so many choosing to leave the industry.  Said one adviser:

“I would consider leaving the industry, after studying for 5 years and with 10 years of experience.  What a waste it would be.”

Some advisers even suggested they would move their operations to New Zealand, in order to stay in business.

Do you agree?  Are you prepared to embark on a new career?  Add your vote by clicking on the Vote now link below and add your comments to make your voice heard.  All your comments will be forwarded directly to the Treasury, to be considered within its industry consultation process…