Our latest poll results tell us that advisers are divided as to whether they will direct more life insurance business outside superannuation, post FoFA, in order to access commission-based remuneration.
Results to date approximate a 50/50 split in response to our question that asks (post implementation of the FoFA reforms):
Will you be more disposed to placing life insurance business outside superannuation in order to access commission-based remuneration?
So far, 48% of advisers have said they will not be placing any additional risk business outside super because of the intended FoFA legislation (which would restrict opportunities to access commissions on risk products written within the superannuation sector). But 45% have said this is exactly what they will do.
A number of advisers rightly pointed out there are many reasons why it is appropriate to place life insurance outside super (eg own occupation TPD issues, buy/sell agreements, child cover, certainty if super fund changes etc…). But others said there are equally many valid reasons why placing life insurance within super is in the client’s best interests.
One adviser raised the issue of the ongoing viability of her own advice practice in relation to this question:
If commission for risk in superannuation is outlawed a client is not going to be happy being asked to pay a fee for the work we have done or…are we supposed to “do it for love”?
We again acknowledge there will remain opportunities for advisers to access commissions in super for individually-advised risk policies sitting inside the superannuation choice and SMSF sectors. But it appears that at least a proportion of advisers still hold concerns for their longer-term financial viability, where they see the flexibility of their remuneration options diminishing. This appears to be particularly so for life insurance advice, where one advisers said:
For Investment advice, clients will pay fees and are happy to do so.
For insurance advice, clients will not pay an appropriate fee to get advice, let alone the many hours of work to finalise and comply with the onerous work invoved in completing this work.
This is a tough question. In one sense, the question itself becomes irrelevant if the intended Best Interest statute is observed. But will this be the case in reality?
Let us know what you think…
Never did understand this push for life cover in super. It only originated with the last changes to the super rule 2/3 years ago.Previous to that if it was appropriate you did if not you did not. Alot of people used to use super to get the tax deduction , that changed as the deduction reduces to only unsupported members.Why would you do it and risk the ungodly tax that can be levied, ie minors become self supporting etc , you can’t be every where.
this whole debat grew out of the life companies promoting it.
For instance why would you put income replacement into super it gets it’s own deduction and uses up deductable premium space.
the govt of the day created this situation and now US the advisers are some how at fault for wanting to be paid. How does that work? jg
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