The strong response we received from advisers following our story about concerns over a proposed commission ban on client referrals from accountants has prompted our latest poll question. We are asking:
By how much would your practices’ risk advice revenue be impacted if accountants were banned from receiving payments for referring their insurance clients to you?
This issue will have little impact on many advisers who source their new client referrals from within their existing client base or from other sources. However, there are many professional advice practices whose entire focus is directed towards serving the financial advice needs of clients referred by their accountant associates. Positioned between the two ends of this spectrum will be many thousands of advice practices that have referral agreements in place with accountants.
Many of these referral agreements are formalised and involve commission sharing between the parties. Others are more informal relationships, but we are considering both types of arrangement in this poll.
Feedback from advisers already indicates the majority disagree with the Accounting Professional & Ethical Standards Board’s ‘APES 230’ proposal, but we are seeking your involvement in order to determine the extent to which this proposed ban will have an impact on your bottom line.
Beyond the remuneration factor for the financial adviser is also the question of the impact the conflicted remuneration proposal within APES 230 may have on the number of Australians who will be provided with access to life insurance advice. Many thousands of clients are currently referred direct to financial advisers by their accountants in order to access investment and risk advice. What proportion of these clients, when left to their own devices, will still make the effort to seek out life insurance advice?
… the proposed standard should be changed to allow commission-based referral payments between risk advisers and accountants
We understand the submission being made by TAL Life to the APES Board argues that the proposed standard should be changed to allow commission-based referral payments between risk advisers and accountants. TAL’s argument is on public policy grounds, reflecting the same reasons why the Government excluded individual life insurance advice from the banned conflicted remuneration provisions under its Future of Financial Advice reform legislation.
But how much difference would the proposed APES 230 conflicted remuneration ban really have? Will it have little to no impact on the remuneration of financial advisers and the underinsurance dilemma? Or will this proposal, if implemented, have a meaningful, and negative impact on the ‘health’ of the life insurance and broader financial advice sector?
Let us know what you think…
Accountants shouldn’t need to be paid to direct their clients to get risk protection. Call it a duty of care if you will but concern for client should override any concern about not getting remunerated for it.
Most won’t take the commissions anyway. Cross referral allows for both parties to benefit.
Why should accountants get paid for a referal does the bank pay a refer fee? does a lawyer pay them fees for a referal? why get paid for it? according the the ASIC we should all get paid nothing what would Julia say if we said her income was too much? how about the head of the ASIC what is his income? I think they earn 70% to much what about they get paid on a bonus system for performance, Yes a good idea, how about them Lawyers in the DPP a retainer plus an incentive for performance, Oh I have a good one why not anybody who refers people get paid a refral fee lets make it $500.00 each regardless of the fees recovered and no responsability period that would not be good now would it. I got a better one Teachers the highest paid public servants lets pay them a basic wage plus a performance bonus yes a great idea.
What a load of crap !!! majority of accountants own the financial planning business they refer their clients to, just another way of accountants generating maximum income from their clients.
As I read the proposed standard, ownership of a seperate FP business receiving the referral will be banned
And that would also include those ( by now rare ) joint ventures.
I wonder what impact this measure will have on the churning of risk policies, particularly death only policies for SMSFs
These regulators have a “rule” fetish. Get off our case and let market forces prevail!
…. How stupid, its leading to other extreme to legislate that adequate insurance is compulsory? What a load of complete BS!
Arms length referrals – we don’t take or offer referral payments, clean referrals work both ways. Remember profit is good–greed is bad. If payments are required-consider is it worth it if both are happy with the amount of revenue. If its one sided- there are flat fee options.
Gerald – didn’t know grade 3’s read this newsletter let alone comment (badly) on it! Love how you propose and also agree to your own ideas… tell me, do you laugh at your oown jokes as well (you do, don’t you).
Sounds like sour grapes from accountants who don’t have referral relationships and therefore have reduced incomes, over those that do.
If there were numerous client complaints (with substance) to these bodies, then they would have a shred of jutification. However it appears that they have taken the self-righteous, pious, holier than thou attitude and created this altruistic nonsense from their backsides.
There is not one shred of evidence that this proposed ’standard’ will benefit accounting clients, and in fact there is substantial empirical evidence to prove that it will have a detrimental impact to all.
One wonders what the true motivation is – envy or some pathetic attempt to reduce PI insurance premiums?
And for those ignorant of why an Accountant should receive referral commission, it is clear that you don’t have a professional working relationship with one, otherwise you would know the time and input that they have on the final advice the client receives.
Crystal Ball says – Time for a REALITY CHECK. My accountants will still get paid regardless. All I need is a simple invoice for services rendered – happens to correlate with their agreed % of revenue generated for that month. And seriously – of course Accountants should be paid referral revenue – show me a successful referral relationship without revenue splits and I’ll show you one generating 10 times that with splits. Please – off the soap box – you arn’t running charity businesses ladies and gentlemen. Greed?? Who’s greedy – the FP sharing revenue or the FP keeping it all for themselves?
It would be very sad to think that accountants wouldn’t recommend insurance to their clients if there wasn’t an earn in it for them.
why why why? I wish the regulators would ping off and target some other industry now…how about real eastate agents or lawyers who take up to 50% commission? Why try to remove something that ultimately benefits Australians?
Comments are closed.