The decision by the Accounting Professional and Ethical Standards Board to stick with its plan to ban accountants from receiving life insurance commissions has prompted our latest poll question, which asks:
Could your advice practice survive and prosper if you were forced to charge a fee for life insurance advice?
Under the APES 230 proposal (see APES 230 Decision…), accountants will be banned from receiving risk commissions for their life insurance advice, nor will they be permitted in future to receive any form of ‘conflicted remuneration’ (which will include life insurance commissions) for any client referral business they provide to financial planners.
This decision will have ramifications for many business relationships that currently exist between financial planning and accounting firms and within the accounting firms themselves.
Many advisers will object to the decision by the APES Board to ban risk commissions. Some will support the decision. Irrespective of your position on this issue, this poll is asking you to take a step back and consider a future where you are no longer remunerated by commission for risk advice. Do you believe this future is possible for your business, regardless of whether you support a ban on risk commissions?
Tell us what you think…
I am a risk adviser (not an accountant) and I can say without a doubt that my business could not survive without commissions. I’ve been in the industry for 27 years and have always worked on commissions. I am proud to say I have always, hand on heart, done the very best I can for my clients. I know that the vast majority of people seeking risk advice would never pay the sort of money I require to research their needs and/or to process their SoA’s and applications through underwriting. Clients don’t pay a ‘fee’ to arrange their car, boat or home insurance so why would they see the need to pay a ‘fee’ for this type of insurance. You and I know how valuable it is and we can justify a fee but the clients, in the main, do not see it this way. You tell me, will an average client pay me $1,500 to implement his life cover or IP? No, of course not – they’d laugh me out of my own office! But $1,500, these days, is a relatively modest commission paid to me for new business to a life office for IP or life.
I am not averse to change – I quite like it as the spice of life! However the change of charging clients for risk advice and implementation would not fly and it would most assuredly push many, if not most, of the good remaining risk advisers out of the industry to early retirement. I would most definitely be one of them. I have given the matter of banning risk commissions many hours of detailed thought over the years. Take it from me, please, there is no way it would serve clients (or advisers) better than commissions. Will they start charging the client a fee over the counter at Suncorp, GIO or NRMA to insure their house, boat or car? Of course not. Then why a fee to insure their life or income? This debate has gone too far if it seriously contends that risk commissions to risk advisers should go. Long live the life industry and the best protection for consumers: risk commissions!
Just who is driving this debate about insurance commissions. Certainly not consumers. They never have and never will. Risk advisers are being driven out. Banks and Unions i expect have all the say in this. I agree with Brian they don’t talk about commissions for General cover, real estate, or other sales areas. Unions and Banks see big profit in insurance, and they want our turf. This makes a total mockery of Complience. We have fought so hard to make our industry clean and professional, but banks and unions don’t care about this, they see eay dollars, and have battallions of legal people to fight insurance claim disputes, which will no doubt increase, much to the greedy glee of the non win no fee vultures who also will gourge on poor hapless clients. Its like the last 10 years have been a big CON. I feel sad for our noble industry, but will fight this cancer.
Yes,I agree with the above two comments. All it will do is further exacerbate the under-insurance situation in this country.
How much more of these churning, commissions on life-risk insurance and other draconian proposals must we endure?
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