- Agree (63%)
- Disagree (33%)
- Not sure (5%)
Advisers appear to generally support the idea of replacing the word ‘commission’ with a term that would be perceived more favourably by the consumer.
In a debate that is more about perception than reality, 60% of those taking part in our latest poll agree the word ‘commission’ should be replaced by a new term. 35% disagree, and 5% are undecided.
While ClearView CEO, Simon Swanson, has suggested the industry consider using the term ‘adviser service fee’, there has also been support from advisers to adopt the word ‘brokerage’ in future.
A further suggestion, made by NSW adviser, Guy Mankey, is that the industry should consider using the terms ‘placement brokerage’ and ‘renewal brokerage’ rather than referring to upfront and ongoing commissions.
Many risk-focussed advisers may consider this debate as a side issue in semantics, while the main game relates not so much to what their future remuneration will be called, but to what it will actually be. But, as one adviser commented,
“…if changing the word to brokerage will help in any small way let’s do it”
Our poll remains open for another week. We hope you will take the opportunity to have your say, as the countdown to the release of the Life Insurance and Advice Working Group (Trowbridge) recommendations continues…
So now the word commission is a tainted term. Please! Who dreams up this drivel. So every other industry that have commissioned sales people should also change the name. I have said it before but no client of mine has every questioned commissions, or shrieked in horror at the term. Someone is trying to hijack my industry.
Although i agree with what you are saying Rob about someone hijacking our industry, I also think it is time to educate the public by calling it a term that reflects what we do.
It is in fact an Admin Fee, a Placement Fee and Ongoing Service fee for claims and future reviews.
Always one to describe something so simple with a flowery term Don.
God we are “dumb”! The majority of us that is.
The only ones that say that there is a problem in the Life Insurance Industry are the Life Companies/Banks, ASIC & the Industry Funds. All three have their own agendas . For the life companies its profits$$. For ASIC, its to show how mighty and proactive they are because of the flaws in the investment product failures. As for the Industry Funds, their agenda is quite simple! Its about getting rid of the Financial Advising Industry as it is today to improve their market share!
And how do these 3 bodies bring about change to suit themselves? By using the politicians to bring about their dirty changes in addition to using the media to provide the public with misinformation on just how many so called crooks are in the Financial Planning Industry! Shame on you all!
P.S I changed someone’s life last week by having a TPD claim approved and paid out for $850,000. Its my 25th claim in 48 months! How many of these stories are used to tell the public, via the media, about how much we make a difference to people lives in a positive way!
As I have said earlier, commission is earned by salespeople and financial advisers and planners are NOT salespeople! We are advisers, so how we are remunerated is by an adviser fee paid directly by the client or indirectly by an institution.
It’s about time that how we, particularly risk advisers, are remunerated is depoliticised. Whether you want to call it “fees”, “commission” or “salary”, the remuneration is earned by giving appropriate and honest advice. That’s all that really matters, especially to the client. There is a stigma and negative connotation attached to the word “commission” as if it’s not really earned.
So let’s stop the nonsense and call it for what it’s worth, adviser remuneration fee.
We are salespeople, Bigal. If we aren’t we wouldn’t exist for long in our industry. Indeed, risk advisers are among the most capable salespeople in business. And the training we received many years ago as tied agents is among the most effective sales training ever devised.
There is nothing wrong and everything right with this though, including the commission paid to us, and only those with an agenda have raised this as another red herring (pun on my name not intended).
If the powers-that-be had to go out from a standing start and sell life-risk insurance as many of us have had to do, the underinsurance problem would now be epic.
In the end, commission as a term is fine, but if we must change why not “brokerage”?
I don’t like the term “brokerage” as many of us are not insurance brokers as such and to me it sounds like an additional cost to the client on top of the premium. I’ve never had a problem with explaining that I am paid a commission which is included in the premium. Most clients don’t really care how much commission we are paid or whether we are paid upfront, hybrid or level, as long as it’s not an additional cost on top of the premium and they are happy with the advice and service we have provided.
If we have to change it from commission, the term needs to reflect what we get paid to do for the client, such as “Advice and Service Remuneration”. I think “Remuneration” sounds like something we’ve earned from the Life company for the work we’ve done, whereas “Fee” sounds like something we’ve charged the client.
Just call what it is an “Adviser Advice Fee”! This is the only way a client can understand that they are be being charged for the advisers time, by paying for which in effect is an (bundled) inflated insurance premium. All quotations including SOA’s should show a Insurance Premium plus the Adviser Advice Fee itemised separately and the gross total that the client has to pay where be it monthly or yearly. This would help clarify to the client on how they are paying for the service that is being provided by the adviser and increase more competition and lower fees. Other types of industries have to itemise their services separately, i.e like what a motor mechanic itemises on his/her invoice of the parts and labour costs listed individually, so why should advisers not be willing to be more open and honest to do so as well when it comes to selling (or servicing) risk?
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