- Yes (65%)
- No (30%)
- Not sure (5%)
Two in three advisers support the recent initiatives from AMP and Centrepoint Alliance to dispense with higher upfront commissions in favour of offering only hybrid or level commissions in future.
While the current poll results indicate 67% of advisers support of the case for hybrid, as outlined by AMP and Centrepoint, we also note that only last month, as many as 82% of advisers said their advice practice could successfully operate under a hybrid commission model for life insurance advice (see: Go With Hybrid – Advisers).
We sense there is ‘resigned’ support by advisers for the hybrid model. We sense there are many advisers, potentially the majority, who believe in the integrity and quality of the advice they deliver – that they are victims of the sins of a few, and that they should continue to have access to high upfronts. As one adviser commented:
“What began as an investigation into poor advice in the risk insurance sector (the ASIC Review of Retail Life Insurance Advice), is now centred around remuneration.”
This adviser is reinforcing a point made by many during this debate, namely that the ASIC Review was mostly focused on the quality of advice, rather than on adviser remuneration. In its report, the regulator explored the link between high upfront commissions and the quality of advice, which was in turn examined by John Trowbridge, leading to his support for a level commission model that would, in his view, successfully address the issue of conflicted advice.
Since we released our latest poll last week, Ray Miles‘ Fortnum Financial Advisers dealer group has also announced it is moving to hybrid/level commission or fee for service remuneration options only (see: Fortnum Removes Upfronts).
This is a fluid debate, which continues to move towards an eventual outcome – an outcome that has yet to be resolved. This is why your opinions count, as we continue to encourage you to make your voice heard on this critical issue…
There is a recognition that we can stay in Business on a hybrid model, though anyone who says they can run a professional life Insurance advice business on fee for service or a flat level commission, is either a liar, a fool, a liar and a fool, or part of the multitude of vested, self interest groups who have little knowledge and concern about the long term viability of the retail Life Insurance Business that for decades has been the foundation of everything people have had in place to protect themselves, their families and their Businesses.
Advice is the most important part of the process. The Insurance product is the commodity that delivers on the advice and commission is the only way we can be remunerated sufficiently to comply and cover our massive costs and time we spend to be able to deliver the Insurance cover.
To RiskInfo.
When you ask if advisers generally support the AMP proposal, are you asking if they support the move to a hybrid model only, or are you asking if advisers support the hybrid model AND the other AMP proposals such as their 5 year rule on replacement business?
I wonder how many advisers support the ultimate move to hybrid remuneration but do not support the other proposals. Therefore the results may not truly reflect what advisers are really saying. Furthermore, AMP may use these results as a means of justifying ALL of their proposals, when that may not necessarily be the case.
May I suggest that you reword your question and make it absolutely clear as to what you are asking, and reissue the poll.
One other thing Risk Info – your survey question asks if advisers support a Hybrid structure.
Yet your opening sentence above states that the survey shows advisers supporting a move to hybrid “or level commissions….”
No reference was made to Level commissions in your original question.
Also could the providers also have level premium only with the Hybrid only commission?Step premiums designed not to pay a claim,is that in the clients best interest?
When the goal posts are being continually shifted it’s pretty challenging to score a goal (even Messi or Ronaldo would have problems with that!). It seems inevitable that upfront commissions are going to go. Who is ultimately responsible for this? The insurers themselves. But they’ve smokescreened it by making it seem that the government has made the running. The government has, of course, but it’s been at the behest of the life offices.
Whether the industry is viable for the product manufacturers as it has been/not been for nearly two decades is a moot-point. In any case the move to hybrid will definitely make it so. It appears in most other industries manufacturers and wholesalers etc can charge what they like, but we as the equivalent of the product-movers can’t.
One further point: if the regulators make law a 5-year write-back rule, the only life-risk business written from that point on is likely to be done by financial planners who’ll write it as part of a full plan. What a monumental cock-up they’re making of our industry, sacrificing it on the altar of a better bottom-line.
(This comment is a re-submit from an earlier ‘Leave a Reply’ because of too many typos in it.)
Well said Jeremy Wright & Paul Herring.
Both of your comments are 100% spot on.
What is best for the client is clearly not the long term goal here.
It is all about increased profits for the insurance companies.
I do not believe most advisers would actively agree reducing their income. This constant misinformation about advisers support changes suit the agenda for the life companies. Advisers stick together and unite against the life companies that reduce your income and destroy your business. Boycott placing business with them. If you unite as advisers and save your family and business. Send a clear signal. It is not too late! Don’t let the constant misinformation and life company lies get traction.
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