- Yes - but I don't support the remuneration proposals (41%)
- No (35%)
- Yes - and I support the remuneration proposals (12%)
- Not sure (12%)
Our latest poll seeks to focus attention on the commercial aspects and implications of the proposed Life Insurance Framework reforms.
With the return of Parliament this week, there exists a strong likelihood that the Life Insurance Framework reform legislation will shortly be re-introduced. Should this occur, it is also likely to be supported by the Labor Party, with no further amendments.
…there exists a reasonable prospect that these controversial reform proposals may soon become legislated
In spite of the ongoing industry debate that focuses on the potentially flawed interpretation of the outcomes revealed in ASIC’s Report 413, which the Government has consistently relied on to justify its life insurance remuneration reform proposals, and despite arguments that the Government and the Financial Services Council has failed to articulate exactly how these reforms will benefit the consumer, there exists a reasonable prospect that these controversial reform proposals may soon become legislated.
It’s been fourteen months since then Assistant Treasurer, Josh Frydenberg, announced the 14-point structure of the new Life Insurance Framework (see: New Life Insurance Framework Announced). What contingencies have you made in your business during that time?
Is your advice practice one of those which has indicated it will be able to withstand the shorter-term reduction in initial cash flows (especially if its is a business based around upfront commission structures), before the doubled ongoing hybrid-model commissions begin to make an impact on its bottom line? Or is your practice one of the many which have told us they will not be able to survive the cash flow transition from 120/10 to 60/20?
We asked you this same question inside one week of the new Life Insurance Framework reform proposals being announced in late June 2015, and are keen to determine whether there has been any significant change in your assessment of the commercial realities implied by the proposed remuneration changes.
This is not a poll which canvasses your opinion of the merits of the proposed reforms. We will continue to report latest developments on lobbying for change. Rather, we’re interested in your own assessment, 14 months on, about whether your business will remain commercially viable in a post LIF environment.
As always, we value your measured thoughts on this critical issue…
Note to Advisers:
We welcome your comments and in the interest of fairness, request that you properly identify yourself either in your post ID or at the end of each comment.
Really 11% agree with the renumeration changes ?? These people either have no commission structure in their business or are oblivious to the extent of problems that these changes will cause
Initially 80/20 is “doable” but what happens in year 2 at 70/20 and year 3 at 60/20 The cost of living and running a business consistently goes up but the renumeration in this recommendation constantly reduces and throw in a 2 year “clawback” on top for good measure ! How is the progressive ? For the insurers maybe and the banks not for advisers!
Over several years now costs to insurers have been cut in many ways , off shore conventions cancelled as this was conflicted renumeration ! How many millions did that save them No reward above the occasional $300 for s job well done ! Conflicted renumeration ! Now with these avenues of savings gone where can we go now they ask themselves?? We know lets put together a scheme that will reduce the advisers input put them out of business and draw the people like unsuspecting lambs to the direct Insurers or the bank adviser no advice no service no idea !!!
This is my opinion and opinions are like A#%~|>£s everybody has one
Rant over
There is a major flaw with this poll, in that it has been open to Financial Planning practices that offer a broad spectrum of Financial Services, including Superannuation advice, Non-super investment advice, lending, Insurance etc.
This does not allow life insurance only advice practices ( who will be the most severely affected, ) to gain a proper voice and dilutes the poll to a set of percentages, with little
analytical study from risk specialists, who are the only ones who fully understand
the real impact.
As a 29 year self employed planner, who previously provided Investment advice, I can categorically state that any adviser practice who provides a full financial planning service, will not be able to run the retail Life Insurance component of their business at a profit, based on the proposed LIF regulations, in conjunction with the current Life company inefficient processes and Business models we have to work with.
Anyone who states otherwise, has not done sufficient analysis of the time and costs to provide Best interest advice.
This is much more important than a simple poll. This is the profitability and survival of the retail Life Insurance Industry.
The direction the FSC and unfortunately most of the Life Companies themselves are heading down, is a dumbing down model that encourages inferior direct products, while making it harder for risk specialists who provide proper advice and appropriate insurance coverage, to survive.
A reversal of strategy and proper education of the regulators, the Government and dare I say, the Life Companies themselves as to the impact of the proposed LIF, needs to be urgently examined before the Government moves to pass the reforms.
Australia has an epidemic of under insurance, though it is becoming much worse than that, we are allowing unscrupulous entities to undermine a main bedrock of the Australian economy, by allowing them to flog rubbish policies and encourage these Companies to avoid their responsibilities, while encouraging clients to cancel quality coverage that would preserve peoples assets, income and dignity.
It is a self fulfilling prophesy when on the one hand, everyone screams under-insurance, then makes it harder for advisers to provide quality advice to remedy the problem.
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