- Yes (43%)
- No (36%)
- Not sure (21%)
Our latest poll asks a difficult question about the future for risk specialist advice businesses.
According to research firm, Investment Trends, the proportion of risk specialist advice businesses, amongst those practices which deliver life insurance advice solutions, has dropped to 17% in 2017; down from 41% in 2012 (see: Risk Specialist Adviser Numbers Continue to Fall).
This fall represents a significant reduction in the number of risk only or risk-focussed advice businesses operating in Australia, and the remuneration restrictions accompanying the implementation of the Life Insurance Framework reforms have not yet even commenced.
Will the LIF remuneration reforms contribute to or even accelerate this downward trend in the number of risk specialist advice businesses?
There’s no question that the commercial structure of many risk specialist advice businesses will start to change from 1 January 2018 when upfront commissions will no longer be available. But to what extent will this spell the end for those businesses still operating on the upfront commission model?
Risk specialist adviser, Mark Rando, sees a bright future for his business after 1 January and also for the continuation of risk specialist businesses everywhere – but not under the same commercial construct (see: There’s Life After January 1, But Not As We Know It).
We asked you almost exactly the same question only a few months ago (The Uncertain Future for Specialist Risk Advisers). That poll in June, however, was entirely about the LIF reforms, while today’s poll expands our discussion to the downward trend in the incidence of risk-only or risk specialis advice businesses that is already and clearly in evidence.
How do you explain the trend that already exists? Investment Trends suggests it is due, at least in part, to the broader evolution of advisers’ practices following the Future of Financial Advice (FoFA) reforms.
There’s plenty more we could say, and other arguments we could present. But it’s time to hand the discussion over to you and we’ll continue the conversation next week…
The new reforms will only impact new start up risk businesses, as established businesses usually don’t have cash-flow issues. A hybrid commission structure is beneficial to a business over the medium to long term in comparison to upfront, so I don’t see what all the fuss is about.
Furthermore in relation to the uncertainty or risk advice – Life insurance has been around for over 100 years and there will always continue to be a need for advice, particularly given Australia’s chronic underinsurance problem. As a risk adviser I’m truly optimistic and looking forward to the next 20 years, so bring on the changes!
What you’ve said is in the main true, Tom. But with little sensitivity for advisers who’ve been in the business for many years. These stalwarts see the changes under LIF etc as benefiting no one but the life offices and the government apparatus which has danced to their tune for its own individual advantages.
The opportunities in life-risk will be there absolutely, but don’t expect it to be a smooth ride. And I’m wondering about this, as will many others: will you still be as upbeat – as Pollyannish – and still saying the same things in 20 years as you are now?
Totally agree Paul.
They will survive but in limited numbers and working harder for less income
For those planning to enter this industry !? Don’t !! Join the police force of something there is no long service leave in this industry and no long term benefits If you are not established now it will be a real battle to do it into the future with all the regulations that are now in place and don’t look like stopping
The silver lining to all this is you could be the most educated person on the “dole” cue
The focus will move far more to business clients as premiums of $5k or less simply wont be commercial for a practice to provide a service.
The example is general insurance where most GI brokers ignore cars and home insurances as the revenue and claims experience do not justify the cost of service.
The mums and dads will be at the mercy of direct insurers (expensive, high percentage of claim denial and largely under-insured) and insurance through their corporate or industry super plan (once again contributing to the under-insurance problem and now generally more expensive than intermediated insurance).
Great work by the FSC and ISA – was always the underlying agenda and they have achieved it. ASIC is simply too dumb to realise they have delivered an overpriced monopoly on a platter.
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