AFA, FPA Join Forces on Future of Risk Commissions

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The Association of Financial Advisers and the Financial Planning Association have agreed to work together in their efforts to advocate for the retention of life insurance commissions beyond ASIC’s 2021 Review of the impact of the Life Insurance Framework reforms.

The purpose of the taskforce is to …deliver a single and united message to the Government

The purpose of the bipartisan taskforce is to ensure that the two major associations representing the voice of financial advisers deliver a single and united message to the Government and its regulators on the value of advice and what they believe is the critical importance of the perpetuation of life insurance commissions as a valid form of remuneration.

While the joint association taskforce has yet to convene, advisers have been made aware of this initiative during the recent FPA roadshow series.

Riskinfo understands the combined advocacy group will have an equal representation from both associations and that it will meet shortly to establish its agenda and the key messages it will be delivering to the returned Coalition Government, the Federal Opposition, the regulators and the life insurance companies.



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12 COMMENTS

  2. This is a positive initiative. However, does the makeup of this task force include risk only specialists? if not, maybe it should! I would also suggest that this task force ensure that they listen to the risk adviser network. i.e. it is not just about maintaining commissions – it is about reinstating them at least to the 80/20 split; removing this evil 2 year clawback; and disbanding FASEA (or doing away with this nonsense about a degree for existing risk advisers). Unless all thrree of these issues is addressed, then we will still see a mass exodus of advisers in the coming few years.

    • 100% agree, Concerned. Perhaps the govt is doing all of this in the interests of professionalism but they’ve gone about it in the same manner as using a sledgehammer to kill a housefly. Dead-set (excuse the pun) overkill!

  3. It has never been asked before, but why does the AFA and FPA ignore the AIOFP? Or is it visa versa? They are taking some very strong actions of late. The more the merrier, and certainly the more the stronger. Lets be really collaborative.

  4. There are some questions that the AFA and the FPA need to ask before they go and have meetings and put forward theoretical plans that may have little bearing on what will occur.

    These questions can only be put to advisers who mostly work in the Retail Life Insurance area and the answers will then help guide the AFA and FPA to formulate a correct strategy.

    Question 1. With the current FASEA requirements and LIF regulations, will you be continuing in the Industry long term and if no, why?

    Question 2. If the FASEA requirements were tailored so Risk advisers were exempt and ongoing training was only around Risk advice, would that encourage you to stay on as an adviser?

    Question 3. If the 2 year responsibility period was changed so that if a client cancels for a reason that was not due to the adviser, then the responsibility period is 1 year, would that encourage you to stay on as an adviser?

    Question 4. If Commissions were reduced to a flat 20 percent, would you stay in the Industry?

    Question 5. Advice practice owners. With the increased costs, compliance and risks to your Business in the current environment of 70 percent commission and 2 year responsibility, what will be the trigger point where you decide it is no longer profitable to write Life Insurance, or have you already reached that point and will start scaling back your risk Business?

    Question 6. Advice Practice owners. With commissions reducing and no protection from Life Companies increasing premiums each year, which leads to lapses, what revenue do you need from each new client to cover all your Business costs, pay staff, have a buffer for lapses and write backs, while still leaving enough for sufficient profit and to offset the increased risks you face staying in Business.
    ( A figure of $3,000 was a benchmark 3 years ago, prior to the new regime coming into force. Has that figure increased now, or was it higher if you employ Advisers, as well as administration staff? )

    There will be more questions, but more importantly, the solution is already known amongst advisers.

    What the Associations need to do, is ask the right questions and have sufficient experience to understand what is being relayed back to them.

  5. I continue to hear risk writers / specialists saying that they should not have to do the exam / extra education and I am yet to understand why. In my opinion I do not believe existing advisers should be required to do the additional education / exam to the extent that has been set by FASEA but I do believe we all need to do some additional studies to some extent and believe we should all be united as one and realise we are all in this together so should be fighting as one industry

  6. I agree any combined front is better than a fractured one. However, as provided in the first FASEA example exam question, the ‘client’ is aged 86 and all the questions have absolutely no relevance to risk insurance.

    The complexity of what is genuine Financial Planning supports a high level of education qualification. Professional FP work is no simpler or easier than what an Accountant or Solicitor undertakes each day.

    But there are levels below ‘Accountant’ e.g. ‘bookkeeper’ and ‘Solicitor’ e.g. ‘Paralegal’.

    I also believe that my 44 years in the life insurance industry and 33 as an agent/AR should carry far more wait, especially as a ‘risk only’ adviser.

    Risk only advisers should not be exempt from FASEA – however their level & area of examination should be restricted to the work thay actually perform on a daily basis.

    FASEA is a shotgun approach akin to taking a mallet to a tack.

    • PS – If you look past the topic or example used in the FASEA example exam it is purely using a situation to examine a person’s ethical competence. They could have used a situation involving a scenario surrounding a stock brokering situation or something involving a SMSF scenario etc etc. Bottom line it is just a story line made up with outcome alternatives to check how people would react & what they would do in certain situations based on ethics. From what I read you are in some way implying that a risk adviser is a “level below” a financial planner……..some people might view that a specialist risk adviser requires a higher level of education due to it’s complexity & the expertise required. Maybe a financial planner is the Dr (GP) but to specialise in an area requires specialist training / further education like a risk specialist?????

      • The situation you are mentioning is correct to a point but for those who do not have an understanding of Retirement homes the benefits of keeping or selling your home to either keep or lose your pension or increase daily fees or refundable deposits is something risk advisers generally do not do.
        If you want to access some ones ethics give them a scenario they can understand and deal with The ethics to a risk adviser faced with the questions asked in the scenario involving this 86 year old women would be to refer it to someone who works in that area is proficient and capable not try and answer questions you have no idea about. You cannot be good at everything in our business it has been this way since Joseph payed 5/8 for Jerusalem. Be good at something and improve as you go don’t try and fix everything its not possible.

  7. don’t forget the insurance companies we need them on board too. They realise that without new business inflow they are in big trouble. AFA FPA how about going to them or better still the FSC and see if they can admit they were wrong. If the do that would be a win for everyone. Would’nt it ??

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