Another Tough Year for Risk Advisers


Year three of the Life Insurance Framework transition period (2020) will have a greater impact on my advice business than has year two (2019)

  • Agree (85%)
  • Disagree (9%)
  • Not sure (6%)

Risk focussed advisers are facing yet another challenging twelve months, according the results of our latest poll.

As we go to press, those who have voted in our current poll have overwhelmingly indicated they think 2020 – which is the third and final year of the LIF transition period – will be much tougher for advisers, who will now be restricted to a 66 percent upfront commission cap this year.

One adviser comment we’ve received has put it bluntly, stating: “I can’t survive on 66%.” The same adviser detailed a number of factors he says will deplete his 66 percent capped commission revenue, including:

  • 10% GST
  • Licensee costs
  • Compliance costs
  • The two-year responsibility period clawback requirement
  • Cost of further education requirements
  • Other increasing fees for the practice

Other comments reflect a similar sentiment, in which there appears to be general agreement that less risk new business will be written in 2020 in a market that is already in decline in terms of risk new business sales.

Another comment notes that it isn’t solely the Life Insurance Framework remuneration reforms that is making life impossible for risk writers: “It is compliance and regulation that is the big killer.”

The results of this poll and the accompanying comments don’t exactly paint a rosy outlook for advisers in 2020 – particularly for those who focus on delivering life insurance advice solutions.

We’ll report and monitor the outcomes around the final stage of the LIF transition period as 2020 unfolds and we hope to stay in touch with you as the year progresses…