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…



  1. Thie first Riskinfo for the year and this is probably the first comment for the year. I’ve said this repeatedly in past Riskinfo editions and I’m going to say it again – the only way out of this mess is for the Life Insurance companies, the AFA, the FPA and the dealer groups to go to the govt collectively (as one) and make them understand what has happened and what will happen if things remain. There MUST be a reinstatement of Life Insurance commissions, rid the industry of this evil 2 year clawback and abolish this ridiculous imposistion that risk advisers are to complete a full financial planning degree. Nothing less will be accepted by Life Insurance Advisers. The longer you all leave it, the longer the recovery.

    • So true concerned. The problem with our industry is it is fractured, and not united. There are petty jealousies which stop this from happening. I wish the AFA, FPA and AIOFP and other industry stakeholders, including the institutions, could plan a conciliatory meeting to present one voice.
      At this meeting they should plan an industry funded advertising campaign directed at the general public explaining our and their plight. Only then will we see meaningful change.

    • Well said ‘Concerned’. Very succinct and those exact things you mention are always top of mind for me too. I received notification from my dealer yesterday telling us all about the way we will do the FARCIA exam and to reply to the email so acknowledge and study the info to prepare for the exam. There were study options ranging (from memory) from $195 up to $995. Extortion, nothing less. From all accounts the exam is amateurish, mistake riddled and deceptively written. This is a travesty. I replied to my dealer saying thanks but I will not be sitting the exam and my retirement date will be 31/12/2021 – the day before one cannot practice without having sat the exam. I then outlined to the dealer the reasons similar to your post above. I simply refuse to spend the time and money to satisfy the whims and PC requirements of self-absorbed politicians and academics. There is ZERO benefit to me OR my clients – on the contrary, it is all a NETT negative. I’m a risk adviser and 80% or more of the exams and qualifications they insist I must have are irrelevant. I have yet to inform my clients and will leave it to later. This is NOT client best interest when a trusted adviser is forced to retire at the point of a gun and leave his clients after decades. After 34 years as an adviser I have finally nominated a definite retirement date. It was gut wrenching to do and I have not heard back from the dealer yet.

  2. As pointed out last year, advisers do not get 66%.

    Clients base their budget on the total premium and there is a misguided belief that advisers get paid 66%, based on the premium.

    Once Policy fees, GST, modal loadings and Stamp duty are deducted from the premium, the actual commission is less than 50%.

    From that, the Licensee will deduct their fee and the Practice must cover all the Business costs to produce the New Business.

    The end result is a loss.

    The reason why New Business sales are down, is the obvious loss on each sale.

    If there was sufficient future opportunity, then advice practices would wear that cost.

    Instead, what we have, is a maze of complexity that makes little sense, it does not make it better for clients, there is more risk, the FASEA debacle and the cost of doing Business, has made it not viable to provide risk advice in it’s current format, FULL STOP.

    • I completely agree Jeremy. Also when you factor in say 1 or 2 customers in 10 not making it to 2 years for whatever reason we are actually LOSING money writing new business. The problem we have is that if you listen to the insurers, FSC, AFA etc they are panicking about loss of commission but still trying to cling to the LIF rates for profit reasons. They just don’t get it.
      I know I’m not alone in understanding that its just more profitable at the moment to look after existing customers, live on trails and not write any new business and I would suggest to all advisers if they can to do the numbers and do the same.
      Unfortunately its going to take another disastrous year or so in new business for the insurers to finally wake up.

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