- No (73%)
- Yes (18%)
- Not sure (9%)
Our latest poll seeks your verdict on the new risk commission model proposed by John Trowbridge at last week’s 2020 FSC Life Insurance Summit (see: Call for Re-Think on Risk Commissions).
The context within which Trowbridge initiated his revised proposal includes the decline in the number of risk focussed and other advisers from the Australian retail advice market and the trending decline in retail advised new business sales. This has prompted Trowbridge to call on the Government to consider a revised remuneration solution that will keep advisers in the industry and allow them the commercial capacity to serve the life insurance needs of middle Australia – the mums and dads market.
As we reported elsewhere, Trowbridge is proposing that an Initial Advice Payment of $2,000 should be paid by insurers to advisers for each new life insurance client (plus 20% level commission), up from the $1,200 IAP plus 20% level, which he proposed in 2015 (see: 20% Flat Commissions…).
According to Trowbridge, this increase in the proposed IAP reflects the rising cost of delivering life insurance advice in the last five years, due in no small part to various regulatory reforms impacting on all advisers and advice businesses.
In our main report on Trowbridge’s proposal, and worth repeating here, the noted actuary is advocating that advancements will have been made if this debate revolves around the numbers he has put forward within his proposed model (ie IAP amount plus amount of level commission), rather than having the debate focus on the model itself.
Also worth repeating here are the benefits Trowbridge says his revised model will deliver:
- Assuming an average cost of $2,000 – $3,000 to place a life policy on the books (especially in reference to the mums and dads market), the new model gives advisers the commercial ability to deliver life insurance advice to middle Australia
- Removal of any upfront commission clawbacks
- Continues to address the Government and regulator’s key agenda of better aligning the interests of advisers and their clients while removing or significantly minimising any conflict of interest, either real or perceived
Editor’s Note: We welcome your considered and measured comments on this poll question, as part of an ongoing debate which attaches to the future viability of retail life insurance advice in Australia.
Placing a flat $2,000 advice fee with no write-back, gives advice practices some breathing space, however it does not take away the fact that the cost to provide advice can be considerably more than that amount, which leads us back to the same argument.
Pre 2015, the Life Insurance Industry was profitable, it had a very small percentage of advisers churning, which would have been easily fixed if the Life Companies had listened and contained those churners.
Instead they went down a path that has led us to the fiasco we face today.
Trowbridge is, in hindsight, making a tepid admission that the current framework is unworkable, though his attempt to fix the issues, is one dimensional and as he has never run a risk advice practice, he is not qualified to now come and make more suggestions based on theory.
Again, an important missing option: “This is not a realistic proposal”
So Trowbridge accepts a decline in advisers, and a decline in advised new business. But as a colleague has correctly stated, he is one of the architects of the mess our industry is in. Furthermore, he has made another proposal which, at time of writing, two thirds of advisers have rejected. Why is he still around? It’s the advisers who should be consulted, but we are not.
He is kidding right ??? It’s like a child that has been found out to be telling lies and now wants to kiss mum and Dad and it will all go away
When did he come up with this idea ? An Epiphany in the middle of the night ? $2000 that’s enough that will fix it ! John go away stay out of it ! You obviously have no idea of what you are doing and never have
Let’s keep this simple shall we !! ? I like many others believe the commission structure should be returned to 80/20 and a one year responsibility period re introduced with exceptions made when the lapse is unforeseen and not caused by the adviser
Fix the ridiculous FASEA exam requirement !
If you want to be a full on Financial Planner with 26 letters after your name then yes do the appropriate courses
If you want to do risk cover do the appropriate course not a “war and peace“ one that is being forced down our throats whether we like it or not
Not one person involved in producing all this garbage has any idea of what to do next
Have a very very lose look at why advisers are leaving the industry in droves new business applications have fallen rates of cancellations and lapses have increased Take a real look and take responsibility “it is your fault” listen to the advisers and fix it or go down in history as the regime that caused the collapse of the industry and the under insurance issue that will bring the nation to its knees quicker than the Corona Virus
John Trowbridge – hmm. As one of the architects of the mess our industry has become, Mr Trowbridge’s thoughts have never carried much weight. Now he’s revising his view on the IAP so it’s plain that he’s just floundering like a fish landed on a boat with no hope of jumping out. Oh dear.
Without wishing to sound completely ridiculous, has there been one comment from any of the Life Insurance companies in support of the vast majority of adviser’s opinions or alternatively providing constructive comment around this latest proposal ?
Surely, the Life Insurance companies well know that when good quality advisers are providing good quality advice and are remunerated well for the advice provided, the industry can be profitable and successful and the consumer can still access quality risk advice on an affordable basis.
Where the hell is any support coming from the Life Insurance companies or is this just a ploy to have advisers wiped from the face of the earth ?
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