Would the revised Trowbridge Reform Model remuneration proposal (20% level commissions supplemented by a $2k Initial Advice Payment) sustain a viable advice practice?
- 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.