More advisers are building fees into their risk-only advice proposition to either replace or supplement life insurance commissions. This is one of the major findings stemming from the fifth edition of Elixir Consulting’s Adviser Pricing Models Research Report, which was released this week.
The report considers the pricing models used by 273 advice businesses around Australia. Among other elements, the report looks at how advisers charge for their life insurance advice, both when it’s included in a comprehensive financial plan, as well as when provided as a stand-alone piece of advice.
In focussing on the relevant findings for insurance-only advice, Elixir Consulting’s Graham Burnard, reports 52 percent of advisers surveyed said they operate on a commission-only model and never charge a fee for insurance-only advice: “However, this means 48% of the participating advisers do charge fees of some sort,” notes Burnard, who elaborated that, of the remaining 48 percent who charge a fee of some description:
- 17% (of the 48%) charge fees alone
- 21% give clients a choice of a fee or a commission
- 62% said they charge fees in addition to commissions
(This finding is revealed by Burnard in an article entitled ‘What Price for Insurance Advice?‘, which will be released in full by Riskinfo later this week as part of our weekly Adviser Focus series.)
…a lot of advisers have a limiting belief that clients won’t pay fees for insurance advice
Commenting on this growing trend of charging fees for risk advice, Burnard addressed the nature of a ‘limiting belief’, defining it as “…something that holds you back because you perceive it to be true but, in reality, it may not be true.”
Burnard says it would appear that “…a lot of advisers have a limiting belief that clients won’t pay fees for insurance advice when there is evidence that a significant number of advisers can and do charge fees in addition to commissions for the insurance advice they provide.”
…this edition is launched at a time where businesses have borne the brunt of increased licensing and compliance costs
Elixir Consulting’s MD and main report author, Sue Viskovic, noted that, while fee-based advice has now been in force in Australia for many years, “…this edition is launched at a time where businesses have borne the brunt of increased licensing and compliance costs, government levies (ASIC and TPB fees), reduced insurance commissions, cessation of investment trail commissions and a new enforceable Code of Ethics that includes a requirement to deliver value for money to all clients.”
She added that pricing has never been a more complex, or important area of business management.
Ahead of our full article release later this week, advisers and other interested colleagues can click here to find out more about Elixir Consulting’s Adviser Pricing Models Research Report Fifth Edition.