The Case for Retaining Commissions


A NSW adviser has released a discussion paper in which he argues the case for the retention of life insurance commissions as a valid and necessary component of the future life insurance ecosystem in Australia.

Approaching the eve of ASIC’s 2021 review of the quality of life insurance advice, second generation risk advice specialist, Brett Wright (KPRM Platform), outlines his argument for the retention of risk commissions by way of documenting the differences he says exist between the nature of advised life insurance on a commission basis and advised life insurance under a fee for service arrangement.

In his paper – Comparing Commission vs No Commission + Advised Insurance Alternatives – Wright breaks down various elements associated with the value of life insurance advice, such as ‘Getting Covered’ and ‘Reviewing & Renewing’, and how each of these elements works, or would work, under the commission model and the alternative fee for service model.

NSW adviser, Brett Wright …articulating the argument for the retention of risk commissions

Wright also takes aim at the relative issues associated with consumers accessing life insurance via direct and group insurance channels, where he implies the consumer is better served by a personal advised life insurance solution, which better addresses the consumer’s needs and personal circumstances.

In the present environment where a total ban on risk commissions remains a possibility, Wright told Riskinfo he wrote this report “…with the sole purpose of starting open, honest, transparent and fact based conversations with politicians, regulators, life insurers, associations, licensees, advisers at the coal face, and most important of all, the consumers we serve.”

Lending support to his position, Millenium3 CEO, Helen Blackford, says Wright’s report outlines many of the key issues from a practitioner’s point of view that lead directly to the accessibility and affordability of Life Insurance: “If an industry construct is further created through decreased commissions where restrictions are placed on a consumer’s ability to access and afford advice, the social and community impacts will result in broader under-insurance, financial hardship for Australian’s in their time of need, and as a result an increased demand on the welfare system.”

Later this week, Riskinfo will report a series of comments made by a selection of key industry stakeholders in response to Brett Wright’s Advised Life Insurance paper, each of which supports the call for the retention of life insurance commissions as an outcome that will offer the best chance for more Australians to access quality life insurance advice…


  1. hit the nail on the head and the first paper to actually sums up a risk adviser….. no place for anything other than commission….. great work

  2. Mr Wright must be applauded for taking the stand and putting this out there.

    Hopefully his effort helps inspire the rest of the adviser community to contribute to the profession and make submissions to ASIC’s consultation.

    However, I was hoping to find more common ground with Mr Wright on this important topic.

    I agree that commissions have a valuable role to play in the advisory landscape, but this report – detailed and clear as it is – seems based on reinforcing the assumptions and beliefs advisers already hold. That the status quo is working so we should leave it all alone. I disagree with this idea.

    There is, after all, a strong counter-argument to the ‘commissions make things cheaper’ position where – for certain premium bands – removing comms and charging a fee is far, far cheaper for clients.

    I’m also disappointed to see the idea that “Using Fee For Service, advisers will charge consumers directly for our advice and services.” is positioned as a negative idea. There are negatives to commissions for both advisers and clients that I believe should be addressed as part of this debate.

    The debate is far, far more nuanced and complicated than ‘commissions good / fees bad’, or ‘fees good / commissions bad’.

    I hoped Mr Wright’s report would capture and explore some of that nuance, but unfortunately that wasn’t the case.

    But I applaud him for contributing to the conversation the way he has – takes real commitment to the industry.

    • What is actually broken?……Status Quo ??
      The client should always have choice provided as to how they decide to pay for the advice and the product.
      Providing choice allows flexibility to suit all clients.
      Removing choice obviously removes flexibility and mandates a single option.
      There are some who have continued to push for the removal of commissions.
      Many of these people and organisations are not directly involved at all in the provision of risk advice but still persist to advocate for removal of commissions and choice based on an underlying objection and bias toward an ideological and imagined benefit.
      The reduction of the commission levels via LIF has been an abject failure.
      The consumer has not benefited in any aspect of this failed experiment.
      What must now happen is for risk insurance commissions to be returned to either an 80/20 or 100/20 model with a 1 year sliding scale clawback system.
      In addition, any replacement business that is placed within 3 years of the implementation date of the current policy is only remunerated at the level commission option.
      The fee for service model can be an alternative option to the commission model if the circumstances suit the client.
      There is no point in having a Life Insurance industry at all if the advisers can no longer afford to provide advice and the consumer can no longer afford to receive advice.
      The massive reductions in new business volumes from advisers is directly related to these very issues.
      Those who advocate for the removal of commissions because they are seen as a conflict of interest are simply wrong and many of them are academics, consumer groups
      and the Labor Party who have agendas rather than real world knowledge.
      Congratulations Brett Wright…..your voice should be listened to.

      • I don’t quite understand your question – do you mean ‘what’s broken with the status quo’?

        If so – everything.

        To say the current model works misses the whole host of issues that make providing insurance advice so difficult. Who of us is looking around at the moment going ‘yep, everything is a-ok. This is EXACTLY how everything should be.’?

        I agree that clients should have the choice of how to pay. But what I’m saying is that we need to critically examine some of the assumptions underpinning the way insurance advice is provided.

        Just because the way things used to be done worked well (an idea which is, in itself, arguable), that doesn’t mean they should continue.

        Given that removing commissions will reduce premiums by up to 30%, there is a large group of clients for whom it is demonstrably better for them to pay a fee rather than commissions – and that’s before working out the impact of the ongoing comms.

        Which isn’t to say ‘fees are good / commissions are bad’. There’s nuance needed here, but that nuance needs to be reflected in the research, reports and discussions we’re having – rather than just echoing ideological touchstones.

  3. There is very little positive argument for fee for service on stand alone risk products for the majority of Australians. Call it “ingrained” stubborn or whatever you like but the general consensous among advisers is that clients will not pay the fee that is required to provide the right products for the clients needs through proper investigation { ASIC RULE 1 KNOW YOUR CLIENT} There are some out there that say they have disproved that but i am yet to see it and most of my colleagues who have asked have either been ignored or discovered the fee also incorporates other advice such as Super or Investment { all packaged up and not set out in any sectioned fee structure } Mum and Dad types who have mortgages { some very large } family commitments like children’s education costs of running a family home and or business let alone putting food on the table take precedence by a long way on paying fees for insurance advice. They will either go direct and hope they get it right or decide its all too hard and give it a “miss” altogether As it has been for decades Insurance is sold not bought and without he commission structure the impact on the under insurance in Australia the tax payer and the hospital and medical system will be unmanageable.
    We have to have a commission structure ! Not part of one that only covers part of what is required{ like a flat 30% being “bandied” around. 80/20 and a one year responsibility period. “That’s fair and equatable” to all and will do the job. If someone prefers to pay a fee it should be available. Its all about providing options not getting rid of them !

  4. The only time I will ever write another Risk Insurance contract with 100% dialled down commissions all years (because that’s what Labour is suggesting when Shadow Minister Stephen Jones threw his arrogant and ignorant support behind the equally ignorant Commissioner Hayne’s ideological position to remove comms if there is no good reason to keep them) is if ASIC ban commissions and we we are force to convince consumers to pay a fee for something they have always perceived as free. If Rice Warner’s research findings are remotely correct when reporting that consumers who would pay a fee for Risk Àdvice, they wouldn’t pay more than $500, then we are doomed. We all know that providing the simplest of Risk Àdvice will take approx. 10 to 15 hours start to policy issuance. That equates to approx $50 per hour. Hmmm, my non tertiary educated unskilled child earns just under that pouring beers with no fear of being sued by clients, no Filenotes and certainly no fear of ASIC look back projects designed to find justification for the spate of unnecessary reforms over the past several years.
    In addition, what is the Risk Adviser going to do for renewal income? Are the clients expected to pay a fee each year from they own cash for us to maintain the policy (aka staying open)? What about every time someone calls to talk about their policy; whether it be because they have divorced, lost a job, changed a will, moved address, changed bank accounts, just received their anniversary letter and want an alteration quote to reduce or God forbid make a claim? What then? Are you expected to start the conversation with…dear customer thank you for calling, now before we go any further my hourly rate is $250 plus GST and the clock is ticking? Fees for Risk Businesses won’t work if they did, then we would have all moved away from commissions already but we all know we won’t find enough genuine new business to justify the compliance risk and provide a certain standard of living. I might have to pour beers or stand at Bunnings for a living. Thank God I don’t have a ‘re-skilling clause in my insurance contracts.

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