Poll Results – The Value of Claims Services

Our latest poll results suggest advisers spend a lot of time and deliver a lot of value in serving their clients’ needs at claim time. We’re thinking this is something about which advisers are already aware, but how should the value of this service be treated?

As we go to press, around one in three advisers (34%) have indicated they average between 11 and 20 hours to help their clients with a claim. This is the most favoured band for advisers, while 23% take up to ten hours and a further 23% clock-up 21 – 30 hours on average. The other 20% who voted in our poll so far average 31 or more hours per claim.

While the numbers are evenly distributed, perhaps reflecting the variety of advisers and advice businesses taking part in our latest poll, the overall results suggest – as we’ve already alluded to – that most advisers spend a significant number of hours helping their clients at claim time, especially when it comes to Trauma, TPD and IP claims.

In considering this poll question within the framework of the ‘commissions-versus-fees’ debate (see: The Case for Retaining Commissions …Continued), even when taking conservative numbers based on our results, we can see that the value advisers deliver their clients in helping them with their claims is worth thousands of dollars.

For example, if we select an average of 15 hours per claim, which is a low number based on our poll results, and apply a rate of $200 per hour, which is also a medium-low hourly fee, it’s easy to conservatively chalk up $3,000 worth of value in advisers/advice businesses helping clients at claim time.

While few advisers actually apply an hourly rate for their financial advice services, especially those who provide significant levels of life insurance advice, is it reasonable for these advisers – or any adviser – to charge their clients thousands of dollars to assist with their claims, even though this equates to the value they have delivered?

This conversation quickly becomes one which considers the merits of commissions v fees for advice services, in which the ‘pool of commissions’ referred to in Brett Wright’s paper supporting the retention of commissions appears to be a sensible approach towards how advisers have historically funded the time and effort and value they apply to the processes involved in helping their clients with their claims.

As always, there’s more to say, and everyone will have their own view. So it’s over to you to vote if you haven’t yet, and to add your voice to the conversation if you wish, as our poll remains open for another week…