In what remains an uncertain future for the decreasing number of risk specialist advisers in the Australian market, the ongoing debate around commission levels and the viability of risk-focussed advice businesses generated the most engagement with Riskinfo readers in the week just run…

The door may be slightly ajar for a returned Coalition Government to reconsider the current commission caps imposed by the Life Insurance Framework reforms.

Responding to a question put by Riskinfo to Treasurer Josh Frydenberg around whether the Coalition was open to reviewing the current 60/20 LIF commission caps – subject to the outcome of the Treasury’s Quality of Advice Review in December – the Treasurer said he was committed to ensuring that Australians have access to high quality, affordable and accessible financial advice:

…the Government will consider the life insurance remuneration reforms and the impact of the reforms on the levels of insurance coverage

Treasurer Frydenberg …seeking to ensure more Australians have access to the advice they need

“That’s why we have initiated the Quality of Advice Review to be completed by December this year. The terms of reference for that review make it clear that the Government will consider the life insurance remuneration reforms and the impact of the reforms on the levels of insurance coverage,” noted the Treasurer, adding:

“I want more, not fewer, Australians to get the advice they need to improve their financial security now and in retirement.”

While the Treasurer’s comments neither specifically refer to the current 60/20 commission cap nor represent a change in current policy, there nonetheless appears a willingness on behalf of the Coalition to explore what actions it might take to stem the exodus of risk specialist and other financial advisers from the sector, with a view, in the Treasurer’s words, to “…ensuring that Australians have access to high quality, affordable and accessible financial advice.”

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6 COMMENTS

  1. The quality of advice review being finalised by December, will be too late for hundreds more Advisers who will have left the Industry by then.

    The facts are clear. The problems are known. The solution is simple.

    What is not clear, is how much the Regulators and Treasury understand these three points and if their review is going to make common sense recommendations to fix it quickly and efficiently.

    Listening to the people at the Coal face and learning from their experience, has NOT been a priority and this MUST change, or we will end up with piecemeal ideas and solutions that Advisers will not accept and the decline will continue.

  2. “Government will consider the life insurance remuneration reforms and the impact of the reforms on the levels of insurance coverage,”

    There is no perceivable change in his position .Totally meaningless pollie speak. More “outs” to escape through. And he is not even looking like he will be back in Parliament, let alone be Treasurer

    • Hmmm, “pollie speak” Old Risky? Methinks you are too kind. I prefer the term ‘public servant dribble speak’. Imagery abounds . . . gotta laugh eh? 🙂

  3. My response to this is that raising the up front remuneration is not the answer to the problem the insurance market is facing, although it would be welcome by most if not all advisers (myself included). The irrational and over reactive regulations have decimated the adviser numbers – this is the problem. Those of us who remain are flat out dealing with the clients we have – especially if we are providing investment advice and are up to our eyeballs with FDS’s and Opt Ins…

    Insurance and the delivery of debt and income protection advice is a fundamental need, the number of those advising in the space needs to be dramatically increased – or the insurance crisis will get much, much worse.

    • Well said Tim, totally agree with your sentiment!
      Today we are dealing with one of our LT clients who has experienced a 62% increase to his Agreed Level IP which he is ropable about and the poor advisers are the ones left to explain the WHY. This will no doubt escalate to a complaint which will consume further time and eneregy to mitigate. Furthermore, by keeping a client by lowering their cover and premium accordingly counts towards a PIF lapse! It’s astounding how complicated ASIC and co have made the landscape to provide insurance advice. By the way, 80:20 is what we recommended under FoFA so will be fascinating to see whether commonsense finally prevails. Hang in there Riskys 🙂

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