Poll Results – Cashflow Trumps Cost Savings

As the life insurance sector awaits Michelle Levy’s recommendations on the future of life insurance commissions, the majority of Riskinfo readers seem to agree that a 20% increase in risk commission caps will mean more for an advice business than an equivalent reduction in the cost of delivering advice.

As we go to press, 63% of voters agree with the poll statement, but a meaningful proportion of 30% do not, with the remaining 7% unsure – probably reflecting overall the approach taken by many small business operators about the relative value to a business of cashflow versus cost savings.

Whatever your view, one comment made by long-time adviser, Amanda Cassar, appears to reflect the mood of many advisers with whom Riskinfo speaks and corresponds:

“Either way, both would be better!”

It’s not unrealistic to envisage a near future in which the cost of delivering advice can reduce by at least 20%, and in which all advisers – in a supposedly free-market economy – have the opportunity to access an additional 20% upfront hybrid commission without compromising the quality of advice being delivered.

It was stated in a main session presentation at the recently-completed AFA Thrive Conference that the reason there was no reference to risk commissions in the Quality of Advice Review consultation paper is that the Treasury is still awaiting the final report from ASIC in relation to its review of life insurance advice files – comparing the relative quality of advice in 2021 to that in 2017 advice files.

So, as the wait on the Quality of Advice Review recommendations on risk commissions continues, our poll remains open for another week, and we welcome your thoughts…