- Yes (79%)
- No (15%)
- Not sure (7%)
Our latest poll suggests the majority of advisers believe the time is right to consider the prospect of separating product from advice.
In response to our question, which asks whether the industry should consider separating life companies and ownership of the networks that distribute their products, a solid 77% have answered in the affirmative. 13% have voted no, while the rest are undecided.
While the poll question relates to the notion of separating product ownership from advice networks, the resulting conversation has focused as much on the value of advice and how that value should be determined. Questioning the extent to which the link between product manufacturers and related distribution firms impacts the independence and quality of the advice received by consumers, one adviser has noted:
If confidence in the industry has been dented recently, it’s due to problems far more concerning than perceived independence of advice…
“I suspect customers care less than is being claimed. If confidence in the industry has been dented recently, it’s due to problems far more concerning than perceived independence of advice. And surely most of the value of advice comes from financial planning or risk management, which should be independent of any ownership concerns…”
Other adviser comments focus more on the general debate surrounding the value of advice and whether a consumer, particularly a ‘mums and dads’ client, would be prepared to pay a fee to receive their life insurance advice.
The sense we have in the results and the comments we’ve received so far is that, while the majority of advisers support at least a conversation about separating product manufacturers and ownership of their own distribution networks, the passion surrounding the question and its implications doesn’t appear to be as strong as other recent polls, such as those relating to the new Life Insurance Framework provisions.
This debate on ownership of distribution remains an important question – flamed in recent weeks by separate announcements from NAB and Suncorp. But while there’s no question about its importance, we’d like to know whether it’s ‘front of mind’ for you at the moment, as our poll remains open for another week…
I voted yes for separating Life company ownership from distribution, as per the poll question – not separating advice from product, as your heading today implies. There is a big difference. Our industry seems to be the only one questioned about the ethics of supplying a product – and being fairly remunerated for it – to solve and/or improve the situation of a client. It happens in a multitude of industries everyday without question, including other professions. Do you not think anyone profits from the ‘parts’ a surgeon uses to save/improve someone’s life or lifestyle? Would you question why he chose to buy his knee replacements off one supplier over another? Is what the client is charged for that knee inclusive of any profit? In the non-professional world, do you think there is any mark up in the price you are charged for parts when you have ‘anything’ repaired? But this is after being charged for their ‘service’ or ‘labor’. And even within our industry, why is it only ‘wrong’ for the adviser or agent to be remunerated from the product he has recommended, when everyone else up the line – all the way to the CEO on his multi-million dollar salary – is being paid off those same premiums/fees that we have sourced. Hypocrisy at it’s greatest.
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