{"id":28381,"date":"2015-01-12T11:59:44","date_gmt":"2015-01-12T00:59:44","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=28381"},"modified":"2015-01-12T11:59:44","modified_gmt":"2015-01-12T00:59:44","slug":"risk-remuneration-must-reflect-activity-trapnell","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/01\/12\/risk-remuneration-must-reflect-activity-trapnell\/","title":{"rendered":"Risk Remuneration Must Reflect Activity – Trapnell"},"content":{"rendered":"

Proposals to remove upfront commissions and reintroduce longer responsibility periods for life insurance do not reflect the nature of the work undertaken by risk advisers, a dealer group head has argued.<\/span><\/p>\n

<\/p>\n

\"Synchron<\/a>
Synchron Director, Don Trapnell<\/figcaption><\/figure>\n

Responding to the recent release of the joint Financial Services Council and Association of Financial Advisers Life Insurance and Advice Working Group (LIAWG) Interim Report<\/a>, Synchron Director, Don Trapnell<\/strong>, said the report failed to adequately take into consideration the honest hard work and effort risk advisers around Australia undertake.<\/p>\n

While not making any firm recommendations, author of the Interim Report and chair of the LIAWG, John Trowbridge<\/strong>, suggested the industry should move away from a high upfront commission model for life insurance advice (see: High Upfront Commissions to Go \u2013 Trowbridge<\/a>).<\/p>\n

\u201cThere is sufficient dissatisfaction with these arrangements to dictate that the \u2018no change\u2019 option is not acceptable,\u201d Mr Trowbridge said.<\/p>\n

Mr Trapnell said that having upfront commissions and servicing commissions that are no greater or lesser than each other does not bear any relationship to the true cost of putting a policy in place, nor the true costs of running a life insurance business, where most expense is incurred at the beginning and the end of the life insurance process.<\/p>\n

\u201cThe trailing commissions a life adviser receives are actually renewal commissions, paid to keep polices on the books. The renewal commissions advisers receive on a whole number of policies compensate them for the time and effort they put into helping an individual client when they genuinely need it most \u2013 at claims time. The renewal commission an adviser might receive on a single policy would go nowhere near covering this cost,\u201d Mr Trapnell said.<\/p>\n

He argued that appropriate upfront remuneration was also necessary to protect the future of the advice industry, saying new entrants may be less likely to join the sector if they are \u201c\u2026 collared into a remuneration system that does not reflect the work involved\u201d.<\/p>\n

It is completely inappropriate to attempt to move responsibility away from product manufacturers and on to advisers<\/h6>\n

Mr Trapnell also cautioned against reintroducing longer responsibility periods, suggesting it could equate to price-fixing.<\/p>\n

\u201cIn my opinion, for insurance companies to now attempt to reintroduce a long responsibility period, without the market-levelling effect of competition, is in its nature price-fixing. It is completely inappropriate to attempt to move responsibility away from product manufacturers and on to advisers in this way,\u201d he said.<\/p>\n

Mr Trapnell urged all advisers to respond to Mr Trowbridge and the LIAWG, who are accepting submissions on the Interim Report until 30 January 2015.<\/p>\n

\u201cI believe all affected advisers and advice businesses should make it a priority to read the Interim Report and respond to it, with clear evidence of how they operate their businesses and how the recommendations will affect their businesses,\u201d Mr Trapnell said.<\/p>\n

The Interim Report can be viewed here<\/a>.<\/p>\n

Submissions to the report can be made via: submissions@trowbridge.com.au.<\/p>\n","protected":false},"excerpt":{"rendered":"

Proposals to remove upfront commissions and reintroduce longer responsibility periods for life insurance do not reflect the nature of the work undertaken by risk advisers, a dealer group head has argued.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,8,6,270],"tags":[],"class_list":["post-28381","post","type-post","status-publish","format-standard","category-associations","category-compliance-regulation","category-dealer-groups","category-remuneration"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/28381","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=28381"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/28381\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=28381"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=28381"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=28381"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}