{"id":29121,"date":"2015-03-30T09:52:46","date_gmt":"2015-03-29T22:52:46","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=29121"},"modified":"2015-03-30T09:52:46","modified_gmt":"2015-03-29T22:52:46","slug":"recommendations-will-increase-cost-of-advice-afa","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/03\/30\/recommendations-will-increase-cost-of-advice-afa\/","title":{"rendered":"Recommendations Will Increase Cost of Advice – AFA"},"content":{"rendered":"

The Association of Financial Advisers has expressed concerns that the measures contained within the Trowbridge Report are likely to increase the cost of life insurance advice.<\/span><\/p>\n

<\/p>\n

\"AFA<\/a>
AFA CEO, Brad Fox<\/figcaption><\/figure>\n

AFA CEO, Brad Fox<\/strong>, said the recommendation to move to a 20% flat commission model, with an additional Initial Advice Payment, would lead advisers to charge their clients an additional fee in order to recover some of the costs of providing advice.<\/p>\n

\u201cUnless it becomes less expensive for the adviser to provide the advice, or insurance premiums reduce substantially as a result of these recommendations, then fewer Australians will be able to afford life insurance advice,\u201d Mr Fox said.<\/p>\n

\u201cIt is common knowledge that cash flow is the biggest reason small businesses fail. If advisers are to earn less than it costs them to provide financial advice, it is only a matter of time before they go out of business or stop providing this type of advice. The social cost to Australia of fewer people getting appropriate insurance would be enormous. We are not being alarmist \u2013 consider what it means for government funding of disability support pensions and other forms of payments and service support.\u201d<\/p>\n

If advisers are to earn less than it costs them to provide financial advice, it is only a matter of time before they go out of business<\/h6>\n

In its submission to the Life Insurance Advice Working Group Interim Report, released by Mr Trowbridge in December 2014, the AFA supported the removal of high upfront commissions. However, the Association argued for a hybrid commission model to be employed because \u201c\u2026it strikes the right balance between removing the publicly unacceptable high upfront commissions, yet provides sufficient revenue to ensure advisers can afford to give quality, personal, strategic financial advice to each client\u201d.<\/p>\n

\u201cOur interpretation of the recommendations is that they will do more to resolve the sustainability issues of insurers than achieve the twin objectives of raising advice quality and increasing the number of Australians with appropriate life insurance,\u201d he said.<\/p>\n

Mr Fox said he believes there is a need for careful, robust risk assessment and modelling of the effects of the recommendations, before any change is enacted.<\/p>\n

\u201cAll stakeholders must question how these recommendations will help Australians access quality life insurance advice. Will the price of life insurance fall, will there be a mechanism to ensure that outcome, and will there be enough financial advisers to provide advice to those Australians who need financial protection?\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The Association of Financial Advisers has expressed concerns that the measures contained within the Trowbridge Report are likely to increase the cost of life insurance advice.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,8,270],"tags":[],"class_list":{"0":"post-29121","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-associations","7":"category-compliance-regulation","8":"category-remuneration"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/29121","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=29121"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/29121\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=29121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=29121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=29121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}