{"id":30627,"date":"2015-08-25T09:18:24","date_gmt":"2015-08-24T23:18:24","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=30627"},"modified":"2015-08-26T06:43:28","modified_gmt":"2015-08-25T20:43:28","slug":"advisers-already-transitioning-away-from-upfronts","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/08\/25\/advisers-already-transitioning-away-from-upfronts\/","title":{"rendered":"Advisers Moving Away from Upfronts"},"content":{"rendered":"

Advisers have already begun transitioning to hybrid commissions and fee for service for risk advice, according to the latest findings from Investment Trends.<\/span><\/p>\n

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\"Senior<\/a>
Senior Analyst, King Loong Choi<\/figcaption><\/figure>\n

The June 2015 Planner Risk Report, released this week, revealed that advisers have already begun to move away from upfront commissions for insurance advice. Comparing the use of upfront commissions by advisers in the last 12 months against the results of the June 2014 Planner Risk Report, Investment Trends said while upfronts remained a key component of financial planner revenue, there was a clear shift away from this model.<\/p>\n

\u201cPlanners are typically already going through the process of phasing out upfront commissions and replacing it with hybrid commissions and fee for service,\u201d said King Loong Choi<\/strong>, Senior Analyst at Investment Trends.<\/p>\n

\u201cThe implementation of capped upfront commissions, as per the Trowbridge recommendations, would see this process speed up, and challenge those not already doing so.\u201d<\/p>\n

Planners are typically already going through the process of phasing out upfront commissions<\/h6>\n

Association of Financial Advisers (AFA) CEO, Brad Fox<\/strong>, agreed that there had been a move towards hybrid models, despite the lack of finer details on the Life Insurance Framework.<\/p>\n

\u201cThere is ample evidence of successful transitions by risk-focused advisers to hybrid models over the last three to five years,\u201d Mr Fox said. \u201cMany businesses that have made the transition have seen stronger recurring cash flows and greater business valuations. We believe if practices devise and employ a watertight transitioning plan and execute it correctly, they will get positive results.<\/p>\n

\u201cAdvisers have told us they need support to adapt to the proposed changes and want the opportunity to workshop how to most successfully use hybrid commissions, how to help clients accept a separate advice fee perhaps alongside a commission, and how to deal with the three year clawback danger,\u201d he said.<\/p>\n

The AFA is currently running a Life Insurance Framework Roadshow to assist advisers to explore their future remuneration options. Click here<\/a> for more information.<\/p>\n

The Investment Trends report also showed that four out of five advisers expected to make changes to their business models if the changes proposed by the Trowbridge report were implemented. The research was conducted shortly after the release of the report, but prior to the announcement of the new Life Insurance Framework.<\/p>\n

\u201cOur research shows more planners anticipate they would move to a holistic advice model and use superannuation and insurance advice to help recoup some of the lost revenue. Those who already provide risk advice as part of their comprehensive advice, meanwhile, feel they may need to charge more for this advice,\u201d said Mr Choi.<\/p>\n

Other key findings from the report include:<\/p>\n