{"id":32529,"date":"2016-03-01T16:20:32","date_gmt":"2016-03-01T05:20:32","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=32529"},"modified":"2016-03-02T08:09:49","modified_gmt":"2016-03-01T21:09:49","slug":"incentives-not-the-problem-say-advisers","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2016\/03\/01\/incentives-not-the-problem-say-advisers\/","title":{"rendered":"Incentives Not the Problem, Say Advisers"},"content":{"rendered":"<div id=\"polls-158\" class=\"wp-polls\">\n\t\t<div class=\"pollHeader\"><strong>Do you agree that sales-based incentives are the main reason that Australian consumers mistrust financial advisers?<\/strong><\/div><div id=\"polls-158-ans\" class=\"wp-polls-ans\"><ul class=\"wp-polls-ul\">\n\t\t<li>No <small>(74%)<\/small><div class=\"pollbar\" style=\"width: 74%\" title=\"No (74% | 260 Votes)\"><\/div><\/li>\n\t\t<li>Yes <small>(21%)<\/small><div class=\"pollbar\" style=\"width: 21%\" title=\"Yes (21% | 73 Votes)\"><\/div><\/li>\n\t\t<li>Not sure <small>(5%)<\/small><div class=\"pollbar\" style=\"width: 5%\" title=\"Not sure (5% | 16 Votes)\"><\/div><\/li>\n\t\t<\/ul><div style=\"text-align: center\"><\/div><\/div>\n\t\t<input type=\"hidden\" id=\"poll_158_nonce\" name=\"wp-polls-nonce\" value=\"a72c20d225\" \/>\n<\/div>\n\n<p>The majority of advisers have rejected the notion that sales-based incentives are the main reason for consumer mistrust of financial advisers.<\/p>\n<p><!--more-->The results of our latest poll tell us that almost three quarters of advisers (74% as we go to press) disagree with the contention outlined in the &#8216;<a href=\"https:\/\/riskinfo.com.au\/news\/files\/2016\/02\/2016_And-the-walls-came-tumbling-down_Whitepaper_FINAL.pdf\" target=\"_blank\"><em>And the Walls came tumbling down&#8230;<\/em><\/a>&#8216; white paper, which is that sales and other incentives are the key issue impacting consumer trust in financial advice and advisers.<\/p>\n<p>However, one in five (21%) agree that these incentives are indeed the main reason for consumer mistrust, with the remaining 5% of those who voted being unsure on this question.<\/p>\n<p>Responding to this poll and to the white paper, some advisers commented that commissions (sales incentives) have never been an issue for their clients:<\/p>\n<p><em>&#8220;I am yet to hear of any client complaints about commissions paid to advisers.&#8221;<\/em><\/p>\n<p>And:<\/p>\n<p><em>&#8220;(No) client has raised any concern about a commission being paid&#8230;&#8221;<\/em><\/p>\n<p>Despite examples of advisers charging fees for life insurance advice, which is effectively what the white paper advocates, most advisers who have &#8216;runs on the board&#8217; in the sector remain unconvinced this is a viable business option:<\/p>\n<p><em>&#8220;I don&#8217;t believe that the majority of people who need this cover are prepared to pay an adequate fee for this advice.&#8221;<\/em><\/p>\n<p>Also this comment in relation to the offer of fee-based life insurance advice:<\/p>\n<p><em>&#8220;&#8230; when asked would they instead prefer an out of pocket fee I am advised they would likely not proceed&#8230;&#8221;<\/em><\/p>\n<p>On the other side of the coin, commenting that fee for service insurance advice will only cater to the best interests of high net worth clients, another adviser suggests that:<\/p>\n<p><em>&#8220;&#8230; fee for service insurance advice creates it&#8217;s own conflicts and will alienate those most in need of quality insurance advice.&#8221;<\/em><\/p>\n<h6>The ultimate problem is unethical behaviour by some unethical people&#8230;<\/h6>\n<p>The sense we have from advisers on this question is that removing incentives (which includes banning risk commissions) will not solve the image and perception problems currently facing financial advisers and the advice sector. Instead, they believe cultural issues, including individual behaviours, must be addressed, and they also point out that there will always be those who will short circuit any system in any industry:<\/p>\n<p>&#8220;<em>The ultimate problem is unethical behaviour by some unethical people. This happens in every human undertaking<\/em>,&#8221; commented one adviser.<\/p>\n<p>The white paper authors point not just to the reality of incentives, but also the perception this creates in the mind of the public. If it is acknowledged that, for the vast majority of the adviser community, the fact that they receive commission payments has no impact on the nature or quality of advice they deliver to their clients, does this nonetheless have an adverse impact on the public perception of advisers? Most advisers will answer no to this question, because they will come back again to the argument that their clients have never had an issue with the fact that they are paid by way of commissions.<\/p>\n<p>Is the white paper right? Should all risk commissions ultimately be banned? Or is there a workable industry solution that will see risk commissions remain an integral component of any future life insurance advice landscape, but a landscape that can also be perceived in a positive manner by the consumer?<\/p>\n<p>Our poll remains open for another week and we welcome your thoughts&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The majority of advisers have rejected the notion that sales-based incentives are the main reason for consumer mistrust of financial advisers.<\/p>\n","protected":false},"author":3,"featured_media":32587,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270],"tags":[4247],"class_list":{"0":"post-32529","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-compliance-regulation","8":"category-polls","9":"category-remuneration","10":"tag-feature"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/32529","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\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=32529"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/32529\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/32587"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=32529"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=32529"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=32529"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}