![\"\"](\"https:\/\/riskinfo.com.au\/news\/files\/2019\/06\/190604-ClearView-White-Paper.png\"){kind=spacer}
<\/a>Rather, according to the wealth firm\u2019s white paper called Advice Culture and Remuneration: The Shameless Truth About Life Insurance Commissions<\/a><\/em>, ClearView says its findings indicate additional changes to adviser remuneration will only:<\/p>\n- \n
- Drive up costs<\/li>\n
- Cripple the advice industry<\/li>\n
- Compound the Government\u2019s social security liabilities<\/li>\n<\/ul>\n
According to ClearView, the paper presents the case for life insurance commissions as an efficient, widely-accepted remuneration model, tracing its origins as a legitimate business risk management tool.<\/p>\n
It cites the science of psychology to demonstrate that human beings are motivated \u2018reasoners\u2019 but their motivation is rarely simply financial. It says the three key determinants of human behaviour are:<\/p>\n
- \n
- Tribal membership and alignment<\/li>\n
- Identity<\/li>\n
- A sense of belonging<\/li>\n<\/ul>\n
Greg Martin<\/strong>, Chief Actuary and Risk Officer at ClearView, said it was unfortunate that much of the public discourse around the behaviour of financial advisers is disproportionately focused on remuneration and not the role of industry culture and norms:<\/p>\n
…if a culture is sound, the remuneration structure shouldn\u2019t matter much<\/h6>\n
\u201cIf a culture is unsound then a remuneration structure won\u2019t fix it but if a culture is sound, the remuneration structure shouldn\u2019t matter much,\u201d said Martin, who added \u201cIt is critical that any reform agenda addresses the real problems and enacts real change to avoid unnecessarily increasing business costs, which means higher costs to consumers.\u201d<\/p>\n
ClearView says its paper seeks to disprove that commissions lead to poor client outcomes. It also seeks to identify the real cause of poor advice and to emphasise the benefits of variable remuneration structures.<\/p>\n
![\"\"](\"https:\/\/riskinfo.com.au\/news\/files\/2019\/06\/Greg-Martin-v3-e1559623311462.png\")
<\/a>ClearView’s, Greg Martin …seeking to disprove commissions lead to poor client outcomes<\/figcaption><\/figure>\n According to ClearView proprietary research, the vast majority of advice practices depend on upfront commissions and only two percent of firms charge a flat fee for life insurance advice.<\/p>\n
It found over 80 percent of advisers do not believe consumers will pay a fee for insurance advice, which it says indicates further reductions in commission caps will force them to focus only on affluent clients who are willing and able to pay a fee.<\/p>\n
\u201cSensible public policy should encourage and facilitate the purchase of appropriate life insurance coverage by more Australian households,\u201d said Martin, who concluded:<\/p>\n
\u201c\u2026The current upfront commission structure is widely-accepted, economically rational and reflects what consumers actually want.\u201d<\/p>\n