{"id":62169,"date":"2022-08-09T18:33:53","date_gmt":"2022-08-09T08:33:53","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=62169"},"modified":"2024-10-30T08:43:40","modified_gmt":"2024-10-29T22:43:40","slug":"returning-risk-advice-to-profitability","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2022\/08\/09\/returning-risk-advice-to-profitability\/","title":{"rendered":"Returning Risk Advice to Profitability"},"content":{"rendered":"<div id=\"polls-283\" class=\"wp-polls\">\n\t\t<div class=\"pollHeader\"><strong>Reducing costs by 20-25% should return most specialist risk advice practices to profitability.<\/strong><\/div><div id=\"polls-283-ans\" class=\"wp-polls-ans\"><ul class=\"wp-polls-ul\">\n\t\t<li>Disagree <small>(44%)<\/small><div class=\"pollbar\" style=\"width: 44%\" title=\"Disagree (44% | 49 Votes)\"><\/div><\/li>\n\t\t<li>Agree <small>(34%)<\/small><div class=\"pollbar\" style=\"width: 34%\" title=\"Agree (34% | 38 Votes)\"><\/div><\/li>\n\t\t<li>Not sure <small>(22%)<\/small><div class=\"pollbar\" style=\"width: 22%\" title=\"Not sure (22% | 25 Votes)\"><\/div><\/li>\n\t\t<\/ul><div style=\"text-align: center\"><\/div><\/div>\n\t\t<input type=\"hidden\" id=\"poll_283_nonce\" name=\"wp-polls-nonce\" value=\"77d00441ee\" \/>\n<\/div>\n\n<p>Our latest poll is based on a warning this week that unless advisers can remove 20-25% of the current cost base in their business, their advice will not be profitable.<\/p>\n<p>This statement was made by MLC Life Insurance in highlighting the key recommendations it is making to the Treasury&#8217;s Quality of Advice Review (see: <a href=\"https:\/\/riskinfo.com.au\/news\/2022\/08\/09\/keep-commissions-and-allow-scaled-advice-mlc-life-insurance\/\" target=\"_blank\" rel=\"noopener\">Keep Commissions and Allow Scaled Advice&#8230;<\/a>), which seek to achieve an outcome that will deliver greater access to financial advice for Australians.<\/p>\n<p>The insurer&#8217;s position stems from benchmark research it conducted with Plan For Life, which concluded that advisers who rely only on life insurance commissions will make a loss under the Life Insurance Framework remuneration reforms (see: <a href=\"https:\/\/riskinfo.com.au\/news\/2019\/12\/12\/cost-of-delivering-life-insurance-advice-advisers-must-act\/\" target=\"_blank\" rel=\"noopener\">Cost of Delivering Life Insurance Advice \u2013 Advisers Must Act<\/a>).<\/p>\n<p>This prediction, released in late 2019, appears to reflect current industry reality, in which many hundreds and possibly thousands of specialist risk advisers have either exited the sector or moved away from delivering life insurance advice.<\/p>\n<blockquote><p>&#8230;not quite as much time and space has been devoted to what appears to be a universally-held view that the cost of advice must be reduced<\/p><\/blockquote>\n<p>While significant public debate has raged around whether risk commissions should be retained, and if so, at what levels, perhaps not quite as much time and space has been devoted to what appears to be a universally-held view that the cost of advice must be reduced &#8211; and where the challenge rests in how to achieve this outcome.<\/p>\n<p>So, instead of asking whether increasing upfront hybrid commissions by 20% would mean the difference when it comes to risk advice business sustainability, the focus in this poll is at the other end of the conversation &#8211; that is, whether cutting the cost of doing business by about the same quantum will make a similar difference for advice businesses &#8211; especially those whose revenue is mostly or entirely derived from commissions.<\/p>\n<p>But would this measure be sufficient of itself? That is, if nothing else changed, including the 60\/20 commission caps, would a 20-25% reduction in the advice business cost base be enough to turn the tide and return an advice business to profitability? Or do other changes need to occur &#8211; in tandem with a 20-25% cost reduction &#8211; to make advice businesses, especially risk only or risk focussed practices, profitable and sustainable into the future?<\/p>\n<p>It&#8217;s over to you to add the next chapter in this conversation and we&#8217;ll report back next week&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Our latest poll is based on a warning this week that unless advisers can remove 20-25% of the current cost base in their business, their advice will not be profitable. This statement was made by MLC Life Insurance in highlighting the key recommendations it is making to the Treasury&#8217;s Quality of Advice Review (see: Keep [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":62179,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270],"tags":[],"class_list":["post-62169","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","category-polls","category-remuneration"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/62169","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=62169"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/62169\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/62179"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=62169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=62169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=62169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}