In a study of 200 advisers, conducted for Zurich Financial Services by Lewers Research, 64.5 per cent of advisers were found to be unsure which types of life insurance remuneration were to be capped, and 69 per cent were “uncertain” of grandfathering rules.
Only 40 per cent of advisers in the study were found to have modelled the impact the LIF changes would have on their cash flow.
Zurich Life and Investments chief distribution officer Kristine Brooks said that the lack of preparedness was a concern for the industry, given the reforms will be implemented from 1 January 2018, only four months away.
“The industry has had a long time to prepare for these changes, and while they ultimately became law in February this year, the detail behind the changes has been known for much longer,” Ms Brooks said.
“It could be that this lag, combined with a sense of fatigue around the whole debate, has seen LIF relegated from being a top-of-mind consideration.”
Ms Brooks said that the capping of upfront commissions and doubling of renewal commissions will “significantly alter the shape of cash flows” for many advisers, and that Zurich expected to see a “greater understanding” of the incoming changes, given that many practices still have a preference for upfronts.
Following the research findings, Zurich has announced that it will release a “suite of resources” designed to prepare advisers for the changes, including a cash flow calculator, webinars, podcasts and interactive surveys.
“From tools to help stimulate demand, break into new markets, or drive more efficiency, our LIF support resources can help advisers be ahead of the game, ensuring they are match, fit and ready to kick off a massive 2018,” Ms Brooks said.
AMP recently announced that it would also release a hub aimed at preparing advisers for LIF changes, which will likewise feature cash flow modelling tools and webinars.
“We know advisers are experiencing a huge amount of change as the insurance industry adjusts to a new operating environment, and they need the right support and resources to continue to service the diverse and changing insurance needs of their customers,” AMP director of insurance proposition Greg Johnson said.
“AMP is focused on supporting advisers with the tools they need so they can continue to drive good outcomes for their customers.”
When you have a governing class of bureaucrats determined to stick their noses into every aspect of life and business the end result is inevitable. Welcome to Venezuela mk 2.
After 30 years in the business. The writing is on the wall and I have noted that its now enough. Its sad and has impacted the wrong people in the majority of cases im sure.
Commission rates , in and of themselves are not the big issue here. the real problem is overzealous and burdensome compliance. the report on “churning” failed to deal with the why, rather than the what. when you put legislation in place that requires a “best Interest” duty, and then a penalize an adviser for replacing cover inside say 7 years because the new cover is “A” cheaper, and “B” more often than not, as good or superior as the existing business, you are going to create a problem, which is not of the advisers making . “Legislate in haste, repent at leisure”
so where to from here? I for one have abandoned my ;life as a specialist Risk adviser, Risk will form “part” of our service offering, BUT no longer will those clients (so often the most in need) be able to access advice, they will be stuck with dealing with the online (significantly dearer and lower in quality) option and most likely end up with inappropriate cover and inferior products. we will have to focus on those clients with the means and motivation.
I have transitioned my business away from risk. Asked for only older clients from my referer that are looking for retirement advice. Provide a fee for service and an ongoing fee if they want ongoing service. Most of them don’t need insurances or can only afford the default cover. No rubbish waiting for underwriting to get paid the fee. The insurers will see a decline in profits and insurance written. Good for them got what they deserved.
Same, we used to average at least $200k new premium business and happy we’re letting that go. Don’t need the headaches and business risk, especially with ASIC9K joke) on the witch hunt. Mind you, the ISA/Labor & Unions are jumping with glee our industry’s remuneration is falling
Send them to me, there’s still a place for it……and who do you think will be retiring in 20 years??? Yep, those clients you didn’t wan’t to help. shortsighted
Um, ok that’s smart – I should keep writing risk for 20 years and take on the extra business risk I have identified, because they will be retiring then? Einstein has nothing on you does he? Lov eto see your biz and compare practises, clearly you’re a ‘thinker’!! Hey, but at least you’re not short sighted 🙂 Going on the strength of your comments and reasoning, there’s no way I’d send anyone to you, and suggest you may be part of the problem in our profession.
So let me summarise what you said.
1. I am the problem with the profession because I want to help people not just make myself rich. Maybe reflect on that for a bit.
2. You are not happy to take a renewal premium on level commission for 20 years until someone needs your help. With very little additional work year on year. makes sense to me.
3. You’ve identified extra business risk, well maybe you’re just not doing it right, Ive been around the block a few times and identified the “extra” business risk in writing insurance years ago and adjusted my business practices and process accordingly.
4. Would be happy to compare practices, not going to happen though as this website is not a d%4k swinging contest.
Have fun in 5 years when all your current clients have retired.
When are these companies going to get it?? Risk is going to be unprofitable to write. Why would anyone go through the regulatory and qualification requirements to stay in an industry that will not make them a wage? It’s not that advisers “are not fully aware” its that advisers are very fully aware but the companies don’t want to accept there won’t be a lot of new business for them in the future. The FSC con job may have delivered a very short term profit but the future is very bleak for everyone.
So some insurers are realizing there is a distinct threat to New Business from LIF. Well all FSC members went along with the radicals at the FSC and stayed quiet, apparently ignoring that the facts that the protagonists for LIF were those insurers looking to sell soon, pumping up their sale value with reduced distribution costs.
The writing is on the wall. Go back and read the comments by ASIC and the FSC. When the review is done in 2021(?) the push will be on for level commission . That’s what there comments imply
How long will the doubling of renewal commissions last before that gets called “excessive” and the next fight starts?
everyone will find out by 30 March 2018 he he gonski