A study of 200 advisers, conducted for Zurich Financial Services by Lewers Research, found that 64.5 per cent of advisers were unsure as to 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.”
maybe most advisors have put insurance in the “too hard, don’t care, I won’t hold the risk” basket. It shouldn’t be the advisors who are panicking about this, it should be the product manufacturers who just might struggle finding someone to sell their product. They left the advisors out to dry when the govt were bringing these changes in, now they can deal with the fall out.
These CEO’s are living in fantasy land. The LIF that they conned government into through the FSC (the same CEO’S) means only one thing. Giving risk insurance advice is going to be unprofitable in the future. You are going to see less new business in the future. Advisers are going to be sitting on trails and writing less new business in the future. Most will retire early due to the LIF combined with qualifications requirements. Your bonuses will not be as high in the future and you have only yourselves to blame for this future.
The insurance companies are providing a lot of support — I’ll save the modelling and go straight to you can’t do risk only advice at 60/20 without a trail book.
Many insurers have already seen a decline in new business premium flows which are likely to reduce further after 1/1/18 and beyond. Perhaps advisers should create a calculator for insurers to model those lower flows including the impact on execs with reduced bonuses?