In the latest episode of The ifa Show, Mr Kewin said there is a risk the cost of advice may increase thanks to changes in the Life Insurance Framework and new education standard reforms.
“You’ve got mandated remuneration levels but you’ve also got an increase in compliance costs and responsibilities,” he said.
“It does say to you that potentially that is going to increase the price of delivering advice to customers.”
However, Mr Kewin believes advisers are “the most adaptable professionals I have ever seen”, and that efficiency can play a big part in the transition.
“We are going to have to be more efficient. There is no doubt about it. With those additional responsibilities and commission caps – certainly for life insurance –we’re going to have to find ways to fund it,” he said.
“I wouldn’t like to think that middle Australia would miss out on advice because it’s too expensive. I like to think that we can adapt, and ensure that we have a model that can deliver great advice to a good many people, not just high-net-worth.”
When asked whether the AFA will push to have some of the other red tape measures reduced, Mr Kewin said this is still being formulated.
“One of things that I made sure in my early discussions with the board is the fact that what we need to do is make sure we identify what areas we are going to fight, what areas we are doing to participate in, what areas we are going to say, ‘look, that’s done. We can’t do anything about it’,” he said.
“That’s something we will be formulating over the coming weeks.”
Forced efficiency is the answer huh? Great game plan buddy, real gem of wisdom there. Idiots come up with absurd rules, but hey it’s ok because we will need to get leaner so not to charge the client more? Clearly an intellectual giant you are not. A display of righteous indignation (as per say the ranga Whitely every chance he gets) may get better effect – you know, squeaky wheel and all that. And I had high hopes for you as well…
Mr. Kewin, being a former life company person, displays one of the reasons there is space between advisers and life companies. Interesting he has ended up at the AFA. Anyone in his position, with his history that calls a client a “customer” should have a good look at the other ways they are thinking about things too. From an adviser’s viewpoint these valuable and precious entities are called CLIENTS. It is a term related to ongoing relationships.
Any person who uses the term ‘customer’ in consulting or ‘sales’ is thinking in terms of transactional sales and moving on to the next one with little regard for the last one after it is completed. It has no place in financial or risk planning relationships. Think Woolworths, Coles, the local hardware store or any of the banks. I would never be a ‘client’ of these businesses but I would most definitely be a customer. Now think how I am treated when I walk through their door compared to the conversation I would have with my financial adviser or risk adviser.
I cannot recall the last time I heard a fellow professional adviser refer to his or her clients as customers. Sadly there are many life company execs that still get up in front of a room full of advisers at PD days and refer to clients as ‘customers and don’t even realise what they have done. Embarrassingly the head of my last dealer, a major bank owner dealer, used to use the term customers all the time. I couldn’t believe it as it went on for years. It was jarring and grating each time he said it. Our actions and words – everything – flows from our thoughts so we should look at how and what we are thinking.
The bottom end is already missing out on advice due to fees with this only expected to worsen. I believe the inability to provide advice at a reasonable fee when compared to the benefits the advice provides, whilst being profitable for the adviser will arise more and more. Personally I don’t believe you can provide small scale advice efficiently whilst remaining compliant with LIF only going to worsen this situation
Scott I completely agree.
Business owners setup business for profit. Advice owners will deliver advice to those who can afford it. Any business owner will first need to meet his own expenses, pay his/her own wage before they can do any type of pro bono work.
Let’s assume a business owner does run the business so efficiently and effectively, any philanthropic activity will not be giving free financial advice. Because to do so, you will still need to abide by the same compliance regiment any way and do a client discovery, do the research and construct a statement of advice.
I’m sure some may have done that, but it’ll be rare.
Efficiencies and outsourcing of non-core components of their business are key areas that advisers should be considering.
I haven’t increased fees, but I am now charging where once I didn’t, so an increase of sorts. I’m not sure how a reduction in (commission) income and an increase in costs means no fee increase.
All well and good…. insurers must come to the party too on wholesale premiums so that we don’t have to cause overall cost to clients to increase. efficiency at the adviser level only delivers piece-meal improvement for small operators whereas an overall reduction in rates would deliver a better outcome especially level premiums. as for picking the fights – of course. yet pressure from the likes of the AFA must continue otherwise the next round of stupidity will prevail and yes, I do expect as much from either this Minister or the next of whatever persuasion.