The Remuneration Modeller will ask a range of questions about an adviser’s new business, in-force premiums, number of clients, remuneration types and lapse rates, according to a statement by Asteron Life.
It will then project revenues over time and allow advisers to assess the impact of different clawback scenarios, the statement said. The tool is available at asteronlife.com.au/remuneration-modeller.
“Advisers have understandably been concerned about the shift in commission structures as well as clawback provisions and how it will impact their cash flow. In response, we’ve created a tool to help them make informed decisions about their business,” said Asteron Life executive manager Mark Vilo.
“Our modelling shows that in many cases advisers will be paid more total commission than currently, but there will be some challenges as they make the move away from higher upfront commissions and allow for new clawback conditions.”
Mr Vilo added that there were still “high levels of emotion” among advisers but the proposed reforms could enable them to increase their business’ value.
“Advisers who see life risk as a long-term business proposition will benefit from reform which can increase the value of their book over time. However, there will be a few leaner years from a cash flow perspective as they adjust to new conditions,” he said.
“We have every reason to feel optimistic about our industry’s future. The Remuneration Modeller is just one way that Asteron Life is supporting the Road to Reform and helping advisers to make the most of opportunities.”
Congratulations Mark,
you have developed a fine tool…
Kind regards,
Adrian Totolos.
Business Analyst.
Here is a suggestion that would assist advisers transition to the proposed commission models.
From 1 July, 2018 when the proposed maximum initial commission would be only 60%,the insurers could then agree to pay a maximum ongoing renewal commission of 20% on ALL in force policies, not just new business from 1st Jan, 2016.
As it stands, there will obviously be a massive volume of existing insurance policies replaced over the next 2 years or so in order to convert the renewal commission income stream anywhere from an existing 5-12% to the 20% level proposed.
At this point there is a significant incentive to replace existing insurance policies to receive 80%, 70% and then 60% initial commission payments from 1st Jan 2016 onward and to convert policies to the 20% renewal level.
If insurers were to agree to guarantee that all of an advisers in force insurance business was to convert to the 20% renewal level from 1st July 2018, not only would this assist in creating a disincentive to transition business in the next 2.5 years, but it would greatly assist advisers cash flow issues created by the proposed reduction in initial commission levels.
How about the insurance companies actually disclose their positions as Craig says. The ones who didn’t completely abuse the process and advisers will disclose their position. The ones that don’t will most likely continue to hide the fact they have tried soooooo hard to wipe out advisers. And yes let’s turn the tide and not write any business for them.
The FSC and some of it’s insurance buddies may end up worse off than when they started this.
How’s your annual management bonus going to look with no new IFA business ???
” there will be a FEW leaner years from a cash flow perspective as they adjust to new conditions”.
what is the definition of a few??….3 or 4 years of significant cash flow impact ?
Mark Vilo needs to confirm whether the loss of cash flow to advisers as a result of decreased commission payments will be retained as additional operating profit for the Suncorp Group and its shareholders.
Will Mark Vilo disclose Asteron’s submission to the LIAWG, Trowbridge and the position they took on commission?
If Asteron or any other insurer for that matter submitted recommendations for nil commission or 20% level only and are now “helping the adviser adapt to a new regime” by spending money on developing software that illustrates how an adviser’s practice is going to be impacted, it is laughable,if it wasn’t so seriously offensive.
Would these companies be comfortable with a significant 3-4 year cash flow deficit?
What every insurer who pushed for nil or level only commission is absolutely frightened of in disclosing their previously submitted position is a total boycott of any new business from advisers.
Now that would produce a “few leaner years”, whilst THEY adapted to the new world !
This is the same life insurance company who recently slashed their level commissions from 32% to 27.5%. That’s a 14% cut to adviser remuneration! I don’t need a ‘Remuneration Modeller’ to work that one out. They may have convinced the naive politicians of the need for the LIF nonsense, and bullied the AFA and FPA into submission. But independent advisers know exactly what is going on. The life insurance companies want independent advisers out of the way so they can control the market with direct and in-house channels.