The launch of the new insurance product follows the decision by the non-aligned group to move to a fee-for-service model for all risk advice.
According to Findex chief of adviser services Michael Wilkins, the “commission-free” product – which will originate from the BT Group – will offer lower insurance costs to clients.
“[These savings will range] from moderate savings to as much as 30 per cent, with the actual quantum depending on individual client circumstances,” he said.
“These commission-free policies will involve a net premium expense and an annual transparent, administrative service fee.”
Mr Wilkins added that the group has plans to extend the range of providers in coming months once negotiations are complete with other life insurance companies.
Findex has been looking for “suitable partners with responsible insurers for several years” because the group was concerned about the “futility” of high commission products as they “simply encourage churn”, he said.
“The history of the industry and its legacy systems – combined with the dominant culture of high up-front commissions in the advisory industry – have been impediments to change so far,” Mr Wilkins said.
“We welcomed the Trowbridge Report but have always believed in aiming higher by seeking a 100 per cent commission-free model.”
The commission-free life insurance product will be rolled out across all the group’s businesses later in the year once appropriate systems are in place, he said.
[quote name=”grad”]”The industry will never cope” they said. “Fee for service is unrealistic given client expectations of advice” they said.
In literally the next week after the Minister’s press release we see products emerging to meet the new opportunity and save the client’s money.
You’re all going to look like a pack of galahs in about five to ten years time.[/quote]
I do not know what area you work in, however, the opportunity to charge a non deductible fee for service has been around for a long time as has dial down comms to zero. So this is nothing new, nothing clever, just grandstanding.
Many clients do not want to pay a fee, they like it just the way it is. They will now go uninsured or worse go direct.
We may look like galahs in 5 to 10 years time, right now, you got the jump on all of us.
So now all of these advisers will be out Re writing risk insurance of other advisers and their own clients because they can now offer a cheaper premium, what a joke , churning in another form, and they can justify this type of action(:
A recent survey suggested the public are prepared to pay like $600 for a financial plan. How much would they be prepared to pay for a life insurance plan…in addition to the premium cost?
Hit the road researchers
Maybe you’re right Grad, maybe we will look like galahs. But given the uproar when people were asked to pay a measly $7 to go see a GP when their immediate health was in question, I don’t see too many people rushing in to pay a few thousand dollars to have an insurance proposal done for them.
I can see the next round of Union Super advertising. “Don’t pay fees to an adviser when you can get your insurance sorted with us for nothing”. Never mind the fact that the premiums for Group and Retail have merged, the definitions under Group are worse than for Retail, that the client has no control over the Group policy and if the trustees of the Union Fund want to change it they can (ie Aust Super).
Advisers have had the option to dial down comms to zero for some time, its not new. The issue is then how do you get paid? If the client can see that premium plus fee is greater than premium including comm, most will opt for the premium with comms.
If I could offer just one piece of advice to prospective financial advice clients, it would be to avoid a certain type of adviser. One who stands on their soap box, telling the client their method of charging is ethical, while the rest of us are cowboys. We have seen it all before. The best advisers are confident in their service and pricing. They don’t need gimmicks. They don’t slander the profession to attract new clients.
Lets have a race to see how much we can not charge the client
It will be interesting to see how much insurance and how many risk only advisers write this commission free insurance. How will these advisers be paid and on what basis and who will invoice the client for the fee? Will all client queries be invoiced or is that a pro bono service
“The industry will never cope” they said. “Fee for service is unrealistic given client expectations of advice” they said.
In literally the next week after the Minister’s press release we see products emerging to meet the new opportunity and save the client’s money.
You’re all going to look like a pack of galahs in about five to ten years time.
This organisation Findex are kinda creepy – check out their portfolio returns over the last 5 and 10 years – surprised they have any clients left at all.
How commendable! The fact is BT have had this ‘no commission’ product available in the market place for many years. It is simply a dial up ‘fee for service’ (or commission, if you like!.
I would be curious to get an understanding of the Findex ‘fee for service’ claims model. Whilst some capital benefit claims can be relatively straight forward, how do they deal with an ongoing partial disability claim, whats the fee for service in that instance? A recent experience whereby it took 2 1/2 years to resolve a dispute with on a partial disability claim with a bank owned Insurer would be an interesting example. How would their ‘fee for service’ model stack up in this kind of example? Maybe they would refer to it a ‘no success, no fee’ legal firm? In that case my client would have been out of pocket $250,000 + (payable to the vultures!)for a legitimate claim which should have been paid in the first instance. (Incidentally the Insurer agreed to com mutate the monthly benefit and settled with a seven figure dollar payment to the client when they admitted the error of their ways.)
I would love to see the fee structure for this. advice, implementation, service etc. I suspect however this will be for those “Higher” net worth Financial planning clients. I’m not sure Joe Average will want to outlay fees for small reduction in premium