During a video conference held yesterday, AFA national president Deborah Kent said that if the association had not become involved in the Life Insurance Framework discussions the government could have supported an entirely different outcome.
“We could [have] ended up with something like a nil commission [model],” Ms Kent said.
“There are still others out there that would rather see us have nothing, or [even] level commissions which was [recommended] in the FSI report.”
AFA chief executive Brad Fox stressed that for the association to get insurers to agree to a hybrid commission model was a “major win”.
“If we looked at the insurers first of all, and it is honestly not for us to say which insurer took which position… but it ranged from no commissions at all at one end, through to some saying actually the commissions aren’t the issue and leave them where they are,” he said.
“Would we have liked it to be higher than 66/22? – Yes, I think it should be. I still think it should be. But we couldn’t get it there.”
Mr Fox said that while the AFA had a seat at the discussion table, it was an “uncomfortable seat” to be in.
“The starting point for some of the arguments of where the outcomes could have been was just nonsensical,” he said.
“I honestly don’t know how we could have had an advised insurance market continue under some of the proposed outcomes.”
Embrace, adapt and prosper…
If you need up front revenue, take 0% comm and charge advice fees.
If your clients wont pay advice fees for risk, change your target client.
YOU CANNOT CHANGE THE RULES, BUT YOU ARE IN CONTROL OF HOW YOU REACT TO THEM.
While most will spend a year whining and then wonder what’s going wrong with profitability, the best of us will quickly consider and adapt now to get ahead of the pack and while most will be whining still, I’ll be busier and more profitable than ever.
CHANGE IS CONSTANT. Embrace, adapt, prosper!
The hybrid commission may be a win but it is more than offset by the 3 year clawback agreement.
The AFA sound like the Black Knight – “It’s only a flesh wound.”. Easy to say when someone else is taking the hits.
It may well now be the most appropriate time to seek legal advice regarding the ACCC & Corporations Act, Cartels and Exclusionary behaviour, Anti- Competitive Agreements, misuse of market power and collusion.
A class action may have significant and unwavering support.
1500 advisers at $2000.00 each provides a starting pool of $3Mill for specific and high quality legal advice.
At $1000 per hour,this provides a consistent 75 weeks of engagement at 40 hours per week.
It may be the Federal Govt. is also joined in the action, for enforcing an unreasonable time frame leading to adverse and damaging outcomes and making threats to dictate terms and consequently attempt to control remuneration in a free market economy where by definition, the government does not intervene and the prices for goods and services find their balance through market forces.
Why can’t AFA disclose the different positions of the insurers in the negotiations?
Surely that is vital information in a free market based economy, and to suppress it is anti competitive behaviour?
Has the AFA been gagged by non disclosure provisions? If so, the ACCC should be called in to investigate.
It is all well and good to say that the AFA fought hard to get what they did but the end result is still not workable for the majority of the IFAs. I believe there is a very simple solution to what has been proposed. All the advisers need to do is to STOP WRITING NEW BUSINESS as of the 1st of January 2016. If we all simply stop then the Insurance companies will not have any new premiums coming in and their cashflow will DRY UP very quickly. Then we will see how long the Insurance company can survive without new business to support their businesses. How many unemployed new business support staff, underwriters, BDMs and managers will this create? How will the CEOs of the Insurance companies explain the drop to their revenues to the shareholders? Meanwhile the adviser doesnt need to worry about the three year claw back and the endless hours of compliance because we can all take a holiday until one of the insurers fold and offer terms that advisers can live with. HIT THEM WHERE IT HURTS!
It is all well and good to say that the AFA fought hard to get what they did but the end result is still not workable for the majority of the IFAs. I believe there is a very simple solution to what has been proposed. All the advisers need to do is to STOP WRITING NEW BUSINESS as of the 1st of January 2016. If we all simply stop then the Insurance companies will not have any new premiums coming in and their cashflow will DRY UP very quickly. Then we will see how long the Insurance company can survive without new business to support their businesses. How many unemployed new business support staff, underwriters, BDMs and managers will this create? How will the CEOs of the Insurance companies explain the drop to their revenues to the shareholders? Meanwhile the adviser doesnt need to worry about the three year claw back and the endless hours of compliance because we can all take a holiday until one of the insurers fold and offer terms that advisers can live with. HIT THEM WERE IT HURTS!
The 3 year claw back is a disastrous outcome for our industry, who in their right mind would demand money back in the 2 & 3 year if a policy lapsed for whatever reason. The accumulation of 2 & 3 year claw backs will be unpalatable for many I think & the poor adviser will be working for nothing again to recover these amounts.
Whilst they acknowledge we dont recover the full cost of advice upfront & therefore rely on trail to eventually profit at some point down the track, 3 years of not really knowing where you stand is a horrible thought, this business has gone mad!
The incredible deception and lack of honesty toward the adviser community by some of the insurers during this entire process has been unparalleled.
These particular insurers have treated the risk advisers with utter contempt and disregard. They have benefited enormously over many years from strong relationships formed with quality, professional advisers and in return have put forward and pushed hard for outcomes they well know would financially damage these advisers business’s, risk the loss of adviser’s employed staff and not have any quantifiable consumer benefit and positive effect on the underinsurance issue.
As the AFA stated ,it is not for them to state which insurers took which position, however, if someone with a conscience leaks this information, and it may not be too long, it will be all on. Those insurers who recommended either a nil or level only commission option will be exposed and I suspect their volumes of new and existing business will be decimated.
This is the very reason of course why these particular companies have rejected all requests to disclose their position regarding submissions to Trowbridge, LIAWG and the recent proposed framework negotiations.
They well know, that if the advisers find out what the insurer’s position has been,they will be severely penalised and justifiably so.
“…..could have ended up with something like a nil commission model”. Really? Would have liked to seen the adviser cohort response to that!
The whole issue focused on adviser remuneration and commissions, ridiculous.
So we should all be ‘high fiving’ each other for getting the best of a bad outcome?
Its absurd to think that the AFA/FPA has the Financial Planners best interests in mind.
The large institutions pay for their advisers to be members of the FPA/AFA and in return they do what the institutions want them to say and do or they will withdraw their memberships
So what have they said – we have done the best for you and we should be kissing their a….!
If the AFA is truly working for advisers, why not name the companies and their particular stances. That way I can support a business that supports my business. I would dearly love to know which of these product providers was stabbing me in the back & then sending me their lying “support” emails. Absolute disgusting corrupt behavior.