While efficiency continues to be a hot topic for the overall advice profession, Risk Hub founder Marc Fabris suggested that for those operating in the risk space, this becomes even more crucial as they attempt to remain financially viable under a mound of legislation and shrinking talent.
Referencing Risk Hub research, Fabris told ifa that around 70 per cent of advisers are taking between eight and 16 hours to complete the client onboarding process through to the implementation of applications, with some taking even longer.
At this pace, Fabris said, “there’s no way you can make it viable at 16-plus hours”.
And while things may look bleak at the moment, Fabris suggested that advisers should be making intentional efforts to try and chip away at their processing times.
“If most practices said, ‘Look, every quarter, if we can take another hour out of our onboarding journey, then that’d be pretty good a year or so’, you know, so just little things like that, you just go, ‘Well, look, let’s just take some bite-sized approach moving forward’, and there’s a lot of opportunity,” he said.
This is further compounded by the low commission rates, a result of the Life Insurance Framework (LIF) which saw upfront commissions cut to just 60 per cent, essentially putting a lid on risk advisers’ profitability.
Although there are a number of challenges that are negatively impacting the profitability of risk advice, Fabris argued that being able to streamline some of the time-consuming administrative tasks through technology could provide some real relief without having to wait for legislative changes.
Where cutting time isn’t possible, he suggested taking tasks off advisers’ hands and giving them to support staff where possible could also help reduce costs.
This is because the per hour cost for an adviser is significantly higher and if they are spending time on administrative tasks, then this ultimately takes away time they could otherwise spend with clients.
“We need writebacks to come back to 12 months,” Fabris said.
“We need commissions to go more like 80, and at the same time, we need to make the processes more efficient and efficiency comes from the compliance and regs over the top, and the digital processes that are supporting it, and they are so desperate at the moment.”
He added: “It’s just highly inefficient and no one in the market is doing a great job at helping that.”
Exacerbating this issue further is the sheer lack of risk advisers in Australia, with less than 500 advisers writing half of all new business, according to a 2024 Adviser Ratings report. As the sector continues to struggle due to legislation, Fabris said the problem will only get worse.
“That just gives you an idea of what we need to be addressing because if it continues to take that long to deliver advice, and the current commission levels, it’s going to continue to shrink,” he said.
“You need two things: you need advisers to write risk and you need new entrants, and who’s going to actually grow focus unless it’s more viable?”
Commissions need to immediately move to a minimum of 100% Upfront with a 15 or 20% Renewal basis.
80% Upfront is still significantly less than previously & will still not be adequate to cover initial advice process costs.
Secondly, the commission write back should only be 12 months but it must be on a sliding scale, pro rata basis so the Adviser is not at risk of forgoing the full amount of commission paid if the client cancels the policy within the first 12 months.
Thirdly, in order to manage any policy turnover issues, make it mandatory that if a policy is rewritten within the first 3 years of the replaced policy commencement date, then only Renewal commission will be paid to the existing or the new Adviser.
Let’s give that a run and see how the volume of quality risk business picks up rapidly with the encouragement for others to then take another look at Risk Insurance as a serious component of their business because it will then be viable rather than the disgraceful mess it has become now through completely misguided legislation based on ideology & misunderstanding of how the basis of the business works best for all concerned, not just the Adviser.
“.. we need to make the processes more efficient and efficiency comes from the compliance and regs over the top…”
And here come the insurance commission consent requirements in July. No doubt they won’t be straightforward and will add to the compliance paperwork pile.
This industry just keeps getting shot in the foot – can’t win a break. Smart advisers should sell their client bases and move out before it disappears completely by end of 2026. Too sad for words . . . this once great industry never got a real chance to prove itself a profession unfortunately.