Speaking at the FSC Life Insurance Conference – following the release of LIAWG independent chairman John Trowbridge’s report – Suncorp Life chief executive Geoff Summerhayes conceded that product manufacturers have a responsibility to fix remuneration structures.
“There are absolutely differences of opinion, but the manufacturers have created this situation in terms of our remuneration structures and I think the manufacturers absolutely accept that it is also our position to solve that,” Mr Summerhayes said.
“That is having consequences right down the value chain, but the payments are made out of manufacturers and it is up to the manufacturers to face into that and [remove] that misalignment.”
Also speaking at the conference, ANZ Global Wealth managing director of insurance Alexis George said the report was a “watershed” for the industry.
“We have a stake in the ground right now, and I think as an industry we need to be responsible and move forward,” Ms George said.
“Certainly we have to consider implications. We have to consider the economics for the industry as a whole, for our advisers, for our customers and for the insurance manufacturers … and understand the implications of certain decisions.
“We have an expectation not just from the regulator, not just from the government but from customers that we are going to move forward and I think [we should] embrace that challenge,” she said.
In a statement from the Commonwealth Bank responding to the report, group executive for wealth management Annabel Spring said it is “critical” that both life insurers and advisers work to implement “sustainable remuneration structures”.
“We are carefully reviewing the report to understand and consider the implications of the recommendations for our customers, advisers and our businesses,” Ms Spring said.
Excellent comment Roger.
Don’t you love how financial planners who can heavily subsidise their dabbling in insurance with their investment advice service fees always get holier than thou when it comes to any other form of remuneration.
In the last year I have administered 7 claims for well over 100 hours work which was paid for by a combination of initial and ongoing commissions. When it comes to ongoing reviews and claims help how much do you charge Ian or do you just refer your clients onto the insurance companies at claim time and and let the client try and process their claim directly?
Also Ian regarding your comment :”The argument is always we are under insured because the cost is too high either in paying the adviser or premiums”
In my 25 years as an adviser I have never heard this argument. The real reason we are underinsured as a nation is because life insurance is a grudge purchase and most people while they know they should have some, don’t want to pay for it, hence why advisers have been and will always be required to help convince clients the need to be appropriately insured.
Let’s get some fairness into this debate!
I do not believe that it is appropriate for anyone who does not derive the bulk of their income from the sale of Risk Insurances to be making any comments whatsoever about “someone else’s” future basis of remuneration being their livelihood.
All I could read was two or three advisers having a crack at each other about their views. I thought there was 18000 advisers in Australia not two or three,
Merv.
Do yourself a favour. Read the comments posted on IFA. You are without doubt a “lone voice”.
I didn’t notice that there was going to be a decrease in premiums for the increased I.R.R when we move to 20% flat commission. I am surprised that no one seems to care about clients getting a fair deal. The argument is always we are under insured because the cost is too high either in paying the adviser or premiums. Surely we should see a very big decrease in premiums if 20% flat commissions are introduced which should allow for more insurance ! My biggest dissapointment with the report is there was no suggestion of proper Zero commission product with payment options such as dial up or direct adviser payments.
Can’t see too much wrong with the Trowbridge Report. Obviously neither can other advisers as there’s not much flack appearing. What the companies need to do is discontinue payments of the volume bonuses to dealers, and also stop paying to get on APL’s which I would think is a bribe.Maybe someone out there can try and convince me it isn’t