Asteron model blames adviser not insurer
Non-aligned advisers have criticised Asteron’s proposed model for life insurance reform, saying that the focus should be on the quality of advice rather than remuneration alone.
GPS Wealth managing director Grahame Evans told ifa that the wholesale commission structure outlined in Asteron’s confidential submission to the Life Insurance and Advice Working Group did not focus on the most important issue – supporting advisers in offering good advice to their clients.
“I am not against change,” Mr Evans said. "Evolution happens and if you don’t have the view that things must change then you’ll become redundant, but there are more parties that need to feel pain rather than the adviser and their remuneration.
“Quality of advice is what we need to fix. Maybe that's where you should start the road back. The first thing the industry can do is acknowledge this is not just an adviser problem.”
Mr Evans said efforts also need to be made to improve financial literacy so that people look to take up insurance policies.
“People are not queuing up at advisers' doors saying they need insurance and there has been no real effort to educate people on insurance,” he said.
Jeff Suggars, principal of Synchron-aligned Suggars & Associates, agreed, adding that “advisers are the ones carrying the can”.
“Just about everything I've seen is about what the adviser needs to do and the way in which we get remunerated. I'm yet to see any proposals from insurers, unless I have missed them, as to how the insurers are going to change their ways and how the clients will benefit,” he said.
Earlier this week, Asteron Life executive manager Mark Vilo outlined the main points of the firm's confidential submission to the LIAWG at a Sydney adviser roadshow.
Rather than a 20 per cent level commission structure, there should be “naked or wholesale pricing” similar to the funds management industry, he said.
“The adviser acts as a wholesaler. If the client comes to Asteron Life, they pay the full rack rate. But if they go via the adviser they get the wholesale rate and the advisers can dial up the fee,” Mr Vilo told ifa.
This model may serve to expose structural problems within the life industry, according to Mr Evans.
“I don’t agree with a mandated commission rate whether it be level or otherwise, because its just a free kick to the inefficient life companies,’ he said.
“If an efficient life company can pay a 20 per cent or 30 per cent level with premiums which are very competitive and to the benefit of the consumer, why can they actually pay that? Why can’t they actually have a different commission rate because they are running a more effective business?”
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