Advisers have been warned not to change their business and remuneration models to cope with the Life Insurance Framework unless they are "totally convinced" it is the right thing.
Elixir Consulting's managing director, Sue Viskovic, said that given the government has announced it will be moving forward with the Life Insurance Framework from 1 July 2016, all advisers will need to reconsider how they run their business and charge for advice.
"Before an adviser can effectively restructure their business model and have the conviction to position a fee (or hybrid model) to their clients, they need to be totally convinced that it is the right thing to do for their business and for their client," Ms Viskovic said.
She added that if advisers can calculate the minimum amount they will need to recover from each client, it will make them more confident in knowing how to structure their remuneration models.
"If [advisers are] approaching their business from the right mindset, the act of crunching the numbers to arrive at their minimum recoverable amount boosts their confidence to quote a fee," she said.
"[This is] because they have seen for themselves what it will cost them if they undercharge.
"If they're still mourning the loss of high up-front commissions and resisting the need to evolve their model, the psychological effect of calculating their minimum recoverable amount [can] lead them toward the right mindset," she said.
Advisers need to understand that "if they do not switch their mind to evolving, they will struggle to earn enough to cover their costs", Ms Viskovic said.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 16 Jul 2018Adviser incentives still valuable: ElixirBy Killian Plastow
- 16 Jul 2018ETF industry hits record high in 2018By Reporter
- 16 Jul 2018Investors place support behind FinPalBy Charbel Kadib
- 13 Jul 2018FASEA exam may disadvantage clients: ConsultantBy Miranda Brownlee
- 13 Jul 2018Industry associations respond to FASEA updateBy Killian Plastow
- 13 Jul 2018Profile Financial Services acquires regional practiceBy Reporter
- view all