Reductions to risk commissions will possibly see advisers move away from servicing lower-income earners in favour of higher-income earners, research commissioned by life insurer Zurich has found.
According to a survey conducted by Lewers Research on behalf of Zurich – which consisted of responses from 200 advisers – the impending cap on risk commissions will drive advisers to explore "higher-value" clients and to shift away from lower-income earners.
In fact, the research found that 38.3 per cent said they would become more active with white-collar professionals, and 32.1 per cent indicated that would increase their participation in the small business market.
This was compared with 19.1 per cent that said they would become less active in the blue-collar market, while 18.7 per cent also said they would decrease their participation in the young singles market.
In addition to advisers looking towards different target markets, the research also found that advisers will be looking to expand their service offering to provide a "more comprehensive advice proposition".
The survey noted 41.2 per cent plan to offer more retirement planning advice, 36.4 per cent expect to offer more holistic financial planning advice, and 34.5 per cent intend to offer more estate planning advice.
Commenting on the results, Kristine Brooks, the head of retail distribution for Zurich's life and investments business, said "it was clear" advisers are looking to employ a "two-pronged strategy" to dealing with the Life Insurance Framework.
"With commissions soon to be capped, it makes sense to explore those segments where ages, sums insured and premiums are likely to be higher," Ms Brooks said.
"Taking a longer-term view, these are also the segments with a higher capacity and propensity to pay fees for advice; many advisers are clearly positioning themselves to supplement commissions with fees at some stage down the track," she said.
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