AFA chief executive Brad Fox said in a statement that it is “looking forward to advisers having greater certainty and are keen to see elements of the life insurance reform package progressing”.
He said that, while remuneration is just one part of the life insurance reform package, it is a part that must not be underestimated, as changes to remuneration challenge business models and, in many cases, an adviser’s sense of identity.
“While most advisers understand that phased reductions in upfront remuneration from 2018 will be offset by higher ongoing remuneration, the change is still significant for many advisers,” Mr Fox said.
“Advisers need to work together as professional peers to learn from each other’s experiences about how to embrace different remuneration models such as hybrid and level commissions and fees.
“For most advisers, transitioning successfully will bring increased practice valuations.”
On Wednesday, Minister for Revenue and Financial Services Kelly O’Dwyer said in a statement the changes to LIF will significantly reduce the incentive for advisers to churn clients between life insurance products where there is no consumer benefit.
“High upfront commissions have been identified as a significant cause of poor quality life insurance advice,” she said.
“ASIC’s 2014 review found that in 45 per cent of cases involving high upfront commissions, the advice provided failed to meet the legal standard. This is unacceptably high.”
“For most advisers, transitioning successfully will bring increased practice valuations.” Can somebody give Brad a calculator! If you were already writing hybrids you will see a drop in income of 20% plus add another 10-20% if you lose a normal number of clients in the first 2 years due to changes in circumstances or not being able to afford the excessive premium rises and whilst you are losing 30%plus income your business value is not increasing (hybrids already paid 20% plus). Great work by the AFA and FPA to increase the profits of their paymasters at the expense of advisers and clients.
Minister for Revenue and Financial Services Kelly O’Dwyer said in a statement the changes to LIF will significantly reduce the incentive for advisers to churn clients between life insurance products where there is no consumer benefit.
“High upfront commissions have been identified as a significant cause of poor quality life insurance advice,” she said.
“ASIC’s 2014 review found that in 45 per cent of cases involving high upfront commissions, the advice provided failed to meet the legal standard. This is unacceptably high.” THE IGNORANCE OF KELLY O’DWYER IS ASTOUNDING! ASIC 413 is a botched attempt at a report which is statistically invalid and should never have seen the light of day. The authoritative report on Life Insurance is the NZ FMA report – “commissions in themselves are not a problem bu a valid means of remunerating advisers for their work..” & ‘Churning is a minor issue..”. With this sort of mediocrity at the top we don’t stand a chance.
“While most advisers understand that phased reductions in upfront remuneration from 2018 will be offset by higher ongoing remuneration, the change is still significant for many advisers,” Mr Fox said.
Its not an increase if you were already writing Hybrid.. In fact in many cases the ongoing is lower as well (25% to 20%).
I would have accepted the LIF (albeit somewhat reluctantly) if current Hybrid rates weren’t reduced.
Brad – just stop talking!!