Two non-aligned advice firms have stated their opposition to the government’s life insurance reforms, saying only the IFA sector will be negatively affected.
Partner of Bombora-aligned MBS Insurance Trevor Shipton said in a submission to the parliamentary joint committee inquiry into the life insurance industry, which was made public this week, that the Life Insurance Framework reforms as they stand will decimate the self-employed sector of the life insurance industry, thereby giving the banks and insurers more money and power.
“As the aligned adviser works inside of the profit pool of their employer, if their commission is reduced, their wage can simply be increased, because the profits will stay in the same environment,” Mr Shipton said.
“In contrast, the [non-aligned] adviser receives the full impact of the reduced commission, as they have no parent company or employer that can reimburse them in other ways.”
In also stating his opposition to LIF in his submission, director of self-licensed DJM Financial Services Damien McColl cited a case from April 2011, where he was heavily involved in a client’s successful total and permanent disability (TPD) claim.
In that case, Mr McColl said the insurer wasn’t providing a service to enhance the claim’s chance of succeeding.
He noted that the insurer seemed to rely on particular medical reports it had sought and the wording of the questions the insurer asked of the doctors did not bring out all the information needed to assess the claim thoroughly.
“The client was very upset and stressed by the situation. We succeeded in getting the claim paid and this was a lot of money for this client,” Mr McColl said.
“It took over two years from start to finish and a lot of my involvement. The only fee I received from this client was the normal renewal commission attached to the policy (and this policy commenced before I was looking after the client).
“I spent countless time on this. I did it for the client.”
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
Several firms have been impacted by the corporate regulator’s action.
Super funds must now have a retirement income strategy in place.
Vanguard has called for a complete overhaul of the advice industry.
Get the latest news! Subscribe to the ifa bulletin
Get notifications in real time and stay up to date with content that matters to you.