The life insurer’s Adviser-Client Relationship Report surveyed over 1,200 consumers and SMEs who had either purchased life insurance through an adviser or were very likely to do so in the next two years, and found that 78 per cent thought fee transparency was the most important attribute in an adviser.
In addition, 55 per cent of consumers surveyed were not able to recall the amount of commission their adviser received, suggesting risk advisers may have further to go when it comes to driving the message home to clients about how they are paid, said MetLife head of advice strategy Jeff Scott.
“There is no doubt that the number one priority for our industry right now is to build open and trusting relationships with consumers,” Mr Scott said.
“One area that serious leaps can be made is in relation to transparency about fees and commissions. With over half of consumers unaware of the amount of commissions advisers are being paid for their advice, financial advisers should be prioritising clear and regular communications about their fees with clients.”
The research also revealed that 85 per cent of respondents thought honesty and trustworthiness was a key attribute for their adviser, while 75 per cent said the overall experience their adviser provided was important.
In addition, a significant proportion of respondents who held life insurance – 40 per cent of consumers and 60 per cent of SMEs – had concerns about whether their insurer would pay them at claim time.
Given the very high payout rates for life insurance bought through an adviser, Mr Scott said this was potentially an opportunity for advisers to reassure and add value to clients when it came to easing their concerns around claim time.
“There is clearly a huge role for frequent and relevant communications to play in quelling these misperceptions and alleviating concerns,” he said.
“Advisers have an opportunity to add significant value to risk clients: first by informing them of their duty of disclosure at application time, and secondly, by being an advocate for their clients at claim time.”
“55 per cent of consumers surveyed were not able to recall the amount of commission their adviser received” Here’s an idea. How about reading that useless document called a SOA. FFS how much more disclosure do we need?
MetLife to give you the heads up current comms rate is 66 percent including gst . It is on page 50 of the risk soa . Also in our adviser file notes it says we disclosed the risk comms to the client and the client had no questions. Some insurers even have the comms rate on the quote that the client signed . Confusing times
Hey MetLife, please show the exact questions asked, the order and who conducted the survey along with any script or info explained in the survey. If like ASIC so called surveys, they are specifically designed to create a desired result, the way it’s phrased and the people asked.
And any dodgy survey can then be used as so called real survey results, mates Stats 170 @ Uni clearly shows us all that you can make the Stats show what ever you want.
How many Life policies have you Advised clients on and Charged fees only ???
Who are these ‘gurus” interviewing and surveying? All these so-called expert reports, always seem to have vested interested, and always contrary to the reality of what we as advisers see daily with our clients!!
Less than 5% of clients read their SOA. Assume 50% were advised in the sample and 50% unadvised. That means 2.5% read their SOA. Assuming all 50% unadvised thought fees were important means that 28% (78-50) advised clients thought fee transparency was important. Now, knowing fees are completely transparent in all SOA documentation the only revelation here is that 56% of the advised clients thought transparent fees were important and only 55% didnt know what fees they paid – meaning 45% did. Remarkable….Value must be at a high in the industry for advised clients and it seems way more than 5% are actually reading their SOA’s – this is all great news….
I think its supposed to say “Advisers gloss over all their comms they are paid at the end of the SoA”
The consumers and SMEs have good reason to be worried about being paid at claim time, the life industry has a poor record and most experienced advisers know it. Mr Scott even admits that the payout rates for non-advised clients is lower! How does that work? Do advisers make you more sick?
Just because a number of consumers that think fee transparency is important is high does NOT mean they want ‘more’. Have to laugh at the number of life insurers now “position their businesses” to mitigate the risk of a full commission ban. I strongly suggest advisers be very sceptical about anything a life insurer is suggesting.
So 45% of clients DO know the commission! Amazing result for the adviser community, that’s pretty good that they recall it. Perhaps the heading could have been positive and accurate.
that’s right – the consumer expects everything fornothing?! What commission do I pay on my mobile phone, general insurance, car purchase – give me a break will you
Just a thought; but maybe consumers don’t recall how much commission their risk adviser was paid because they don’t care. The risk comms would have been explained and are documented in the advice. it doesn’t change the premium and clients are more than likely just happy that there are no advice fees for the specialist risk advice they are receiving.
Advisers would like to know who at Indusrty Funds is receiving the “commissions” paid for all the JUNK insurance policies offered in their funds. Remembering that these insurance offerings are similar in price to retail policies, have vastly inferior conditions and have a uch lower chance of ever paying out. We would also like to know what percentage of the payouts from these JUNK insurances (of which Metlife is a market leader) gets taken by the blood suckers at Maurice Blackburn and co to handle the claims which would usually be handled by advisors for free.
If it wasnt such as serious issue, i would laugh at the fact that the polititians think its better for clients to get JUNK insurances directly from the insurer or in their super with no underwriting, with that insurer paying their salaried staff sales bonuses (commissions in other words), whilst at the same time these polititians hate the advised retail insurances (which are far superior and usually more cost effective and tailored to an individual’s situation) because they pay advisers a commission. And then they reduce that commission and increase the regulation whilst allowing the direct insurers to keep pushing their junk through the Industry Super Network. I wonder who is paying these polititians to make these assessments which obviously defy logic and are definately not in the best interests of anyone other than the insurers?
This article title should read PEOPLE WHO RECIEVE NO RISK ADVICE CUSTOMERS WANT MORE FEE TRANSPARENCY. Why are I-select sales reps with 2 hours training paid the same commissions as university qualified advisers who are forced to do fact finds, SOA’s and act in the best interest of clients
Really, I bet you could ask the same question on car sales commissions, real estate commissions and get the same result. How many times do we need to disclose this information?
Commissions are all outlined very clearly in the SOA
‘In addition, 55 per cent of consumers surveyed were not able to recall the amount of commission The adviser received’ as the saying goes price is long forgotten after the value they receive. If they need to be reminded then look back at the SoA cause uits in there.
clients don’t want insurance premiums going up 15-30% year after year
If clients dont know what commission is getting paid then maybe they should take the time to read the FSG and the Disclosure in the SOA. There comes a point where the consumer needs to take some responsibility in the process.
You have got to be kidding.
How big do you want the printing on part of the disclosure sign off?
I wonder if the questions included something like, “Do you really care how much commission the life company pays the adviser?”
Most clients see the commission as what it is. A fee paid by the life company to the adviser instead of paying life company staff to do the work.
How much more clarity do you want? It’s there in black and white!
Once again the transparency factor is left to advisers to shoulder. If APRA has a shred of credibility left, then its priorities should be Insurer’s massive transparency deficit on product pricing (ridiculous discounts coupled with gigantic hikes for existing loyal consumers) and a live claim index.
What rubbish!
This sounds a bit sus to me, we have been disclosing commissions for more than a decade so I am confused as to why no one knows what has been charged / Paid