The knowITdigital whitepaper noted the future of life insurance advice will depend on ASIC’s response in 2021 to the Hayne royal commission’s recommendation that commissions be abolished entirely.
It said the abolition of commissions on life insurance products would destroy the business model used by advisers recommending 99 per cent of intermediated life insurance policies.
“While advice on life insurance products can still be provided on a fee-for-service basis, there is little evidence such a model would generate enough profit to sustain an advice business,” the whitepaper said.
“Similarly, there is little evidence that as many consumers would be willing to pay upfront advice costs commensurate with the planner’s efforts as are currently happy to pay the delayed costs provided by the commission-based model. If anything, research has shown upfront fees to be a disincentive to consumers.
“When this complete transformation of the industry is combined with the significant education and training requirements currently being overseen by FASEA, it is fair to wonder how many advisers who currently specialise in life insurance advice will remain in the industry in 2030.”
The whitepaper said online advice tools, such as insurance needs calculators and policy comparison sites, will have steeply risen in availability and popularity.
Further, it said lower-means consumers will likely have insurance promoted to them through avenues no longer encompassed by the term “financial advice”, and that it is likely they will come from such sources such as intelligent direct marketing, robo-advice products and consumer-driven information sources such as comparison sites.
My clients all fill out paperwork correctly, disclose everything appropriately, completely understand the risks of their personal situation and completely understand the complexity of the risk insurance options available to them. Further they understand the taxation complexity of structuring some cover inside and outside of superannuation, are fully capable of managing underwriting restrictions, rejections or loadings and are well versed in the claims process. They can do all this despite their busy lives running their businesses and families.
Isn’t everyone else’s clients like these?
I just lay back and accept commissions for not doing any work!! LOL indeed.
So Bill Shorten is on an obsessive march to reduce the cost of Cancer treatment for all Australians.
This is an admirable and good thing to be trying to achieve.
What about Bill Shorten promises to make all Trauma Insurance premiums tax deductible and the proceeds of a claim non-assessable so the affordability of Trauma Insurance increases and the proceeds of a claim can be utilised to assist the client with treatment costs ?
In fact, why not make Life and TPD premiums also deductible outside super with the proceeds being non-assessable to assist Australians in financially protecting themselves and their families ?
Simple, effective and in the best interest of all Australians.
Hello Josh Frydenburg ?????….are you listening??…want to get in before Bill and give this idea a big tick and provide a competitive answer to Bill’s campaign message?…..hello Josh ?
the life insurance industry is history…..
What do you all think about the AIOFP legal initiative (as circulated earlier this week) ?
Yep i worked with some Advisers and Super Fund top dogs back in year 2000 before the DotCom bust, remember all things Internet new and NASDAQ euphoria that every person who clicked on a website was going to be a paying customer and Digital Financial Advice was going to take over, make the developers mega rich and allow processes such as:
– Emailed Fact finds to be completed by client after a brief phone call or email discussion with internet referral prospect.
– We receive back fully completed fact find, get a mostly auto generated advise plan prepared for next to nothing in about 75 seconds.
– Email SoA etc and Investment / Super Applications to prospect and after another brief phone or email meeting they will happily sign up and BOOM we have another new client paying us big upfront and ongoing fees.
– Then the SoA software auto talks to the Admin platform and with the wonders of Straight Through Processing it is all implemented seamlessly and the Advisers team barely do a thing.
– Then if Life insurance is also part of the plan the clients happily sign up themselves via links we send them for applications and medicals that just happen with such little adviser interaction, it’s magical.
– Never have to waste time meeting the clients, generating a trusting relationship and providing face to face advice.
[b]Its that easy, isn’t that how every advice / Life insurance business runs ??? [/b][b][/b]
Wake the hell up IT people, it never became reality back them and has never become reality in the last nearly 20 years.
And i’ll bet you what ever you like it won’t become reality in the next 10 years !!!!!!!!!!!!!!!
How much should we bet ?
Put your money where your IT mouth is please.
The Life Insurance industry was significantly compromised the day the Life Insurance Framework was enacted.
Based on the clear evidence following the ASIC 413 Report, the commission basis for Life Insurance advice should have remained at the 80/20 combination in addition to the level commission option.
Any adviser to have been discovered churning new business could have either been placed on a Level commission only basis or banned from practicing….simple, effective and fair on the remainder of advisers who were doing the right thing.
Instead, a punishment was handed out to every single adviser and now Kenneth Hayne and the Labor Govt think that all commissions for Life Insurance advice should be abolished.
It is driven by ideology and not reality as to the effectiveness of advice delivery and affordability that remuneration via commission can deliver to the Australian consumer.
It is shortsighted, manipulated and self serving.
There will no benefit delivered whatsoever and the industry is currently on a hiding to nowhere.
2030, try 2024. The FSC/insurers will achieve what they wanted all along, direct insurance, robo “advice” paid for “comparison” sites and bigger profits.