Remuneration changes won’t correct poor advice: Bombora
It is "very difficult to fathom" how reducing adviser remuneration will suddenly create an environment that will lead to better quality advice, argues Bombora Advice managing director Wayne Handley.
Responding to the release of the new framework for the life insurance industry, Mr Handley told Risk Adviser he would like someone to explain the rationale that reducing adviser remuneration will actually lead to better quality advice.
“It's still very difficult to fathom, however, that by any deductible rationale reducing an adviser’s income suddenly creates an environment to improve the quality of advice,” Mr Handley said.
“Better quality advice is about training, education, leadership and culture.
“It has nothing to do with remuneration whatsoever – would that mean that advice from an accountant or lawyer is suddenly better because they have reduced their fees?” he asked.
Mr Handley added that the "silence" from many of the institutions during discussions of the industry reforms has been “alarming”.
“They have completely lacked the courage to openly support quality advisers,” he said.
“It's with great interest that we now read [that the insurers say,] ‘we will be here to help you through the change', [but] we may well ask, where was your help when we needed it the most?
“I hope within the parameters of their own conscious they can answer this question. There are a few organisations [that] can hold their head high,” Mr Handley said.
While there is still more information regarding the reforms to be presented – including how the reforms will be enforced – Mr Handley said he is not certain about what to expect in the final outcome.
“As for expectation of outcome, at the end of the day we were not actually sure what to expect,” he said.
“We certainly had our view on what we felt was reasonable and during the process we consulted heavily with all stakeholders, including John Trowbridge, the AFA, FPA, the institutions and Assistant Treasurer Josh Frydenberg.
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