Advisers need 'watertight' transition plans: AFA
Advisers who devise and employ careful plans to transition to the new remuneration model proposed within the Life Insurance Framework will see "positive results", says the AFA.
AFA chief executive Brad Fox said "regardless" of the finer details of the Life Insurance Framework, the risk insurance industry will move to a hybrid commission model, with some advisers already making the transition.
"We believe if practices devise and employ a watertight transitioning plan and execute it correctly, they will get positive results," Mr Fox said.
“There is ample evidence of successful transitions by risk-focused advisers to hybrid models over the last three to five years.
“Many businesses that have made the transition have seen stronger recurring cash flows and greater business valuations," he said.
Mr Fox added that the association is committed to helping its members with the transition and to developing models that will enable them to "maintain viable businesses".
“Advisers have told us they need support to adapt to the proposed changes and want the opportunity to workshop how to most successfully use hybrid commissions, how to help clients accept a separate advice fee – perhaps alongside a commission – and how to deal with the three-year clawback danger,” he said.
“That is what the Life Insurance Roadshow is all about.”
The AFA is currently running its roadshow in each of Australia's capital cities.
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