Speaking to Risk Adviser, federal Liberal MP Bert van Manen – a former financial adviser – said the industry reforms are “not set in stone” since they present many difficulties for advisers, especially small business owners.
“This is the time for feedback and for the industry to apply pressure,” Mr van Manen said.
“I appreciate [advisers’ concerns] and I think [the reforms] have the potential to significantly affect the capacity of businesses to grow over time and to make [the industry] attractive to new entrants.”
Life insurance specialists are needed, as are their businesses, in order to bring new life insurance advisers into the industry, Mr van Manen said.
“[Life insurance advice] is a different kettle of fish from the investments and superannuation side of the financial planning sector.”
He added that during conversations with advisers, he has outlined how he believes the reforms should be adjusted.
“My view, as I have expressed to a number of advisers, is that the commission should be set at 80/20… and the clawback period I think should come down to two years,” Mr van Manen said.
The clawback period should also not apply to an adviser where a policy has been written by another adviser, Mr van Manen said.
Some good comments however why do we need to reduce our incomes ? CEO,s of life companies still have a driver for cars, fly first class and get paid a bonus , yes not one CEO of a life company did not get a bonus last financial year, hui AIA paid them up to $3,000,000.00 just in a bonus, and yet they want to cut off the hand that feeds them why? Claw backs serious if you had products that kept up with change and underwriting that was flexible you might retain the business. This is illegal it is illegal to do what you propose
I agree with David J Earley
To Brad Fox and the AFA Board.
In reply to comments by Mr van Manen as reported in today’s Risk Advisor, before you go off on your own with all the so called educated ideas, I implore you to please start listening to Advisers, please.
If you think about what even Mr van Manen is proposing I can assure even the 80% up front and 2 year claw back period is not the way to go. Two years is a long time, we now operate in an extremely fragile market where we can set up an affordable program for a client and 6 months later we are receiving a call from the same client to say “My hours have been cut, employer has done this to all staff to ensure we all retain our jobs” and then he adds “FOR NOW” so through no fault of their own they have to reduce something and no matter what we as advisers say Insurance premiums have to reduce.
There is not another industry in Australia with a two year responsibility period
legislated.
What other Industry in Australia has been put through the ringer like our industry and suffer so called reforms.
Mr Fox and AFA negotiators, seeing that there “maybe” some light at the end of the tunnel, please respect the fact that you have fantastic and trustworthy advisers looking after everyday Australians.
I implore you to now represent us in a extremely fair and diligent way that we all stay in this wonderful Life Insurance Industry.
We save the financial lives of many thousands of Australians, there is not another industry in this country that every year can say with conviction how many Millions or Billions of dollars we have saved the Government, no Bank Manager is able to advise people in time of extreme need that. “Sir, your loan has self cancelled”
We all pay TAX there is Millions of dollars paid in tax by advisers, the GST alone is many millions of dollars.
Myself and many Advisers around the country have fantastic true stories to tell about how we financially assisted our clients.
I call on you Brad and your team to represent us as your clients.
If you loose AFA members there goes our annual AFA Fees you don’t have a job.
I have not seen in any debate who actually benefits from the reduction of upfront commissions. From my observations it will only benefit the insurance companies as the public will gain nothing as there are already level commissions available.
If the commission has to be changed for the sake of change I could live with the mooted 80/20 model.
The other area with the clawback debate that has not been addressed is the adviser’s legal obligation to act in their client’s best interest. What is an adviser supposed to do if during an annual review it is in the client’s best interest to replace a Life Insurance contract.
If the adviser replaces it where there is even a 2 year claw back they will be doing this work for no compensation.
If they don’t replace the contract they are not acting in the client’s best interest and subject the prosecution.
Just thought that I would ask the question.
As Mr van Manen says quite clearly & succinctly…”This is the time for feedback and for the industry to apply pressure”!!! We must get everyone to push their associations to act & stop with the verbal diarrhoea! We as Financial Advisers & Financial Planners must also take action by writing to our Ministers NOW, before we miss the opportunity. Forget who let us down, let’s just get it fixed before it’s too late!
Yaaaaaay, finally someone who understands us! While this is definitely some good news, there is no need for us to stop weeding out the grubby adviser who brought this heartache on all us honest advisers. Thank you Bert!
This is a wonderful positive first step for advisers that we have a voice in this process.Kudos to you Bert for this message of support.
A 2 year responsibility period only applied when products had an Investment component. If 1 year was acceptable to Mr John Trowbridge, it should be acceptable to everyone in our Industry as he looked at the position on an Independent basis. A 50% reduction in “upfront” income is surely quite enough of an impost.
Finally! The only other thing that should be changed IF 2 years is pro-rata, that is only fair for the writer.
Now some positive developments at last. Let reason prevail.