Confidence key to moving forward under LIF
Before changing their business and remuneration models to better manage the Life Insurance Framework, risk advisers must be “totally convinced” it is the right thing for their business and their clients, says one practice management consultant.
In an upcoming Viewpoint article for Risk Adviser, Elixir Consulting managing director Sue Viskovic said that given the government has announced it will be moving forward with the Life Insurance Framework from 1 July 2016, all advisers will have to reconsider how they run their business and charge for advice.
“Before an adviser can effectively restructure their business model and have the conviction to position a fee (or hybrid model) to their clients, they need to be totally convinced that it is the right thing to do for their business and for their client,” Ms Viskovic said.
She added that if advisers can calculate the minimum amount they will need to recover from each client, it will make them more confident in knowing how to structure their remuneration models.
“If [advisers are] approaching their business from the right mindset, the act of crunching the numbers to arrive at their minimum recoverable amount boosts their confidence to quote a fee,” she said.
“[This is] because they have seen for themselves what it will cost them if they undercharge.
“If they’re still mourning the loss of high up-front commissions and resisting the need to evolve their model, the psychological effect of calculating their minimum recoverable amount [can] lead them toward the right mindset,” she said.
Advisers need to understand that "if they do not switch their mind to evolving, they will struggle to earn enough to cover their costs,” Ms Viskovic said.
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