Major adviser-client disconnect on risk advice, research finds
A study has revealed a significant disconnect between the cost of providing life insurance advice and the willingness of consumers to pay for that advice.
The Zurich research, conducted by Rice Warner on its behalf, found only 8 per cent of those surveyed indicated they were willing to pay more than $1,000 as an out of pocket fee. By contrast, 93 per cent of advisers said they would need to charge in excess of $1,000.
None of the consumers surveyed said they were willing to pay $2,000 or more, the amount that almost two-thirds of advisers said they would need to charge, the research said.
Further, almost 30 per cent of consumers said they were not willing to pay a fee at all. Zurich said this finding “illustrates the size of the challenge ahead if expert help with life insurance is to remain within reach of everyday Australians”.
Zurich life and investments chief executive Tim Bailey said a major priority for insurers and the advice profession, in partnership with ASIC and government, should be to help create a consistent and robust evidence base to be used by the many stakeholders who will shape the sector over the coming years.
“Life insurance is not without its complexities, and some of the commentary we have heard since the royal commission highlights a genuine lack of understanding of the sector and the interplay between the major channels and product types,” he said.
“For example, an appreciation of the differences between group and retail, the dynamics at play, and the role each plays in delivering positive consumer outcomes, does not seem to be evident in many discussions.
“Similarly, it is largely overlooked that since the implementation of LIF, up-front commission rates are now standardised, rendering one of the major objections to commissions – a fear of bias towards products or providers paying higher rates – effectively redundant.”
The research examined the attitudes of 1,000 Australian adults towards a range of issues relating to life insurance advice.
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