TAL group chief executive and managing director Brett Clark said the current debate around life insurance commissions needs to be more sophisticated than whether commissions or fees is the better remuneration model.
According to Mr Clark, the debate needs to consider a number of different angles, including consumer access to affordable financial advice, the supply of financial advice, the payment for that financial advice that ensures consumers can be confident in its quality and minimising any potential conflicts or risks.
He said the development of the LIF was an attempt to balance these interests and ensure a sustainable, high-quality financial advice industry, which is good for consumers.
“The alternative of a user-pays full-fee model would undoubtedly lead to the supply and availability of financial advice being much smaller than it is today, and that financial advice would be affordable only for a much smaller population of wealthy consumers,” Mr Clark said.
“This doesn’t feel in the best interests of consumers, particularly in the context of banks exiting financial advice services.”
Further, Mr Clark said the commission-based model put forward by the LIF, alongside a legislated ‘best interest duty’ for advisers, is a good model for both financial advisers and consumers which balances these perspectives.
He warned that alternative models which he says “limit consumer access to affordable financial advice, or the supply of financial advice” would need to be carefully examined, and that any further changes to the LIF beyond the scheduled 2021 ASIC review “should also be considered carefully”.
“Financial advisers are small business operators, providing local employment opportunities, often trusted members of the community, who work hard to provide competitive insurance products and services for their clients,” Mr Clark said.
“The parallels with the recent debate on mortgage broking remuneration are very relevant and insightful. We don’t want to depower competition while empowering large financial institutions at the expense of choice for consumer, and financial advisers play a critical role in that.”
Many here are correct.Brett Clark was quiet during LIF or at least to the point where the 2 year responsibility and commission reductions came in. he didn’t object violently to those – neither did other life companies set to benefit from that! Disgusting. If he is serious now (please show me he is!) he will push this through TAL and help endure commissions stay at LIF levels (AT LEAST) – AND – that renewal commissions and UP fronts are kept as is. Anything else is a sell-out and treacherous to advisers. C’mon Brett – we’ve got your card son, don’t betray us again.
“Has been a good model for Advisers!”…Um Ok if you say so. Then Minister O’Dwyer said the LIF would force Life Insurers to reduce premiums which would be a great outcome for consumers. Since the LIF every insurer has actually increased premiums. The only beneficiaries from the LIF have been Life Insurance companies.
Isnt TAL the group that is getting canned for failure to pay in comparison to its peers – sounds like their model for the way ahead is not so rosy after all. I dont have any doubt that the leadership of TAL are hugely behind the LIF outcomes – all based on BS and known to be rubbery. talking about bitting the hand that feeds you. I would love to see the current new policies written –
Totally Agree with Mark and Old Risky. I watched this bloke during LIF. He was the catalyst along with his FSC mates. Maybe we should start clawing back CEO’s salaries or better yet Royal Commissioners …The lunatics are on the grass
Agree with old risky, Brett Clarke has done nothing for advisers and was deafeningly silent when LIF was being brought in. Now that he has realised his distribution network will suffer from LIF and he can no longer rely on his “Direct” insurance sales, he comes crawling back to advisers even though he was one of the architects of this mess in his support for LIF. If he wants his distribution network to survive, he better start lobbying the Gov’t for 80/20 and pro-rata clawback. Otherwise his words are just empty platitudes, as usual.
im gone this year
Old Riskie – spot on. Well said and that 2 year clawback is evidence supreme of the likes of Brett Clark at TAL giving ZERO support to advisers on that important aspect – INCOME and SMALL BUSINESS VIABILITY> He talks a lot – says good things – BUT where was he AND all the other life execs when this idiocy of LIF was being forced upon us in DIRECT CONTRAVENTION of corporations law AND spirit??! Brett- explain yourself and your absence in the support of advisers through LIF – PLEASE! Lip service from life execs will NOT save our clients, their best interest OR our businesses.
While its good to see a few life insurers endorsing the retention of SOME FORM OF COMMISSION, not one has addressed the elephant in the room. Advisers MAY survive on Stage 1 of LIF ( with a $1,000 fee) , but surviving on Stages 2 & 3, with a 2 YEAR CLAWBACK, will decimate what’s left of risk advisers AFTER FASEA.