Life insurance advice customers want more transparency about the fees and commissions their adviser receives, according to new research from MetLife.
The life insurer’s Adviser-Client Relationship Report surveyed over 1,200 consumers and SMEs who had either purchased life insurance through an adviser or were very likely to do so in the next two years, and found that 78 per cent thought fee transparency was the most important attribute in an adviser.
In addition, 55 per cent of consumers surveyed were not able to recall the amount of commission their adviser received, suggesting risk advisers may have further to go when it comes to driving the message home to clients about how they are paid, said MetLife head of advice strategy Jeff Scott.
“There is no doubt that the number one priority for our industry right now is to build open and trusting relationships with consumers,” Mr Scott said.
“One area that serious leaps can be made is in relation to transparency about fees and commissions. With over half of consumers unaware of the amount of commissions advisers are being paid for their advice, financial advisers should be prioritising clear and regular communications about their fees with clients.”
The research also revealed that 85 per cent of respondents thought honesty and trustworthiness was a key attribute for their adviser, while 75 per cent said the overall experience their adviser provided was important.
In addition, a significant proportion of respondents who held life insurance – 40 per cent of consumers and 60 per cent of SMEs – had concerns about whether their insurer would pay them at claim time.
Given the very high payout rates for life insurance bought through an adviser, Mr Scott said this was potentially an opportunity for advisers to reassure and add value to clients when it came to easing their concerns around claim time.
“There is clearly a huge role for frequent and relevant communications to play in quelling these misperceptions and alleviating concerns,” he said.
“Advisers have an opportunity to add significant value to risk clients: first by informing them of their duty of disclosure at application time, and secondly, by being an advocate for their clients at claim time.”
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