In an article published on the practice’s website, Adapt Wealth Management owner Reuben Zelwer said the royal commission will be “a complete waste of time and money”, and described the commission as a “witch hunt”.
According to Mr Zelwer, “nobody wants this royal commission” and the end result will be a disappointment.
“The government doesn’t want it (they were dragged kicking and screaming), the banks don’t want it (even though they ended up caving in because they felt they [had] no choice), and the opposition doesn’t want it because they say it’s not broad enough,” he said. “No one’s going to be happy with the outcome.”
Additionally, Mr Zelwer said the royal commission could further harm confidence in the system and make clients “a lot more suspicious”, despite a majority of people not having issues with it.
Clients who have received bad advice are also likely to receive a “false hope” from the commission, Mr Zelwer said.
“It is not going to provide redress for individual cases. They’re going to look at the system in general – sure, they will interview people who got bad advice but they will not make judgements regarding financial compensation, so people will be disappointed,” he said.
The commission will, however, be “great for the lawyers”, Mr Zelwer noted.
Mr Zelwer is an authorised representative of Hub 24-aligned dealer group Paragem.
As of 1-January we have decided to not sell risk anymore and will recommend customers use the watered down but much cheaper insurance offered thru industry super funds which is inferior, yes but much cheaper and better than nothing. Why would I sell a product that keeps getting premium increases every 3 months AND now has a 2-year clawback with the potential to report the clawback to ASIC and have them come looking into our business and accusing us of product churning and breach of best interests duty etc!?!
So the end result for your clients will be a migration from quality underwritten insurance to junk insurance. As it will be for many other Australian consumers. This is exactly what the union funds and insurance companies wanted. It is why they lobbied for LIF. However it is an appalling result for consumers.
Consumer groups like Choice and CALC should hang their heads in shame for supporting this.
So because you’re not going to make a stack of money you leave your clients in the lurch and just advise on things that can make money.
Yes you need to be profitable so change your processes rather than leave customers in a poor spot.
Change processes to what? Charging fees for the real upfront costs of advice and implementation? Surely that’s not a workable model unless the client’s insurance premiums are $10K+.
You must have extremely inefficient processes if preparing and implementing a risk SOA costs you over $8,800, or you are overinflating your hourly rate to $660 +.
To provide risk advice should not cost that much to your practice, particularly if you amortise in some of the risk trail at 20%.
Consider your research process, consider your data gathering process, can you streamline any of it, move it to another part of the business that has a lower hourly rate.
If you have to be told these things good luck to you.
I will continue to help my clients and if it means my hourly rate charge is only $300 ph I will be happy.
Most financial planners need to charge $2-3K upfront to recoup all the costs associated with insurance advice and implementation. If they forego commissions, the client gets approx 25% premium discount. So if the standard [b]premium[/b][i][/i] is $10K+ the client gets a $2-3K discount and is no worse off from a year 1 cashflow perspective.
If the client’s standard premium is a more typical $2K, they still have to pay $2.5K in upfront adviser fees, but only get a $500 premium discount. The client’s year 1 cashflow impact is $4K instead of $2K. Even though they might eventually recoup this via premium savings in later years, most middle income clients are unwilling to take such a big hit to their cashflow in year 1.
That’s why it’s not a workable model unless premiums are $10K+.
Wow, you can’s see the forest for the trees can you!!!
Your original post mentions “selling” insurance twice, yet you want to charge for advice. I think you have your priorities mixed up.
Secondly, what is wrong with taking some commission? rebate it to the $3k for your higher premium clients if that’s where you feel comfortable.
Taking 88% of a 5k premium will still be profitable and you will almost certainly place a client in a better position than a junk or industry policy.
I think you need to invest in a business coach or a better calculator.
You should offer no risk advice rather than advising them to go to an inferior product as you need to provide in the BEST INTEREST of your client not your commerciality. Therefore you should refer them to a risk specialist or an adviser willing to work with the client to meet their needs.
Or just tell them it will cost $2-3K extra in upfront fees if they want insurance advice and implementation assistance, but their premiums will be reduced by 25% as you no longer take commissions. About 1 in 20 clients will take you up, the rest will DIY junk insurance.
A comprehensive royal commission is needed – as occurred with the RC into institutional responses to sexual abuse. Pity this one wasn’t called Institutional Responses to Banking and Financial Sector Misconduct and Abuses because that’s what the focus should be – the responses to the fact are the issue. The government did not even mention the victims far less put the focus on them as it should have. Compare Gilliard’s respect and dignity afforded to sexual abuse victims with the complete lack of concern of Turnbull and Morrison – it is disturbing. Hopefully Hayne will not allow the government or banks to dictate or shape this into a Clayton’s RC. And it must include unscrupulous liquidators. The spin from senior executives, CEOs and board chairs in banks and industry like KordaMentha is simply staggering in comparison with the conduct they permit and engage in.
I think it is needed. I have written a submission into the creation and outcomes of the LIF.
ASIC’s flawed report and their refusal to release details.
The FSC’s blatant lies around churn and cartel behavior to increase profits.
The FSC members cartel increasing of existing customers premiums during and since the LIF
The FSC members reducing new business premiums and increasing existing customers to actually create a churn issue that wasn’t there before (e.g. Comminsure who have today announced their fourth premium increase in the last 12 months on existing customers but have reduced premiums for new business).
The FPA and AFA’s failure to act in the best interest of customers and independent advisers and for being conflicted due to sponsorship by the FSC members the “sell out deal” which of course was compulsory membership .
The appalling outcome he LIF will create for customers who will be driven to direct junk insurance as is the wishes of the FSC.
And also the financial incentives and conflicts we are already seeing from FASEA
As advisers we are surrounded by blatant corruption and profiteering in the form of the FSC, FASEA and unfortunately even ASIC and our supposed industry bodies the FPA and AFA.
Its time to call it out and all advisers should be writing submissions.
Lazy journalism. Copy and past from some random website of an unknown firm
Looking forward to the Royal Commission actually. I’ve already written my submission calling the FPA to be held accountable for being the puppet masters of product manufacturers. Cheers all…I’m off to send off a few opt in letters and a enroll in an “Introduction to Superannuation” whilst being taught by a guy that has been teaching Monetary Economics for 20 years.