Advisors are being urged to get ahead of recommendations that will limit upfront commissions on life policies.
It’s a bitter pill to swallow, but advisors are being urged to “make their own moves” to address issues raised in a report that could affect commissions.
“I would not be surprised at all if we see announcements from licensees mandating new standards ahead of an industry wide solution being agreed,” said Association of Financial Advisers (AFA) Chief Executive Brad Fox, speaking to life advisors in his jurisdiction, Australia.
“I think it is totally conceivable that some licensees will seize on the opportunity to address consumer perceptions by mandating that their advisers accept no more than a hybrid payment. This would certainly have the AFA’s support.”
In the wake of Australia’s Trowbridge Report, which would see commissions capped at $1,200 and limited to trailers of 20 per cent of the policy value for the duration of the contract, the AFA is urging Australian advisors to think ahead.
Regulators are looking to fix Australia's troubled life insurance industry, with any developments Down Under being watched closely by the same Canadian regulators backing CRM2. The fact that Australia has already led the way on fee transparency in financial advice lends added weight to concerns that proposals affecting life insurance would also find their way to Canada.
Fox said that many advisors have already begun the move away from high upfront commissions - those paying over 100 per cent of the premium in year one - to sustainable hybrid models in response to training programs offered by either their licensee or insurers and to meet the expectations of their clients.
“In light of the ongoing industry negotiations to reach a unified position for the future of life insurance, there is a clear opportunity for licensees to implement their own solutions, particularly in relation to replacement insurance advice and adviser remuneration,” said Fox.
“I would not be surprised at all if we see announcements from licensees mandating new standards ahead of an industry wide solution being agreed,” said Association of Financial Advisers (AFA) Chief Executive Brad Fox, speaking to life advisors in his jurisdiction, Australia.
“I think it is totally conceivable that some licensees will seize on the opportunity to address consumer perceptions by mandating that their advisers accept no more than a hybrid payment. This would certainly have the AFA’s support.”
In the wake of Australia’s Trowbridge Report, which would see commissions capped at $1,200 and limited to trailers of 20 per cent of the policy value for the duration of the contract, the AFA is urging Australian advisors to think ahead.
Regulators are looking to fix Australia's troubled life insurance industry, with any developments Down Under being watched closely by the same Canadian regulators backing CRM2. The fact that Australia has already led the way on fee transparency in financial advice lends added weight to concerns that proposals affecting life insurance would also find their way to Canada.
Fox said that many advisors have already begun the move away from high upfront commissions - those paying over 100 per cent of the premium in year one - to sustainable hybrid models in response to training programs offered by either their licensee or insurers and to meet the expectations of their clients.
“In light of the ongoing industry negotiations to reach a unified position for the future of life insurance, there is a clear opportunity for licensees to implement their own solutions, particularly in relation to replacement insurance advice and adviser remuneration,” said Fox.
