Increasingly, insurance carriers are creating products to sell direct to consumers possibly bypassing brokers.
Increasingly, insurance carriers are creating products to sell direct to consumers possibly bypassing brokers.
“This should be a cautionary tale for those who want to change the rules in Canada as the changes that they are proposing will allow the banks to take control of life insurance sales and increase even further their control of Mutual Fund Sales,” Lawrence Geller, president of Geller Insurance Agencies Ltd. wrote on his blog, ‘For Advisors Only’. “Has it occurred to no-one as yet that eliminating commissions will allow financial institutions to manufacture products with built in distribution costs and pay low(ish) salaries to employees to flog them to a captive audience?”
Geller is speaking about the move by the banks to sell insurance directly to consumers thus eliminating the need for insurance agents and putting more money in the pockets of those banks while doing nothing for premium costs.
The capping of commissions could result in a fee-for-service model similar to what’s happening in the wealth management arena. The end result believes Geller is that numerous Canadians would say no to the fees charged by insurance advisors and be forced into the outstretched arms of the banks.
“The only people who can really afford to pay for service are higher income individuals. All the lower income individuals go to where? The banks,” Geller reminds WP. “The banks have announced in the past week that they’re closing branches in smaller communities. So you live in New Liskeard, Ontario. Are you going to drive to drive to North Bay to talk to a bank?”
Not likely.
So, they’ll go online, ratcheting up the profits of the banks even further, while also affecting the livelihood of younger advisors. Eventually, the banks could lose their agent network.
“They don’t care [banks],” says Geller. “If they lose their agents they’ll go direct and use employees.”
“This should be a cautionary tale for those who want to change the rules in Canada as the changes that they are proposing will allow the banks to take control of life insurance sales and increase even further their control of Mutual Fund Sales,” Lawrence Geller, president of Geller Insurance Agencies Ltd. wrote on his blog, ‘For Advisors Only’. “Has it occurred to no-one as yet that eliminating commissions will allow financial institutions to manufacture products with built in distribution costs and pay low(ish) salaries to employees to flog them to a captive audience?”
Geller is speaking about the move by the banks to sell insurance directly to consumers thus eliminating the need for insurance agents and putting more money in the pockets of those banks while doing nothing for premium costs.
The capping of commissions could result in a fee-for-service model similar to what’s happening in the wealth management arena. The end result believes Geller is that numerous Canadians would say no to the fees charged by insurance advisors and be forced into the outstretched arms of the banks.
“The only people who can really afford to pay for service are higher income individuals. All the lower income individuals go to where? The banks,” Geller reminds WP. “The banks have announced in the past week that they’re closing branches in smaller communities. So you live in New Liskeard, Ontario. Are you going to drive to drive to North Bay to talk to a bank?”
Not likely.
So, they’ll go online, ratcheting up the profits of the banks even further, while also affecting the livelihood of younger advisors. Eventually, the banks could lose their agent network.
“They don’t care [banks],” says Geller. “If they lose their agents they’ll go direct and use employees.”
