Consternation at 20pc flat commission proposal
A Financial Services Council (FSC) submission to the Life Insurance and Advice Working Group (Trowbridge Committee) suggesting a flat 20 per cent commission and five-year responsibility period has caused consternation amongst life/risk advisers.
The FSC submission, although still to be formally released, is being widely discussed in the life/risk advice space with concerns being expressed to Money Management about the manner in which such a regime would impact business viability.
The importance of the FSC submission is reflected in the fact that the Life Insurance and Advice Working Group was established by both the FSC and the Association of Financial Advisers (AFA) in the immediate aftermath of the highly critical Australian Securities and Investments Commission (ASIC) released a Review of Retail Life Insurance Advice in October 2014.
The working group is being headed by former Australian Prudential Regulation Authority (APRA) member, John Trowbridge and has received hundreds of submissions following the release of its interim report in December.
While the FSC represents all of the major insurance providers, Money Management has been told that not all of the insurers have indicated their support for the position expressed in the FSC submission, with some newer entrants currently pursuing growth indicating a different approach.
The FSC submission is causing particular concern because, if adopted, it would impact the book value of advisers' life/risk businesses and significantly impact cash-flows.
The Trowbridge working group is expected to hand down its final report before the end of March.
Recommended for you
Advisers at DOD Bookkeeping, which received an $11 million penalty last week, received as much as 40 per cent of their remuneration via a bonus when clients purchased a property via a SMSF, according to court documents.
Private wealth manager Escala Partners has launched an end-to-end investment platform to strengthen its alternatives capability as clients seek sophisticated vehicles.
Perpetual Wealth Management has hired two advisers from Ord Minnett as part of five hires, just weeks after the rival firm announced it had picked up six from Perpetual Private.
ASIC has cancelled the AFSL of a Perth financial services firm following payments to its clients by the Compensation Scheme of Last Resort after a failed managed investment scheme.
