Days of heaped commissions numbered
Commissions paid on life insurance products will inevitably move to level com-missions, according to a visiting financial planning expert.
Commissions paid on life insurance products will inevitably move to level com-missions, according to a visiting financial planning expert.
US-based financial planner Mike Weintraub told the recent Zurich Financial Gurus conference that the days of high upfront commissions are numbered.
"Commissions for the first year of a policy are going down very rapidly in the US," he says. "In fact, corporate risk products now are almost only level com-missions."
Weintraub says the new generation of Internet companies are putting even more pressure on upfront commissions. Online life insurer, eCoverage, has been run-ning a series of ads across the US with the catchline: "Proudly trimming the fat from the insurance industry since 1999".
"These sorts of services are offering the same sort of products available from advisers but without the commissions. The question we have to ask ourselves is how do we compete with this," Weintraub says.
He says the flattening of commission structures has forced financial advisers to restructure their businesses.
"The commission structure a few years back encouraged advisers to bring in new business. Now, it is moving towards a structure where advisers are rewarded for keeping clients on the books."
Weintraub says financial advisers must now pay more attention to retaining cli-ents, using techniques to differentiate their practices in the client's eyes. This may include thanking clients for their business or providing educational seminars and newsletters.
TIPS: 1. Take a handful of your best clients on an all expenses paid holiday. It will improve the relationship and create differentiation to your practice.
2. Refer a plumber or a tradesman to your clients. It will build the breadth of your service.
3. Develop relationships with a client's wider family, especially on clients be-ing advised on estate planning and life insurance.
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