Life insurance and annuities embedded in financial planner revenue
Life insurance and annuities have become far bigger parts of the revenue model for financial planners, according to the latest data compiled by Wealth Insights.
The data, the result of surveys and focus groups conducted over the past month or so, has confirmed a significant increase in the number of planners advising on life insurance.
According to the data, the provision of advice around life insurance has now become an integral part of the offering of almost all planners.
The latest Wealth Insights research points to the continuation of a trend which emerged as traditional revenue streams retreated after the outset of the global financial crisis.
The data suggests that the changes to the revenue models are unlikely to become embedded in practices, particularly as planners seek to accommodate the regulatory environment emerging out of the Government's Future of Financial Advice changes.
Commenting on the data, Wealth Insights managing director Vanessa McMahon said almost all financial advisers now advise on life insurance, which typically accounts for over one-quarter (27 per cent) of planner revenue.
McMahon said her company's research also suggested the trend towards providing advice around life was not about to end any time soon.
"More than half of all advisers (56 per cent) expect life insurance to become more important to their practices over the next few years," she said.
Commenting on the results, McMahon said she believed the take-up of advice around life insurance was being driven by a number of factors, not the least of which was investor sentiment, with investors becoming more fearful and cautious in general terms.
"The increase in household savings (built on the belief that there could be rocky times ahead) has also been evident in increasing levels of insurance coverage," she said.
McMahon also pointed to a pick-up in the number of planners deriving increased revenue based on advising around annuities.
She said the Wealth Insights research had revealed 33 per cent of planners now sourced revenue from annuities - up from 22 per cent last year.
AUTHOR
Mike Taylor
Recommended for you
With an advice M&A deal taking around six months to enact, two experts have shared their tips on how buyers and sellers can avoid “deal fatigue” and prevent potential deals from collapsing.
Several financial advisers have been shortlisted in the ninth annual Women in Finance Awards 2025, to be held on 14 November.
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
