Why fee-for-service won’t work for risk advisers
A doctor-style fee-for-service model for all advice, including life insurance, would create unsustainability in the financial planning sector and prevent specialisation, a former adviser believes.
Recently, Industry Super Australia's put forward a proposal to the Senate Economic Committee's inquiry into the Scrutiny of Financial Advice for planners to be "paid by doctors", with commission-based incentives to be removed on all advice, including life insurance.
Retired Newcastle-based adviser, Graham Poole, took umbrage at the suggestion and said it would see risk adviser-specialisation decline and underinsurance spiral.
He said in the NSW city of Newcastle, he saw risk specialisation fall from the hundreds to "just a handful" in the time he was practising.
"People who go to doctors are generally sick and go willingly…. Having sold life insurance for 40 years, I can say nobody rushes out to buy it… The adviser spends an inordinate amount of time looking for new clients," he said.
"I don't know how it can be compared to doctors."
Poole said the consequence of removal all incentives would be a loss of interest from advisers in selling life insurance, which could have devastating impacts for the wider community, he said.
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
