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
AFCA has confirmed United Global Capital’s membership of the body will not be extended to accept further complaints, avoiding a repeat of the Dixon Advisory scenario.
Three of Australia’s largest financial advice groups have shared their thoughts with Money Management on whether they would include crypto on their approved product lists.
Shadow treasurer Angus Taylor has vowed to introduce a bill to legislate a raft of financial services reforms if the Coalition is elected.
Money Management examines the share price of financial advice licensees over one year to 31 March, with M&A actions in the final quarter having a positive effect for two licensees.
