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 FAAA has secured CSLR-related documents under the FOI process, after an extended four-month wait, which show little analysis was done on how the scheme’s cost would affect financial advisers.
Nearly seven in 10 HNW-focused advisers view alternatives as the asset class that will be fundamental to meeting client demands in the future, according to Praemium.
The Perth-based advice practice has welcomed a private wealth adviser and senior paraplanner to its ranks amid its strategic shift towards wealth transfer strategies.
The number of members expelled from the Australian Financial Complaints Authority almost doubled between 2023 and 2024, according to internal data.
