Claw-back the big issue for risk advisers
The existing level commission structures being utilised by life/risk advisers will remain unchanged, despite the changes to life/risk remuneration agreed with the Government last week with the three-year claw-back arrangements emerging as the most problematic area for industry participants.
Association of Financial Advisers (AFA) chief executive, Brad Fox, said that while there had been much debate within the life/risk sector since the Assistant Treasurer, Josh Frydenberg, announced the agreed position for the life/risk industry the bottom line was that advisers were now craving the fine detail.
"They want to know how it will be implemented," he said. "They want to know things such as whether it will be implemented by regulation and whether there will be Australian Competition and Consumer Commission (ACCC) involvement," he said.
Fox said that the level of detail being sought by advisers even extended to whether the regime was inclusive of goods and services tax (GST) — which it is not.
The AFA will today be conducting a webinar in a bid to explain and discuss many of the workings of the proposed new regime.
In the meantime, financial planning commentators are suggesting that it is too early to suggest that the changes will drive a major exodus of life/risk focused advisers with much now depending on the attitudes adopted by the major insurers and the impact of other changes occurring in the financial planning industry.
Among those other factors is the drive to lift minimum education requirements in the planning industry and the willingness of some older risk-focused advisers to seek to meet those standards.
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Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
