Hybrid remuneration model can boost cashflows
Life/risk advisers who have transitioned to new hybrid remuneration models have seen stronger recurring cash flows and greater business valuations, according to the Association of Financial Advisers (AFA).
The claims around the potential inherent in new remuneration models have been made not only by the AFA, but by consultancy groups such as Sue Viskovic's Elixir Consulting.
While the AFA has pointed to the development of transition plans towards hybrid models, Viskovic said that while many advisers feared that clients wouldn't pay for risk advice if they were asked to pay a fee separate from the premium itself "we know from our research and our coaching that there are already advisers doing so successfully right now".
Kicking off the AFA's latest Life Insurance Roadshow, AFA chief executive, Brad Fox, said he believed there was ample evidence of successful transitions by risk-focused advisers to hybrid models over the last three to five years.
"Many businesses that have made the transition have seen stronger recurring cashflows and greater business valuations," he said. "We believe if practices devise and employ a watertight transitioning plan and execute it correctly, they will get positive results."
Fox's comments came just hours after the release of the latest Investment Trends Planner Risk Report which found that advisers had already begun the transition towards the new post-Trowbridge remuneration environment with many having already switched to hybrids or moved to fee for service.
The Investment Trends research also suggested that a number of advisers had sought to counter the impact of the remuneration changes by diversifying into more holistic advice.
Recommended for you
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.
