Industry needs time to adapt to fee for service: Trowbridge
After some debate John Trowbridge defended his recommendation to keep the fee for service for life/risk advisers and said it would act as a middle ground aimed at better consumer outcomes, and productivity.
The recommendation for the fee for service model outlined in the Trowbridge report released on Thursday said that the adviser and client remained free to agree on fees for service that are additional to the insurance premium.
"It's a middle ground aimed at better consumer outcomes, productivity in the industry and greater responsibility by insurers and licensees to assist the advisers to do a really good job," Trowbridge said at the Financial Services Council's Evolve conference on Thursday.
"By having a payment that is a dollar amount it is actually a cost recovery payment. It's up to the advisers to figure out in conjunction with the support of insurers."
Trowbridge also said the industry is not accustomed for fee for service and it would take a long time for the industry to adapt.
"I'm encouraging the adviser groups to look more towards fee for service which happens everywhere else. They shouldn't assume they should rely indefinitely on it," he said.
"I know that customers will pay fees if they're satisfied they're getting value for their money but the advisers are just not accustomed to that."
Commenting on the issue, financial services adviser firm millenium3 chief executive, Richard Klipin, said the newer younger advisers tended to be more confident in valuing their advice for a fee.
"What's often happening is that the younger generation of Gen Xs are driving the older generation to go ‘Why are you giving away all this strategy? Why aren't you charging because this is where value exchange takes place'," Klipin said.
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