High cost of life/risk advice is the Govt’s problem
The high cost of life/risk advice resulting from the Life Insurance Framework (LIF) has made it the problem of the Government, not financial advisers, according to Bombora Advice chief executive, Wayne Handley.
Addressing Financial Newswire’s Life Insurance Outlook conference in Sydney, Handley said that life/risk advice has been priced beyond the means of many Australians and had turned from something that was affordable to mostly higher income earners.
He said it had moved from “blue collar affordable” to mostly “white collar affordable”.
However, Handley said this was not the fault of life/risk advisers who had simply moved with the market.
“This is no longer a problem for advisers, it is a problem for the Government,” he said in reference to the unaffordability of advice.
Both Handley and Fitzpatricks Insurance Advisers specialist, Sam Bendeich agreed that at least a part of the answer in addressing the affordability and availability of life/risk advice would be for the Government to make financial advice tax-deductible.
In the meantime, both Bendeich and Handley agreed that life/risk advice specialists were prospering, largely as a result of referrals from other advice businesses.
Handley said that specialist advisers had rarely been busier, with Bendeich citing a formula based on a mix of fee for service and commissions.
LIF = Govt & Regulatory favours for conflicted benefits of institutions to sell Dodgy Direct Life Insurance.
One of the few very good things the RC did was mostly kill Dodgy Direct Life Insurance.
Now LNP, Frydenberg, ODwyer and ASIC can bask in the glory of the disaster they have created. Great job LNP & ASIC.
Handley said that specialist advisers had rarely been busier, with Bendeich citing a formula based on a mix of fee for service and commissions.
Might be busier, but surprised if there doing it at a profit. We tried very hard, to find a profitable model. But it came down to clients not wanting or able to pay our ( at cost) the SOA fee. Along with building in lapses risk, (2 years responsibility) time to underwrite, declines, loading etc.
And ultimately we were forced to make the business decision to walk away.
Look like doing the same, this is beyond a joke & no longer worth the risk.
The below is from the Bombora Advice Page. It obviously helps to have a large trail commission base.
At present, Dwyer says his advice business only remains viable because of the smaller proportion of his client base who receive a more holistic, comprehensive advice service including super consolidation services, cashflow and pre-retirement advice.
“In the end, listen to your clients,” says Dwyer, who have delivered him a resounding ‘no’ to any form of meaningful fees for his advice, whether stand-alone or in combination with commissions when appropriate.
Handley reinforced the point that charging any form of fee for life insurance advice – in the cold hard light of day – does not work and will not support a viable advice business because, in reality, clients are rejecting the notion of paying fees for life insurance advice.