What ASIC thinks life/risk advisers earn

The preparation of a statement of advice by a life/risk adviser can cost anywhere between $550 and $1,500 take anywhere between five and 10 hours, according to the Australian Securities and Investments Commission (ASIC).

Answering questions on notice from the Parliamentary Joint Committee on Corporations and Financial Services, ASIC said that based on information it had received from advisers, “a simple life insurance statement of advice for an average family could take anywhere between five to 10 hours to prepare.

“This estimate takes into account the time required for the first meeting with the clients, research, data entry, applications, administration and the presentation of the advice to the clients once the statement of advice is prepared,” ASIC said, noting that the estimate was “a very general one, as there are many variables that may affect the time need to prepare advice”.

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It said some examples of those variables included whether or not the clients had existing products, medical issues that might require specialist underwriting or unusual high risk occupations that may need to be individually rated.

“Most life insurance advice is remunerated by commissions paid to the adviser (or the licensee) by the insurer. In REP413, we found that over 80 per cent of remuneration was by upfront commissions, with an upfront commission of 100 per cent to 130 per cent of the new business premium and an ongoing commission of around 10 per cent of renewal premiums,” the regulator said.

“Where advisers use a fee for service model, for the simple life insurance statement of advice discussed above, information we have from industry indicates a range of charges for the preparation of the advice, from $550 to $1,500, largely dependent on whether or not a para planner was engaged to assist with the preparation.”

“In some instances the adviser would charge a fee if the client did not proceed with the advice, and waive the fee and receive commission if the life insurance was purchased. Some advisers use a mixture of fees and commission for remuneration (a hybrid model).”

ASIC said the amount an adviser earned per hour, was “affected by many variables that would need to be considered such as software leasing costs, office expenses, insurance, tax and other overheads etc., and these would vary from adviser to adviser”.




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An advisers income can vary based on many factors including doing some work.
As compared to ASIC turning up 9-5 on the taxpayer's dollar.
Oh yes, that's right, they also get paid because of the taxes advisers pay on the income they earn working long hours for which they need to pay for educations and overheads.
As compared to ASIC who have everything paid for them and have no overheads, but feel entitled to deride the majority of advisers based on the actions of a few they can't even find.
tch tch tch ASIC. Back to the office to put your feet up and hand out for the paypacket!

That is an average of 7.5 hours fora SIMPLE life insurance SOA. Can someone please ask ASIC if they think this is in the client's best interest? Especially compared to general advice where they get no help, no expertise, and the AFSL is still paid the same commissions. ASIC we need to have a better solution! ASIC is just destroying the industry.

Wow. This is quite illuminating. ASIC really has no idea about the cost of running an FP business, does it?
Our hourly charge out rate is $340 (incl GST). The initial appointment, pulling all the information together and putting it into a compliant format and determining client goals and objectives costs around $680 (inc GST) before we even get to the strategy development, SOA preparation and delivery of our recommendations.

Further with current regulatory requirements and fixed overheads excluding wages (i.e. modest rent, insurances, AFSL fees, software fees) and depreciation, I estimate it costs around $500 p.a. just to have a client on the books. They really are clueless!

More lies from ASIC. There isn't a single adviser in this country who could deliver a compliant SOA for life insurance advice in 5 hours when you include the meetings beforehand, research, presentation to the client, applications and administration. It is utter nonsense. How can our regulator get away with this?

I think this was just to do the SOA. ASIC have not included the other times. perhaps the senator needs to change the query to "What is the TOTAL time needed to correctly assess, educate, do an SOA and follow though to completion a SIMPLE insurance advice?"

Not so. The article indicates the time includes preliminary work...

No the article states that its 5-10 hours all up.

“This estimate takes into account the time required for the first meeting with the clients, research, data entry, applications, administration and the presentation of the advice to the clients once the statement of advice is prepared"

They must think a SOA takes 15 minutes to do.

They dont factor in the cost for all those meetings that dont eventuate into revenue - eg. people not proceeding, tyre kickers, policy cancellations, medical declines, other underwriting declines.

So at the bottom end of their estimates it takes 5 hours to prepare the SOA and the cost would be $500?? If you use the Industry Fund Financial Planners as a model, they charge $220 / hour, so the cost range should be $1,100 - $2,200 should it not? The profit margin on an SOA in that price range would be minimal. ASIC are so clueless on what Advisers are actually having to go through on a day to day basis it's laughable.

Great way to make decisions ASIC (not).....do the research afterwards upon which the decisions are meant to be based. Industry bodies should have been completing this research and presenting this information in the first instance. Asleep at the wheel and the reason why ASIC has dictated the conversation all the way.

Yep. ASIC have certainly screwed the risk advice industry good and proper. Thanks to ASIC and the FSC and the LIF risk advisers are expected to work at a loss. Can somebody please explain to ASIC that nobody can work for free and the customers will not pay huge fees to cover what these bodies have done to the industry.

If the senator requires an accurate answer why would you ask ASIC?
When I give advice to a client theres generally two meetings. The first to do a fact find assess the clients needs. Then I have to go away and research, arrange quotes , maybe seek a preassessment from underwriting and then I complete my SOA . Approx 8 to 10 hours potentially there. 2nd visit I go to the client and present the advice and assist the client with a personal statement and obtain consents etc. After that I may have to arrange medical requirements and liaise with underwriters. My best estimate would be between10 and 14 hours all up. My all up "cost " of running my practice is around $280 per hour plus GST. So there appears to be a significant difference between ASIC's reckoning and mine. Wondering why my bottom line is looking kinda sick.

Totally clueless - takes 5-10 hours for a simple case - that's like saying I have a client without underwriting issues - the mythical, the unimaginable clean skin. - A simpleton would understand that at best 3.5 out of 5 cases end up on the books - in our practice, this falls away as a function of the quality of the clients. Maybe ASIC should take a lead from the CPA start up advice firm - and acknowledge they don't have a clue - but then again - They have answers for problems that don't exist. Its not longer the public good vs commercial interests - its B** Sh** media spin over the truth, the rub is - for too long advisers have not been able to push back on this overreach.

Medical declines, waiver negotiation, completion of complex structuring in/out of super.

Not sure what ASIC thinks actually running a business costs?

Must be like their kids lemonade stand out on the street?

If only they engaged in a professional manner and got up close to where the real work is done so they actually know what they are talking about and not throw rocks from afar with no idea.

In the mean time clients will be forced to get those 'great' policies that get flogged without any advice oversight.

We are mostly FP so when the full LIF income levels come in we'll drop risk.

I don't have enough profit to run free public services.

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