The life insurance industry needs to break the connection of the product providers being the ones to provide remuneration, BFG Financial Services managing director believes.
During a panel discussion at the Financial Services Council’s (FSC) Life Insurance Conference, BFG managing director, Suzanne Haddan said while it was difficult to make sudden remuneration changes it would actually be great for businesses over time.
Haddan said product providers were already assisting practitioners by developing more products that are suited for the fee-for-service environment.
“This is actually great for your business overtime because we love new product providers, they’re an important part of the process of giving advice,” she said.
“But practitioners should give them a hug and say ‘thanks for the memories, but now I’m going to do it my way, and my way is that I charge my clients for my services’.
“We have to break the connection of the product providers being the ones to provide us with remuneration.”
Haddan noted that she thought it was easier to have a fee-for-service structure when holistic financial advice was given.
“…because you’re packaging up a range of services which would include insurance, some investments, it would mainly include strategy, and that’s where the value add is.
Haddan said as accountants were pushing more into the space pure risk advisers needed to expand on their advice.
“I look at the risk advisers who just do risk and I think they should try to add some other services to assist clients, whether it’s age care advice, super advice, mortgage broking, etc,” she said.
“People tend to have those other needs and I think it’s going to be trickier to just be a risk adviser.”
Also speaking on the panel, Infocus Wealth Management managing director, Rod Bristow, said an ecosystem approach was the best way to deal with change.
“With so much of this change whether it’s FOFA [future of financial advice] related and LIF [life insurance framework] related I think it’s an opportunity to step back and have a look at what the change means for each person involved,” he said.
“One thing we try to do is take an ecosystem approach which is to have a look at who all the various different players are in the ecosystem and then we decide what roles we all need to play.”
