Regardless of whether the Financial Services Council (FSC) makes changes to its currently proposed risk insurance framework, significant change is inevitable for the businesses of risk advisers, according to Guardian executive manager Simon Harris.
In a speech to a Money Management thought leadership breakfast this week, FSC chief executive John Brogden hinted the controversial three-year responsibility period on upfront risk commissions may be altered, with Harris suggesting either a two-year responsibility period or a one-year responsibility period for hybrid commissions may come under consideration.
Either way, it will be a significant business model change for risk advisers and it will be up to licensees to support them through creating better office efficiencies, using technologies to get better outcomes and lowering the cost of the advice they provide, Harris said.
Vertically integrated licensees may have more options to support the advisers by creating central hubs where advisers can share services such as back office, reception, meeting rooms and paraplanning, he said.
"At Guardian, we would go immediately to our preferred partners and start working with them: 'how are you going to support us to support our advisers to change their business models and make sure they're no worse off'" he said.
Harris was supportive of the self-regulatory approach taken by the FSC on behalf of the industry. With advocacy from groups like the Association of Financial Advisers and Financial Planning Association, as well as licensees such as Guardian and Synchron, advisers would have a voice at the table, he said.
When the Government gets involved that can lead to sub-optimal outcomes, but hopefully the final outcome from the self-regulatory approach would be the best one for advisers, clients, licensees and life companies, he added.
