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There has not been one intelligent analysis from the CraigG, Clem, Jason and Ritchie club to explain exactly how the consumer will be better off with absolutely no choice whatsoever as to how they elect to pay for the advice and product combined in relation to risk insurance.
Clearly explain to me this:
Client seeks risk insurance advice.
Annual premium cost is $4000.
If insurance is placed, adviser will be remunerated via transparent, clearly documented commission currently at a maximum rate of 80%. ($3200).
Case has taken 10 hours of work from commencement to completion and 3 client meetings.
If the commission is stripped out of the product, providers estimate the net premium will decrease by approx 30%.
( ie $1200), resulting in an annual premium cost for the product only of approx $2800.
Client pays $2800 for the insurance product and is provided with an invoice for $3200 for the advice, research, strategy,
3 client meetings, discussions with several Underwriters and product team and follow up on pathology and medical assessments.
Cost to client is now $6000 for the same transparent, compliant, advice process if they had been able to pay for the advice via the current commission model. ( an increase in total cost to the client of 50%).
At this very moment, the increases in premium costs across the board are ensuring that clients and the public are questioning whether the expenditure on quality personal insurance is warranted.
I know what is coming in the next response.......reduce the adviser's fee to only $1200 for the 10 hours of work and the client will be paying the same cost as the commission !
Risk Insurance advisers have already had a significant reduction in commission levels as a result of LIF and is continuing to decline over the next 2 years.
So those who are uninformed and base their commentary on ideology and removing choice from consumers, clearly explain whether the significant under-insurance problem in Australia is going to better by increasing the cost of advice, isolating those who need insurance from receiving advice and pushing them into junk direct product?