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The only reason the commission structure works out cheaper is because you added in advice fees equivalent to the commission payable. This isn't a given at all. In fact, one of the biggest complaints clients have about their advisers is that they get no service from the adviser.
If you take away your assumption that there would be extra yearly fees and just went with:
$2800 premium + $3200 adviser fee in first year
$3080 annual premium in second year
$3388 annual premium in third year
the total amount paid is $12468.
Compare this to the $4000 + $4400 + $$4840 in three years' of premiums under the commission model and they're paying $13240.
I.e. the client pays more under the commission model. The more years the insurance is held the greater this difference will be.
I agree the client has greater upfront costs under the no-commission model, but I think they save long term. And I agree that it wouldn't be fair for the adviser to do work for no reward. (We are not the only profession to have this problem, Real estate agents can also do an inordinate amount of work and not get paid a cent if the vendor changes their mind or refuses to accept what the market if offering for their house. But I digress.) I am in favour of a model where clients pay for the advice regardless of whether or not they choose to follow it, and this should be set out in the Terms of Engagement. Whether the fee is paid upfront or retrospectively would be up to the adviser.
But I think this would ultimately be in EVERYONE'S best interests to move to a model like this.