Industry Super Network attacks FPA's commission stance
Industry Super Network's spokesman David Whiteley has criticised the Financial Planning Association's position on commissions associated with the sale of life insurance.
As former 1960s UK callgirl Mandy Rice-Davies said: “Well he would say that, wouldn’t he?”
Such is the track record of Industry Super Network (ISN) spokesman David Whiteley that no one should be in the least bit surprised that he last week chose to attack the Financial Planning Association (FPA) over its support for commissions continuing to be paid with respect to insurance products.
Assuming Whiteley’s statement was not merely a Pavlovian response to the word ‘commission’, the ISN spokesman has clearly failed to understand the difference between commissions relating to the provision of financial advice and commissions relating to the sale of a product — insurance.
As well, Whiteley clearly fails to understand the limited nature of the insurance products offered via most superannuation funds, notwithstanding the fact that their suite of offerings has been gradually improving beyond the tradition of life insurance to include income protection and total and permanent disablement.
However, the reality remains that with the rare exception of funds such as REST, members have only limited ability to vary their coverage beyond a fixed template of offerings.
What is more, Whiteley’s comments fail to take account of the distinct differences between the group and personal insurance markets and the manner in which Australia’s underinsurance problem has continued largely unabated.
While it is true that advisers are paid a commission on the sale of insurance products, it is also true that they cannot hope to compete with superannuation funds on the basis of cost. It follows that advisers are mostly receiving commissions on the sale of insurance products not offered by funds.
Ironically, the companies paying commissions to planners on the sale of insurance products are those competing strongly on the group insurance mandates offered by industry superannuation funds — a mandate market so competitive that it can make a real difference to the decision-making of employers with respect to the selection of default funds.
AUTHOR
Mike Taylor
Recommended for you
In the latest episode of Relative Return Insider, host Maja Garaca Djurdjevic and AMP’s Shane Oliver break down US and Australian rate cuts, soaring gold, and bitcoin’s volatility.
In the latest episode of the Relative Return Insider, host Maja Garaca Djurdjevic and AMP’s chief economist Shane Oliver unpack the surprising twists in the Australian economy, diving into the latest GDP numbers, what’s really driving consumer spending, and what it all means for the Reserve Bank’s next moves.
In this episode of Relative Return, host Laura Dew chats with Roy Keenan, co-head of fixed income at Yarra Capital Management, to discuss the evolving fixed income asset class, his sector preferences, and the RBA’s rate-cutting policy.
In this week’s episode of Relative Return Insider, AMP chief economist Shane Oliver joins the show to dissect the ongoing government economic reform roundtable and reflect on the wish lists of industry stakeholders – and whether there is hope for meaningful reform.
