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.
