The impact of the Life Insurance Framework (LIF) outranks adviser education standards in terms of its impact on life insurance advice, according to Money Management’s 2016 Life/Risk Overview Survey.
Survey respondents, the majority of whom said they were financial planners or life/risk advisers, nominated the LIF as the factor which would have the greatest impact on life insurance advice in 2017.
Nearly 90 per cent of respondents nominated LIF as the crucial factor, far outranking those who nominated higher adviser education standards with even fewer respondents believing ASIC lapse reporting would have an impact.
The survey has also pointed to a strong belief that the LIF would result in the exit of many advisers in the next 12 months.
The survey, which was conducted around the same time as the LIF debate leading up to the Association of Financial Advisers’ (AFA) annual conference, saw nearly 80 per cent of respondents suggesting that the LIF had not generated an equitable outcome for advisers.
Asked to state why, most cited a reduction in remuneration for advisers with little or no benefit being generated for their clients with a typical statement being: “It appears to strongly favour insurers at the expense of advice businesses. Customers won’t see any price or protection improvements”.
Another typical comment was that “commissions for policies that would have been sold on upfront commissions, will now be sold on hybrid or level, actually increasing the cost to insurers who will pass this onto consumers”.
Another respondent stated: “It is skewed to the insurers. Their cost of doing business has halved while the advisers risk has doubled. Consumers will be charged the same”.
