Actuaries can meet needs of commission debate
The fees versus commissions debate doesn’t have to be an either/or scenario, and the actuarial profession is in a position to contribute to the solution, according to RGA managing director Pauline Blight-Johnston.
The debate is taking up a large part of everyone’s time purely because commissions have the potential, in limited circumstances, to cause a conflict of interest, Blight-Johnston told the Institute of Actuaries of Australia conference in Sydney yesterday.
While a commission ban on investments would not be good for sales, there would still be a ‘pot of money’ advisers could take a fee from, meaning that it wouldn’t be the end of the world, she said.
But in a life insurance context there was no pot of money to take a fee from, and a system that required an upfront payment would take away from the industry’s ability to meet the needs of Australians, Blight-Johnston said. At a time when there was a chronic underinsurance problem there should be an effort to make that situation better, not worse, she added.
The mistake the industry was making was thinking the solution was either fees or commissions, but it didn’t have to be either/or, Blight-Johnston said. There were myriad solutions, and the actuarial profession could contribute to finding the best solution, she added.
Those who sell advice need to be fairly rewarded, she said. Blight-Johnston said that the question was: how do we reward people who sell advice, and what are the appropriate remuneration structures?
Recommended for you
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
