ClearView aims for flat fee advice approach

27 February 2020

Major insurer ClearView has begun the process of changing the commercial dynamics of its financial advice businesses with the aim of having them become profitable standalone structures utilising flat fee structures.

ClearView managing director, Simon Swanson outlined the company’s objective to Money Management at the same time as announcing a “disappointing” half to the Australian Securities Exchange (ASX) entailing 23% decline in underlying net profit after tax to $13.1 million largely owed difficulties around income protection products.

The company reported a 27% decline in net profit after tax for its life insurance business to $7.5 million, a 19% decline in NPAT to $1.7 million for its wealth management business and a more modest decline to underlying NPAT for its financial advice business to $600,000.

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However, in doing so the company pointed to “turning financial advice into a profitable standalone segment over time by repositioning and repricing the dealer group core offering of Matrix Financial Planning and ClearView Financial Advice and rolling out LaVista Licensee Solutions to help create a sustainable model.

Speaking to Money Management, Swanson said ClearView believed it was clear that advisers needed to move to flat fee arrangements and that the days of asset-based fees or percentage-based fees were over.

He said that was the underlying premise of turning the company’s dealer groups into profit centres – a process that could take up to two years.

At the same time, Swanson also pointed to ClearView undertaking a major project to seek a modern replacement solution for its wrap technology noting that there were lessons to be learned from the industry superannuation funds in terms on simplicity and clarity of offering.

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