No commercial case for life commissions removal
The National Australia Bank (NAB) last year saw an opportunity to take the lead in removing large upfront commissions from the life/risk arena, but ultimately opted not to do so because there did not appear to be the necessary commercial justification.
As the Financial Services Council (FSC) and Association of Financial Advisers (AFA)-sponsored Life Insurance and Advice Working Group moves towards producing its final report later this month, documents tabled in Parliament have revealed the degree to which NAB recognised the continuation of large, upfront life/risk commissions as problematic.
The documents, tabled by National Party Senator, John Williams, revealed how NAB regards itself as having been at the forefront of the introduction of Future of Financial Advice (FOFA)-mandated flat dollar advice fees but how it worried about how the removal of commissions on life/risk might dissuade clients from purchasing life/risk products.
"Large upfront commissions remain in place across the industry for insurance and while there is an opportunity to take the lead in this space, we would need a strong commercial case to do so which is not currently apparent," the NAB document said.
"We also recognise the tension between the potential consumer detriment of commissions and the likely reluctance of consumers to seek insurance advice if they have to pay explicit fees for it, which was the primary reason these commissions were exempted from the FOFA ban on commissions," it said.
Recommended for you
TAL has introduced four new courses to its Risk Academy focused on ethical dilemmas as part of Ethics Month to help advisers meet their CPD requirements.
Unadvised Australians believe they need $2 million to retire comfortably, according to Colonial First State, a wide variance compared to advised individuals which estimate $1.3 million.
Financial advisers can now access Vanguard’s diversified managed account strategies on HUB24 and Netwealth, marking a “significant expansion” through new distribution channels.
The heads of two financial advice licensees have joined the board of the Financial Services Council as it looks to deepen its engagement with the space and strengthen its representation.
