Politicans challenged to live under adviser regime
A Perth based financial adviser has challenged politicians reviewing the sector to run successful risk insurance businesses under the models they are advocating claiming it would be impossible to do so under proposed changes.
Charles Alexander Financial Services principal Alex Vagliviello has questioned what experience members of Federal Parliament have in relation to financial planning and insurance advice and therefore their ability to make calls to ban upfront commissions on all life, insurance, income protection and trauma Insurance sales.
He also questioned how many of them would be prepared to "leave their present fixed income positions to become self-employed and work as risk insurance writers?" given the work involved in entering the sector and maintaining a business.
Vagliviello said for a new adviser to reach an income target of $100,000 per year they would need to secure 17 new clients a week for 40 weeks a year and work around 85 hours per week to properly service those clients.
He said this was based on a time requirement of five hours per new client to properly provide risk insurance advice and that income was based on average premium of $800 per client with the adviser receiving the proposed 20 per cent flat commission or $160 per client. After licensee fees the adviser would have around $148 and to meet their income target would need to see 672 clients.
However Vagliviello said even these numbers were impossible to meet given that it required five prospective clients to secure one new client and to secure 17 new clients per week required 85 new contacts per week on top of the 85 hours required to service those clients who signed with the adviser.
"What I would like to do is ask that every member of the Parliamentary Joint Commission leave their current 'jobs' and come work with me as a financial adviser for 12 months as a new start-up representative. I will offer no guarantee of a weekly pay cheque or job security", Vagliaviello said
"I will be asking them to commit to working for a minimum of 85 hours per week for an non-guaranteed income of around $30 per hour before expenses and tax. Do you think that any member of the PJC would take up my offer?"
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