Are risk commissions out of line with best interests?

Risk commissions may be a mis-match for best interests duties, with the current product-driven framework incentivising insurance options that could distract advisers from quality advice.

Such was the warning from Personal Risk Professionals' Mark Everingham, who said the recent Australian Securities and Investments Commission's (ASIC's) best interests risk report warranted a review of how advisers are paid.

The regulator's survey of insurance best interests compliance, report 413, revealed 37 per cent of policies were not lawful and a significant number of those that were only just ticked he boxes.

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Everington said part of the problem was adviser fee structures that only ensure adequate payment if a policy is sold, even if it's not in the client's best interests.

"If my only lever to pull is to sell insurance, I've failed in my best interests," he said

"I'm a huge believer in separation of advice from product."

He said advice should be outcome driven and not product driven and suggested the answer may lie in licensees reviewing their remuneration structures to promote a more level playing field.

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