Hybrid remuneration model can boost cashflows

Life/risk advisers who have transitioned to new hybrid remuneration models have seen stronger recurring cash flows and greater business valuations, according to the Association of Financial Advisers (AFA).

The claims around the potential inherent in new remuneration models have been made not only by the AFA, but by consultancy groups such as Sue Viskovic's Elixir Consulting.

While the AFA has pointed to the development of transition plans towards hybrid models, Viskovic said that while many advisers feared that clients wouldn't pay for risk advice if they were asked to pay a fee separate from the premium itself "we know from our research and our coaching that there are already advisers doing so successfully right now".

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Kicking off the AFA's latest Life Insurance Roadshow, AFA chief executive, Brad Fox, said he believed there was ample evidence of successful transitions by risk-focused advisers to hybrid models over the last three to five years.

"Many businesses that have made the transition have seen stronger recurring cashflows and greater business valuations," he said. "We believe if practices devise and employ a watertight transitioning plan and execute it correctly, they will get positive results."

Fox's comments came just hours after the release of the latest Investment Trends Planner Risk Report which found that advisers had already begun the transition towards the new post-Trowbridge remuneration environment with many having already switched to hybrids or moved to fee for service.

The Investment Trends research also suggested that a number of advisers had sought to counter the impact of the remuneration changes by diversifying into more holistic advice.




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Comments

I want an organisation that represents me and the industry not a mouth piece for the government trying to sell me on decisions that will be a detriment to my business are a good idea.

It seems to me, and from research i have read, that the only advisers who are charging a fee for service for insurance advice, are those that embed the advice coupled with either superannuation or investment SoA's. And the fee is charged for the whole.
If it were to be charged as an independent item, ie Risk only, then, i feel, this would create a financial barrier to the client and it would be very difficult to "sell" this model.

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