Stripping out commissions and opting for a fee-for-service model for risk advice can help clients in maintaining insurance cover, while meeting best interest duty, Wealth Elements director, Dean van Zyl says.
Speaking at the Financial Planning Association of Australia (FPA) Professionals Congress, van Zyl, said planners with a young client base needed to look at how they can make insurance sustainable for their clients.
van Zyl said that by adopting a fee-for-service model, Wealth Elements has been to lower costs for clients making insurance more sustainable.
“When I talk to our clients, and particularly when I’ve met clients that have come from other advisers, they’ve had insurance policies that — thank goodness — they were set up, but the problem is they’re being cancelled after four, five, six years,” he said.
“So families’ cost concerns and sustainability of premiums, and this concept of staying insured became a bigger issue for them.
“If you’ve got a young family client base it’s going to come up, because as premiums grow up, and they grow quite significantly, they’re starting to tug with other resources that the client wants to put their money into.
“When you take away the commission side of the policy, it completely changes how you can build a strategy for your client, because you can start to tinker with certain aspects of advice, and consider the short, medium, and long-term needs of the client.”
