Mandate fees for risk advice and watch the complaints grow

Spot on Don. If government keep interfering with over the top compliance, extra admin costs, and lower commissions we won't have any new advisers entering the industry. It will gradually die and the consumer won't want anyone looking after their interests especially at claim time.

You're right. No prospect has chosen a fee route when given the choice and difference in premium.
With riskies likely to leave owing to unbalanced education standards by 2024, the under insurance problem will get worse.
Keep pushing...

I disagree. I have provided risk insurance advice as a fee-only service, with no commissions, for over five years now. Clients are happy to pay for the service.

Fee-for-service risk advisers are about as common as visits from the Virgin Mary. Very few can lay claim but the few that do yell it out from the roof tops. Just look at the percentages because insurers know it's not an option.

Dealing purely with fact-experienced risk advisers know fee-for-service is a flawed proposition. I have studied insurance demand and markets at a post grad level with empirical data and any economist will tell you its a very segmented market yet it's just as important across all the segments.

With the very cream of the crop white collar workers with high incomes especially combined with holistic advice, then yes fee-for-service is an option. Unfortunately for most people requiring risk insurance this is not the case.

A self employed tradesman with a $60,000 p.a. income and a family to support can not afford to pay fee-for-service and will think you have been seeing a few too many visits from the Virgin if you suggested otherwise. Yet fee-for-service advocates would have this person denied advice and left to the mercy of direct insurers who ASIC are already having concerns about along with the industry funds policies who he will need to pay half the claim money to Perry Mason to get his hands on.

Honestly this whole trend is based purely on big institution greed and hysteria around the new "c" word. In the 50s we had communism as our go to "C' word. Now the witch hunt is commission. Forget about logic. This is politics after all!

And again where are our industry defenders? Insurance companies, the AFA: We now have a situation where upfronts have been slashed - it won't stop churning (by a minority of advisers anyway); advice documents are increasingly meaningless, impersonal and clunky with many clients not bothering to read given the meaningless volume of verbage (so much for achieving better advice); and increased compliance for no tangible benefit except increase the risk of mischevious litigation and premiums continue to increase - well done government and our so called partners in this diminishing great profession.

Education requirements are offensive and simply not relevant to what a risk adviser does - having to be a member of the tax practitioners board? Any risk adviser giving tax advice is running a risky line - saying your income insurance premiums may be tax deductible and you need to speak to your accountant is hardly tax advice but some bureaucrat needs to tick a box and having to be a member of the AFA in order to be a member of the TPB? It would be nice to know what the AFA has done to defend advisers in a cycle where we are a seriously threatened species - and the two year responsibility period? - what genius thought that was a good idea - business can fall over due to life events through no fault or action of an adviser - what other industry has a two-year shadow hanging over its cash flow?

It's hard not to think that some agenda is going on - surely decision makers are not this stupid and ignorant of the value of good advisers.

Great write up Don. Common sense has obviously not prevailed. Would it be fair to ask for a copy of what was discussed between the life companies and the so called authorities? Life companies have let us down big time.
How has reducing adviser commissions help the consumer? Fee for providing risk advice? How much more pathetic can this get? Great way to ruin an industry.

Great article Don. In my 34 years in this Industry there is an old saying, "there is never enough money at claim time."
If both spouses had ten times salary plus the mortgage as the sum insured, the surviving spouse and dependant children would be in a much better position to face the new challenges ahead.

There are people charging fee for advice, as already suggested in the comments. My question to these advisers, what other work are you doing for the client, is the risk bundled into another, or part of a full service offering? Are you invoicing the client, or are you taking your fee via another product, i.e. super?
Many people who say the are already fee for service, in my experience, are dealing in HNW, and charging an over all fee for an entire package, I've seen fees of 20k pa plus. This isn't fee for service on risk. Nor is charging a $500 SOA fee.
Going to your average mum and dad client, have them pay a $5000 premium then present them with an invoice for $2000, that's fee for service. Charging a client $2000 to handle their ip claim, that's fee for service.