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Is the LIF a disincentive to new planners?

The Life Insurance Framework (LIF) may act as a disincentive to university graduates entering the financial services industry as life/risk advisers, according to the results of a survey of life insurance executives conducted by technology provider DST and the Financial Services Council (FSC).

What is more, the research suggests this will lead to a significant ageing of the advisers focusing on life/risk.

The survey, conducted during the FSC’s recent Life Insurance Conference in Sydney, pointed to concern among respondents that the pool of life/risk advisers will be become less diverse as a result of the new regulatory regime.

“There is a strong sense that LIF will not attract university graduates in the same way as professions such as legal and accounting,” the survey analysis said and pointed to the fact that this was a view shared by 71 per cent of respondents.

It said that, partially as a result of this, 54 per cent of polled executives believed that approximately half of all advisers would be over the age of 50 by 2025, with a further 23 per cent believing that approximately 30 per cent of advisers would be over 50.

The survey analysis claimed this lack of diversity represented a challenge for the industry in circumstances where consumer needs were becoming more diverse.

“This underlines the importance the Financial Adviser Standards and Ethics Authority’s mapping of adviser qualification pathways and ethics,” the analysis said.




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If doctors' remuneration was reduced by two-thirds for treating patients who turn up at emergency - but the hospital kept the balance - do you think more people, or less people, would want to choose medical practice as a career ? Of course LIF has created a problem !

This was exactly what the banks and life insurance companies intended when they drafted the rules. Fewer advisers means more consumers will be forced to go direct, straight into the hands of these institutions who will rob them blind with rubbish, over-priced policies. They are at it again at the Royal Commission. Hayne, Orr and co think they had a big win during the last few weeks, but look at how this is heading towards cuts to mortgage broker commissions, cutting off or capping adviser remuneration etc. If the RC goes down this path, the number of independent advisers and mortgage brokers will be decimated. What a gift for the banks and life insurance companies! There will be no-one left to hold them to account.

Totally agree, Truth in that saying 'the path to hell is paved by those meaning well'. Their so called 'oversight' is unfortunately blinded by ignorance and total lack of foresight.

I used to work in a Big Four bank as a financial adviser and now I'm independent and my clients really value my independent advice. Can I please encourage all advisers to put a submission into the Royal Commission.

I think if the Royal Commission receives multiple suggestions from independent (non-bank aligned) advisers suggesting that the LIF discounts MUST be passed back to the consumer, ie the Life Companies MUST show how policies have gotten cheaper by 30% in 2018, a further 10% in 2019 and yet a further 10% in 2020 rather than the Life Companies pocketing the gain as a result of having to pay less upfront commissions, this might go some way to removing the vested interest that Life Companies have in reducing the upfront commissions (for hybrid commissions).

As soon as they increased the clawback period, we moved out of the space. We don't churn, we don't rewrite risk from other advisers, we don't even write that much risk as a practice, but I'll be damned if I'm going to hold off on seeing revenue as income until a longer period expires. There are times when clients change circumstances, their credit card expires and you can't reach them, or any number of things, and for us to cop the brunt of that, on top of a much lower income per client is not worth the risk.

One plus, you get to tell the new BDM from each provider that calls to introduce themselves and a new fantastic suite of products to bugger off

The banks are getting out of the wealth management and life insurance business.
So who's left, fewer and fewer life insurance companies who will rape ravage and pillage the consumer with inferior products as the Royal Commission into banking have now revealed.
So look at what you wish for.
Unless there's a reversal of the LIF legislation, sooner or later, the FSC sponsored insurance industry will rely on Direct marketing of their products.
It will be interesting to see how that works out with the last man standing (Insurance Company).
One things for sure, advisers under the current regime will not waste their time being involved in the life insurance industry. The report of dwindling numbers expected to enter the industry supports that...... then what ?
As the saying goes, Life companies will "reap what they sow".

Not only the life companies but the politicians and largely ignorant decision makers and questioners, such as the RC. Despite the number of submissions from advisers and active groups like Synchron, the RC to date has shown little except their utter disregard for us as anything but despicable and yet to be proven guilty, so our voices won't be listened to. Sad day indeed when the fate of entire industries and professions is decided by unqualified ill-informed public servants.

Oh here we go. The dodgy FSC got this through by misleading government over actual lapse data and inventing a churn issue that was not there in the first place. They just expected advisers to suck it up, take a 50% pay cut but carry on writing business. They also expected to write more direct junk insurance.
Now lets look at what has happened. They have all already seen a big drop in new business. Every BDM I speak with is saying business is terrible and they don't expect to hit anywhere near target. They insurers are now panicking also because they have realised that the junk direct model is going to cost them a fortune in the future with high lapses and even higher litigation.
And yes risk advisers will not re qualify to stay in an industry that is not profitable and yes new entrants will not look at risk advice BECAUSE ITS NO LONGER PROFITABLE to write it post the LIF.
As soon as Opt in hits the insurers are sunk without the very risk advisers the FSC set out to destroy and there will be no sympathy.
Instead of the FSC now trying to lobby government into ditching the LIF through this route they would be better off falling on their swords and admitting they mislead government in the fist place and created a monster that will now destroy them.

have a look at the Board - it's the who's who witness list of the RC.

Won't be long now before independents are squeezed out and the banks flee, all that will be left are some industry super funds, their own backend offerings before calls to nationalize.....and so the market dies with thunderous applause "those dirty advisers and their commission, those dirty banks and their profits!".

Question, what have the industry bodies apparently meant to represent us been doing the last decade?

Well said Tommy. The ISA have a distinct advantage; they have an exceptionally strong lobby group (and ally in the Labor party) and speak with one voice with a focus on their clear objectives.

Unfortunately, our idiot member assoc's have had delusions of grandeur of being a professional body (despite inherent conflicts and un-admitted inabilities), ineffectively vacillating in stupendously erroneous debates around education, enshrinement, or fees versus commission arguments (Rantall was a weak distracting disaster at the worst possible time) rather than focusing on fighting for our rights with as much vigor as the ISA.

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