Speaking at an adviser roadshow held yesterday in Sydney, Asteron Life executive manager Mark Vilo outlined the main points of its response to the Trowbridge Report, saying that the business initially “oscillated” over whether or not to put in a submission.
However, the insurer decided to “because we are a supporter of the independent financial adviser market [and so] there was a lot in there that we wanted to respond to”, he said.
Mr Vilo said the insurer’s submission looked closely at the different remuneration structures put forward by Trowbridge.
“In the response, we provided pros and cons for each of those and whether they would address the challenges of our industry,” he said.
Asteron Life’s submission also commented directly on the level commission proposals.
“One of the things we put forward in the response was the idea of having a form of naked or wholesale pricing, in the same way that the investment fraternity do,” he told the audience.
“The adviser acts as a wholesaler. If the client comes to Asteron Life, they pay the full rack rate, but if they go via adviser they get the wholesale rate and the advisers can dial up the fee.”
Speaking to ifa, Mr Vilo said the challenge for advisers would be to put a value on their advice and that it was entirely possible that the life industry would move to an exclusively fee-for-service model at some point in the future.
“Advisers should start thinking about their business models and whether or not their current model is future proof,” he said.
“At the end of the day, it’s about advisers putting a value on the service they provide.”
These comments come as insurers have come under pressure from members of the IFA community to reveal their positions on risk remuneration.
“Wholesale option”. “Naked pricing”.
Don’t advisers currently have the choice to dial down commission and apply their own fee (on new policies) with any insurer on the market?
And there is already at least 1 insurer on the market who offers to collect the adviser service fee as part of the direct debit payment.
Not exactly a change on Asteron’s part. Or have I missed something?
[quote name=”emkay”]
Yes Laurence, I AM a risk adviser. I ALSO do Super. Is that OK?[/quote]
My apologies then – I generally consider a risk adviser as somebody who exclusively provides advice on risk. The name sort of implies that – otherwise you’re a financial planner for example.
Is that it-a thought bubble on wholesale pricing. Come on Mark Vilo, show us the lot
One of my promises to myself when this commission bullsh##t finishes is my relationship will chang with every provider I use. I will remember those who told ALL the truth, those who walked both sides of the street, and Ministers who apparently have different messages for everyone who complains
Insurers will have to earn my business, and good products alone will not wash
And trust ? That went out the window when the banks were allowed to drive their selfish agenda in the name of consumerism
And if I hear the Coalition say they are a small business government lookout !!!
[quote name=”Lawrence”]@emkay
Have you every walked in the shoes of a risk adviser? I thought they didn’t have to deal with FDS or Opt-in.
Still, industry has to adjust and they’re just sharing their ideas.[/quote]
Yes Laurence, I AM a risk adviser. I ALSO do Super. Is that OK?
Lawrence, I assume that if moving to a dialled in fee as proposed by Asteron that opt-in and FDS would become relevant as it is similar to an asset based fee… In reality this would work the same as commission but just puts more admin burden on the adviser which is the trend at the moment.
I could be wrong but I am assuming that is where emkay is coming from.
The wholesale option is an interesting approach and one that should receive more than a cursory look. Too many advisers have had risk as an ancillary service to their investment advice and hidden behind the commission options provided by the product manufacturers. Risk done well is a highly skilled and valuable service. Under a wholesale priced model the current risk professionals will be able to further differentiate themselves from their competitors and will help lift public and government perceptions of the risk industry. They will help bring the focus onto the value of risk advice rather than a product solution.
I will challenge Vilo though on where he thinks the investment manufacturers are. They still have a long way to go to eliminate unnecessary fees in their platform and when a manufacturer has multiple fee versions for the same platform one has to ask if that is fair for either investor or adviser.
@emkay
Have you every walked in the shoes of a risk adviser? I thought they didn’t have to deal with FDS or Opt-in.
Still, industry has to adjust and they’re just sharing their ideas.
Asteron have stated they are a supporter of the Independent Financial Adviser market and therefore should have no issue with releasing a full copy of their submission rather than a “glimpse”, to the independent financial advisers that also support Asteron.
The nature of confidential submissions from product providers to the LIAWG creates an environment of mistrust between the information that is being dripped out and the detail that was included within the submissions.
This mistrust between advisers and product providers may have no basis at all, but when advisers are not privy to the content, it is only natural to question what other information is being withheld.
The corporate protection machine is well and truly in control and the insurers who do not release copies of their submission to their “trusted” adviser network are playing them for fools by stating “we are with you, but we wont let you see what we said or recommended about your financial future”.
great idea, along with FDS, opt-in, “rack-rates”, “dial up fees” etc etc I wont actually have any time to sell your product. Words are cheap, as a “supporter” of the IFA you would do well to walk a mile in the shoes of a risk adviser, lets see what you come up with then.