Finance Wise Global Securities Pty Ltd (fwgs)\u00a0has a unique referral offer for accountants. Fwgs offers 20% of the upfront income received and 20% of the ongoing trail.\u00a0 However, will this be sustainable a mere two years after the accounting exemption expires?<\/p>\n
Last Friday, the government handed down its final report on the Life Insurance Framework.\u00a0 Many of the changes, which have been welcomed by the majority of the industry associations, are positive for our industry and will bring improvements for advisers in terms of clawbacks and commissions.<\/p>\n
Say a premium is $200 per month or $2400pa. This premium includes stamp duty which is excluded from commissions paid.\u00a0 Thus, if the insurer paid 100% of the upfront, then the accountant will receive $470 upfront and $47pa.<\/p>\n
From July 2018 this reduces to $282 but the ongoing benefit will be higher. So this is still acceptable for the accountant – but\u00a0 what about the adviser? The adviser was earning $1,880 but, from\u00a02018, it\u2019s $1128.<\/p>\n
That is a significant haircut and entirely unsustainable. My prediction is an exodus of \u2018Lifeys\u2019 and increased fixed dealer fees for those remaining advisers. Advisers will then charge additional fees for service and this will exacerbate the massive underinsurance problem in Australia and result in further change.<\/p>\n
Key points from the government\u2019s report, include:<\/p>\n
1. Clawbacks reduced from three years to two years\u00a0<\/strong><\/p>\n If the policy lapses in the first year, 100% of the premium will be clawed back. If the policy lapses in the second year, 60% of the first year\u2019s premium will be clawed back.<\/p>\n 2. Premium only excludes government taxes<\/strong> Commission is to be paid on premium which includes policy fees, modal loadings and CPI increases. The only exclusion is government taxes.<\/p>\n 3. Transitional arrangements<\/strong><\/p>\n From 1 July 2016: maximum total upfront commission of 80% of the premium in the first year of the policy. From 1 July 2017: maximum total upfront commission of 70% of the premium in the first year of the policy. From 1 July 2018: maximum total upfront commission of 60% of the premium in the first year of the policy.<\/p>\n Finance Wise Global Securities Pty Ltd (fwgs)\u00a0has a unique referral offer for accountants. Fwgs offers 20% of the upfront income received and 20% of the ongoing trail.\u00a0 However, will this be sustainable a mere two years after the accounting exemption expires? Last Friday, the government handed down its final report on the Life Insurance Framework.\u00a0 […]<\/p>\n","protected":false},"author":1,"featured_media":457,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[19],"yoast_head":"\n