Financial Standard Comments - Life commission clawback forced on advisers: Synchron

Comment by James Harman (Bristol Street Financial Services)

James Harman (Bristol Street Financial Services) — Mon, 12 Nov 2012 14:08:57 +1100

Hi.

There is an easy solution to this problem and there has to be a phase in period so that advisors can get used to the lower commissions if they wish to go to hybrid or level commissions.

Level commission - 1 year responsibility

Hybrid commission - 2 year responsibility, if the policy lapses in the first year 100% clawback and then 1/12 clawback per month until the end of the second year.

Upfront commission - 3 year responsibility, if the policy lapses in the first year 100% clawback, 50% in the second year and 1/12 for the remaining 12 months.

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Comment by Bill Medhurst (Worldwide Group)

Bill Medhurst (Worldwide Group) — Mon, 12 Nov 2012 14:26:56 +1100

Life office management again continues with its unproductive "them and us" mentality and then wonders that there is a persistency problem with business written.

Life offices chose to position themselves as product providers and by so doing further disconnect themselves from advisers thereby creating a "relationless" business environment based on nothing more than the corporate bottom line, profit. Advisers have responded in kind finding greater profit in churning business than in developing and nurturing longer term business strategies with clients and relationships with life offices.

Rather than continuing on a path of further alienation [the proposed punitive clawback of commission] life offices should seize the initiative and determine to renew and foster the relationships they once had with advisers. The results of positive relationship building would prove, in the longer term to be infinitely greater than those gained through implementation of this repressive backward step.

Both life offices and advisers will thrive and prosper if we move forward working positively together rather than having life offices fearfully imposing sanctions which will only cause further damage to an already tattered relationship.

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Comment by Anton Boreckyi CFP (Melbourne East Insurance and Financial Planning Services Pty Ltd)

Mon, 12 Nov 2012 15:18:33 +1100

John Brogden, start listening. You might learn something. As a certified financial planner with 31 years of experience, I can write quite comfortably that we of the silent majority are sick and tired of the changes and interference which is in no way beneficial for anybody. I agree with Don Trapnell. We've been there, done that and now we're going back there again. Thirty years ago an SOA was not required when providing risk insurance. We just got on with the job and sold insurance to protect the family and businesses. Today, we research analyse and construct reports. If a 3 year penalty period is to be reintroduced, I wonder who gets to keep the claw back, the insurer or the insured?

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Comment by Alec Woodgte (Kilcott Securities)

Alec Woodgte (Kilcott Securities) — Mon, 12 Nov 2012 15:22:31 +1100

Is this not what the High Court would call Discrimination? If advisers are to come under these
draconian measures, then the same must apply to car salesmen, medical practitioners who
receive remuneration for referrals, commission sales people of all ilks,engineers and
architects who provide services to the retail public and what about surgeons - if the surgery
is ineffective or requires further attention within three years does the customer get part of the fee back? Of course not.

Oh what an an Insurance industry human resource exodus you will create!!!

Pity your not part of it now.

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Comment by Andrew R (HPWM)

Andrew R (HPWM) — Mon, 12 Nov 2012 15:34:29 +1100

Perhaps the life insurers could waive these proposed three year claw backs for individual advisers with proven persistency records by simply segmenting advisers in a similar manner to what many advisers have been doing with their clients for many years now?

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Comment by Frank Smith (adviser compliance services)

Frank Smith (adviser compliance services) — Mon, 12 Nov 2012 15:42:22 +1100

Totally agree with Bill. Does this mean the life companies will stop their "take over terms" activities when grabbing quick market share? I doubt it.
What if a client wants to reduce premiums without reducing the coverage? Then in order to meet the best interests duty the policy will have to be replaced as it no longer meets the client's needs. This will be recorded as a lapse against the adviser's record. That's simply wrong.

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Comment by David Rushworth (Rushworth & Assoc)

David Rushworth (Rushworth & Assoc) — Mon, 12 Nov 2012 16:00:31 +1100

It's about time life brokers had there own independent organisation to represent them rather than the FPA and AFA. I think we would have a better voice rather than having to put up with organisations that have multi-purposes. The three year claw back is totally unrealistic when trying to run a business. I wonder if Mr Brogden had to pay back his income due to lack of performance how secure would he feel.

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Comment by Rashesh Bhavsar (Fortune Wealth Creation Group)

Rashesh Bhavsar (Fortune Wealth Creation Group) — Mon, 12 Nov 2012 17:18:59 +1100

I strongly believe that there must be better solution to resolve this so called "Churning issue".

Nobody will enter in risk advisory industry if these kind unrealistic practices lies in the industry.

No other industry has to face this much red tape without any necessity as we are already highly regulated.

We should unite and work hard as what Australian Nursing Union did. Perhaps it is the time to have independent body to represent Individual Risk Advisers.

I totally agree with Don Trapnell, director of Synchron and thank him for his hard work to raise the voice in the industry.

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Comment by Andrew R (HPWM)

Andrew R (HPWM) — Mon, 12 Nov 2012 17:33:55 +1100

When one upgrades their phone, their car, their house, etc. it is known as a purchase. In most occasions this would be done for a myriad of reasons including getting newer technology, lifestyle changes, saving money, etc. When the same person upgrades their life insurance policy it is called churning...! This phrase was coined many years ago by insurance company execs and has no relevance today (except to their shareholder driven profits). Best duty demands advisers have open architecture to work with and introducing 3 year clawbacks is anti competitive so to Don Trapnell of Synchron we are with you!

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Comment by Stephen Catterall (Amazon Financial Group)

Stephen Catterall (Amazon Financial Group) — Tue, 13 Nov 2012 08:46:56 +1100

The relationship of alienation between life offices and advisers will be expanded if this policy goes ahead, Let us not kid ourselves, the Insurance companies have no loyalty to advisers, they already offer external avenues of procuring insurance online (every second TV advert), they are driven purely by profit. I must act in the best interest of my clients, if they need to reduce the cost of the cover, but maintain that amount of cover then i need to find a solution for this, going back to the insurance company to get them to reduce/discount will not work, hence we have to look elsewhere.

Advisers have been loyal to companies, as I have, however I now feel totally let down, by (Mr) Brogden and the FSC, who, I believe have never worked on a commission basis or had to run a practice in an environmnet that is becomming for hamstrung every day.

Don, keep up the good work, we should be working on an independant organisation to support us, forget the FPA etc, they all have their own agenda.

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