AMP supports commission cut

AMP New Zealand has lent its support to colleagues across the ditch, who have slashed advisers' upfront commissions on life insurance to 80% of the first year’s premium.

Thursday, May 7th 2015, 6:00AM 2 Comments

by Susan Edmunds

AMP's Australian chief executive Craig Meller said the 3500 advisers who distributed its products would use a hybrid model from July 1, of 80% upfront and 20% annual trail commission for the life of the policy.

Previously, they were paid 120% of the first year’s premium.

Advisers will only have access to first-year upfront commission once every five years per policy.

The Australian industry has come under intense pressure to reform adviser remuneration.

The Trowbridge Report recommended level commissions be cut to no more than 20% of premiums, or $1200 for premiums below $2000. Advisers have been accused of churning business for upfront commission, to the detriment of clients.

Meller told Australian media the AMP move was worked out in consultation with advisers. “Advisers are essentially going to have to adjust their business models to live in an environment where they are not going to have the same upfront remuneration,” he told the Australian Financial Review.

A spokeswoman for AMP in New Zealand said it supported the decision.

"We support the leadership role taken by AMP in Australia as it continues reform in the advice industry towards higher standards of advice. AMP New Zealand has adopted similar leadership positions around commissions - leading the market in investment fee for service models in 2011 and taking a leading role in supporting the largest QFE for independent financial advisers in the market. There does not appear to be the same level of regulatory and market concern in New Zealand around the remuneration of advice and as such it is not apparent where or when the drive for similar reform to Australia will occur. We have no immediate plans to follow suit.”

Tags: AMP Commission financial advisers health insurance Life insurance

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Comments from our readers

On 8 May 2015 at 8:15 am billy the broker said:

Amazing when it comes to talk about wording of contracts cants shut some of you guys up!! But lowering commissions not a peep to be heard. This sends a message in itself!! For the record this is the way forward and will get rid of our show ponies who move huge client bases and get hollow pats on the back, you know who you are...peace out y'all

On 9 May 2015 at 7:04 pm Mark Ogden said:

I would like to believe lack of comment might suggest no one disagrees. The only question is which carrier is going to be brave enough to pull the trigger first and cut upfront commissions here?
I don't think it's all about lowering commission (@Billy)it's about only paying for new business once irrespective of the carrier.
It's having the intestinal fortitude for the carriers to do their part in stopping churn. At present, it's all a bit self- serving really at the consumers cost.
Everyone will soil themselves when legislators decide to step in and do it for us.
We are seeing small steps and talk which is positive, I suppose.

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