Advisers put in hours of unpaid work

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We've had a great couple of pages from Naomi and Partners Life on commissions, and it has been excellent to see an insurer standing up and speaking out on this issue surrounding advisers and their livelihoods. Not many are.

Wednesday, May 22nd 2019, 10:10AM 2 Comments

Jon-Paul Hale

The lack of commentary from the insurers makes it a little amusing for advisers and adviser associations to  beat the drum about something that we have a vested interest in for what is perceived as the wrong reasons.

Added to that, as I have said before, those that are not advisers but are close enough to the industry to understand it, are not also high enough on the food chain to explain or influence the lawmakers about what is really going on.

Which leaves us with perceptions not based on any reality other than personal experience and bias about the real reasons. Because life insurance is damn complicated to the uninitiated.

Now, having come into the advice side of the business with an expectation that we will have what is happening in the foreseeable future, I have already had the opportunity to look at what is required to run a practice at the level our regulator is expecting.

It's been an interesting journey. One thing that has been said for many years and I'll add my comments to it, too, is that this is a career where you often do much work for nothing initially, but it pays in spades later. Moreover, it is this hidden effort that is disguised in what is perceived to be high incomes for the work done.

There is much work out of sight that an adviser does to get a client over the line.

Talking to an adviser today, it became apparent they have done a heap of work only to find that a combination of medical conditions and client stubbornness to see they represent an increased risk to the insurer has left them with a good 30 hours of work with no return.

When we look at what Naomi has put together, you get a clear picture of what we get paid for and what we don't. Moreover, looking through that there is a clear disconnect between what is expected of an adviser and what they actually get paid for.

Claims is a clear example. In my business, the upfront commissions cover off all the things Naomi has talked about. The reality is when I'm working with someone with a claim it is the upfront from other clients that pays for that claim management, because that is the cash flow at the time.

It's not like we go, "oh, we'll need x per cent for claims, throw it in a bank account and leave it there ignoring tax and operating costs until the claim arrives". We have to pay taxes when we receive it not when we use it... So cash flow on the day is how this works.

So while I have suggested that payment for claims management is something to think about, I'm not actually serious about that.

As we have seen with Christchurch and other examples, when there's money available for people in vulnerable states, other people take advantage.

If we were to implement a form of payment for claims you can guarantee we would see all manner of ambulance chasing where it's nothing more than "I'll sort your claim, sign here", the ambulance chasing shark gets paid, and they do little more than forwarding emails if you're lucky.

A disaster waiting to develop quite frankly.

Tags: Jon-Paul Hale

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