Charging fees in risk advice

Commission has been, and probably will continue to be, the main way that sales of insurance are rewarded. Adequately disclosed that should pose no great risk to consumers. But two forces argue for a broader approach, where fee charging at least becomes part of the mix.

One is considering a future where fees might have to play a bigger part. The other is more immediate. It is the principle of cost recovery – each service should cover its own costs. You don’t mind going the extra mile for a client where you will be receiving a commission, but there are plenty of situations where you won’t.

For example: consider a client that asks you to review an old policy and see whether it is still suitable and should be maintained. What if you know this client has a health condition which will prevent obtaining a replacement cover? Your investigations into the old policy might be very useful to the client, there may even be a possible claim, but will certainly not create any commissionable activity.

Without a fee option, you may either you decline to help, or you do some work out of the goodness of your heart.