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Planners preparing for new life regulations

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Financial planners are starting to adopt the hybrid commission models in preparation for January 1 when the Life Insurance Framework reforms come into effect.

The changes include phasing down the rate of upfront commissions paid to advisers and capping trail commissions at 20%.

“Many planners are evolving their businesses to meet the regulatory requirements,” Investment Trends Senior Analyst King Loong Choi said.

A new report by the research company says support from insurers and technology providers is becoming more important for planners as their try to expand their life insurance advice model.

About 70% of planners are keen to get extra help to improve efficiency and bolster business support, according to Investment Trends’ planner risk report, which is based on a June survey of 495 financial planners.

The survey also indicates insurers need to provide a better value proposition, as 47% of planners stopped using at least one insurer in the past 12 months, up from 45% last year and 35% in 2015.

About 27% are looking to establish a new insurer relationship in the next 12 months.

“Insurers need to provide support from the back end, through seamless underwriting and online applications, all the way to the front end, by assisting planners with client engagement and education,” Mr Choi said.

“Insurers that cultivate their planner relationships and maintain high satisfaction levels will benefit from lower attrition levels.”