Advisers doing no-commission deals

Roughly 3% of risk advisers in New Zealand are operating on a no-commission basis, it has been claimed.

Thursday, July 23rd 2015, 6:00AM

by Susan Edmunds

In Australia, Findex Group has announced that all new life insurance policies recommended through its Centric Wealth and Financial Index Wealth Accountants divisions will be commission-free.

It has entered into an agreement with BT Group to deliver a commission-free product.

Chief of adviser services Michael Wilkins told media the policies will be distributed with an annual fee.

He said the move could reduce the cost of insurance by up to 30% for clients.

Russell Hutchinson, of QuoteMonster, said his company's surveys had shown the number of New Zealand risk advisers operating on a no-commission basis was small, but they were in the market.

He said New Zealand advisers already had access to products such as the one Findex is launching. “I can’t think of a company that does not offer a no-commission product," he said.

At least one adviser a month would contact his company asking to be allowed to quote based on 0% commission. At present, QuoteMonster does not have this capability but Hutchinson said that was set to change.

“About 3% of risk advisers are purely fee-based at the moment. I’m not saying it happens a lot but any life adviser who has been in the market more than a couple of years will have done a 0% deal.”

Fidelity Life has dropped its zero-commission product that allowed advisers to add their fee and have the total charged as one amount to the client.

But all the major insurance firms offer the option of a zero-commission product billed to the client, allowing advisers to invoice for their fee separately. Milton Jennings, of Fidelity, said that product was 30% cheaper for clients.

Australia’s Trowbridge Report recommended requiring all insurers to make a zero-commission product available.

Tags: Commission Russell Hutchinson