Despite facing “a few leaner years” during the initial stages of the Life Insurance Framework (LIF), advisers should over the long-term see an increase in the value of their client book.
Asteron Life executive manager Mark Vilo said while there are still “high levels of emotion” among advisers regarding the LIF, the proposed reforms could enable advisers to increase their business’ value.
"Advisers who see life risk as a long-term business proposition will benefit from reform which can increase the value of their book over time,” Mr Vilo said.
“However, there will be a few leaner years from a cash flow perspective as they adjust to new conditions,” he said.
In an effort to support advisers on the road to reform, Asteron has launched a new tool – the Remuneration Modeller – which will help advisers estimate the effects of the proposed remuneration changes on their business from 1 January 2016.
"Advisers have understandably been concerned about the shift in commission structures as well as clawback provisions and how it will impact their cash flow,” he said.
“In response, we’ve created a tool to help them make informed decisions about their business.
“Our modelling shows that in many cases advisers will be paid more total commission than currently, but there will be some challenges as they make the move away from higher upfront commissions and allow for new clawback conditions,” he said.
The modelling tool asks a range of simple questions about an adviser’s new business, in-force premiums, number of clients, remuneration types and lapse rates.
The Remuneration Modeller then projects revenues over time and allows advisers to assess the impact of different clawback scenarios.
“We have every reason to feel optimistic about our industry’s future. The Remuneration Modeller is just one way that Asteron Life is supporting the road to reform and helping advisers to make the most of opportunities,” Mr Vilo said.