Hewison & Associates has made moves to stamp out commissions on insurance polices, applying a fee-for-service model to life, total and permanent disability, trauma and income protection insurance.
The firm will rebate all commissions received back to insurance policy owners and, instead, charge for the advice provided to establish the policy and review it annually.
The move will save clients thousands of dollars in hidden fees, Hewison & Associates chief executive John Hewison said.
“What consumers don’t realise is that in some cases advisers will receive 140 per cent of the first year premium, and then 20 per cent each year after that, in commissions,” he said.
“Wiping out commissions on insurance is a sure fire way to reduce the cost of personal insurance as well as encourage people to seek advice on how to best protect their income and their family, without paying excessive premiums.”
Industry bodies such as the FPA and the Association of Financial Advisers (AFA) supported the move.
“Obviously we are supportive of any move to increase transparency and improve the benefits of professional advice to consumers, including potentially better pricing for the services they receive,” FPA deputy chief executive Deen Sanders said.
“In making the decision to continue to allow commission on risk products … we acknowledge and support those members that take a strong stance on full fee-based services whilst also recognising that not all Australians are able to take advantage of those services.”
AFA chief executive Richard Klipin applauded Hewison & Associates for their stance.
“Obviously in their market a fee-based model is what supports their value proposition and that’s an appropriate model for their client base,” he said.
“However, the market is diverse and there are various models and client segments, some that enjoy a fee-based model and some that enjoy a commission-based model.”
