Financial advisers and licensees may need to re-evaluate their advice models and revenue streams if the federal government's ban on risk commissions inside superannuation becomes legislation, an advice executive has said.
MLC Advice Solutions protection advice national manager Fiona Navarro said while she would like to see lobbying continue to amend the government's planned ban, there was also a potential reality the risk insurance industry needed to face.
"If legislation gets passed, then you have to make it work and I suppose as everyone is doing we're looking for the opportunity there and there will always be an opportunity," Navarro said.
"From an adviser's perspective it would mean they would need to re-evaluate their current advice process and from a licensee's perspective as well I think it would mean licensees would potentially need to reconsider how they support their advice businesses through this."
She said while MLC planned to work with its businesses and licensees, it would need to change some of the support it provided.
"At this point in time what we're thinking is from an adviser business perspective if you have additional complexity and more work potentially your revenue is affected, then it's time to look at all the activity that you have inside your advice business and say what's routine and where do I add value," she said.
"It's about focusing more on where you add value and where you can earn revenue and potentially looking at outsourcing more activity. That's the sort of thought we're having."
She said determining how to provide additional value to clients had always been an advisory business's biggest challenge, a challenge now exacerbated by the Future of Financial Advice (FOFA) reforms.
"What I think has happened now, and FOFA has really just exacerbated this, is that if FOFA goes through in its current form then that problem is not just a challenge, it is really an imperative because even the opt-in situation means the client must be experiencing ongoing value in a relationship," she said.
