Customers have a range of preferences when it comes to how they pay for their financial advice, which is why financial advisers should consider implementing a range of payment options to suit their clients’ individual needs, according to MetLife Australia.
The MetLife Adviser-Client Relationship Report 2019 found that 78% of consumers who bought their life insurance through an adviser would prefer an upfront fee for future advice if it meant lower premiums over the lifetime of the policy.
When asked what types of advice consumers would be willing to pay a fee for, building up investments (54%) ranked first, followed by saving for retirement (50%), and getting life insurance (46%). For SMEs, seeking out life insurance (59%) was the top reason for seeing a financial adviser.
The research also revealed a lack of awareness around the commission advisers earned, with 55% of consumers unaware how much commission their financial adviser receives. But when asked if removing commissions would affect their willingness to see a financial adviser, nearly half of consumers indicated it would not, while only 19% said it would make them more likely to see an adviser.
Meanwhile, 72% of consumers thought removing commissions would mean more people being underinsured, which may be due to the perception that this would lead to higher upfront fees resulting in people choosing lower levels of cover, the report found.
“There’s a growing number of consumers who are interested in fees as an alternative payment structure for risk advice, which means it’s important for advisers and product manufacturers to offer consumers multiple options when it comes to paying for financial advice,” said Matt Lippiatt, MetLife Australia head of adviser experience.
He continued: “Consumers don’t have a problem paying for their insurance advice by way of a commission taken from the product, but there is an opportunity for greater education around how they work. Advisers who are embracing highly transparent charging models and have systems in place to continuously educate clients about the value they provide seem well placed to thrive in this environment.”