Meddling With Commissions Could Hurt New Zealanders – Severn 


The new Chief Executive of Professional IQ College has cautioned the Government to be careful with taking a hasty approach to adviser remuneration in the insurance sector.

Former PAA CEO, Rod Severn, who is now leading financial services education and training provider, Professional IQ College, says he is concerned about the flow-on effects that the potential removal of commissions could have on the industry and New Zealanders.

This follows the Government’s recent call to remove sales incentives in the life insurance sector, although it is yet to reveal whether this will include commissions (see: Government Pledges…).

Professional IQ College CEO, Rod Severn

“People still need advice. The government needs to be very careful here – if they eliminate commissions completely they are going to hurt a large chunk of the New Zealand population,” said Severn.

“If commissions are zero and we go on a complete fee-for-service industry, it’s going to turn the industry up-side down.”

He said if consumers have to pay a fee for advice, this could lead them to believe they can no longer afford and access advice.

“They might not now get the advice that they need, which is going to hurt the lower part of the social-economic groups in New Zealand and that is a real shame,” said Severn.

He added that a mass exodus of advisers from the industry brought about by a reduction in commissions, could have serious flow-on effects, causing issues for insurance companies who rely on advisers for their business, which may lead to dealer groups disappearing and advisers finding themselves without a financial advice provider.

“There’s a flow-on effect that could be quite dramatic and catastrophic for the industry as a whole so these are things that need to be thought through very carefully,” he said.

“There’s a flow-on effect that could be quite dramatic and catastrophic for the industry…”

“We’re already the third least-insured country in the world, only in front of Greece and Ireland and that’s not a good look and [removing sales incentives] may well exacerbate that.”

But he said well established advisers with strong networks in place are in a strong position to succeed regardless of a change in incentive structures.

“Even though the Government may well decide or legislate that commissions are either going to be reduced or eliminated, I think if you’ve got a good practice, you’re a well respected, established adviser and you’ve got your networks and referrals going, I don’t think you’ve got anything to worry about. People still need to get advice,” he said.

“Clients will understand that they’ve got to get paid and they’ll pay. It’s new people coming in at the lower socio-economic level that are going to miss out here.”

Professional IQ College is currently developing a one-day workshop for advisers still needing to complete the New Zealand Certificate in Financial Services Level 5.

Click here to contact Rod Severn for more information.