The changes happening in the Financial Services Industry are aimed at making Financial Planning a Profession, similar to Accounting and Law with the outcome being that the end user/client gets a Professional service and a fair deal. There is no place in the future for commission-driven sales people whose main aim is to maximise their income, often at the expense of their "clients".
While most of the focus is on the agents/brokers/Financial Planners who sit face to face with clients; perhaps we should be looking at the large Life Assurers and what they are, or are not doing to encourage best practice by the peope who sell their products. Many of these companies champion their commitment to the end user, but are they really concerned about the man in the street or are they merely posing while focusing on sales and shareholder returns?
My concern stems around the way these companies pay their consultants who call on Financial Planners. I think we can all understand that these consultants will find it difficult not to focus on the activities which will maximise their income as this is how they feed their family. In most cases these consultants are paid on how many sales their Financial Planners make on their behalf while very little credit is given to them for educating/training their Planners on how to best help the end user/client. Much focus is on trashing other companies' products by highlighting their shortfalls vs the product house they represent. They are not rewarded for building long term relationships, if a Financial Planner does not sell a certain amount of their product they have to move on, even if the Financial Planner is excellent at their job.
Many life products are now extremely complex with all kinds of links to wellness and reward programs, others use term assurance or are needs based, all which make the Financial Planners job at selecting which product/company to use very difficult. It should make sense that the life companies, especially a new company entering the market with a complex product, should not pay its consultants on the number or size of sales but rather on educating and assisting Financial Planners on how best to use the product to the benefit of their clients; sadly this is not the case. The companies' Directors stand in front of Financial Planners proudly proclaiming how much better their product is than their competitors and how much market share they have taken since entering the market; yet the very people they employ to deal with the Planners on a day to day basis are being treated like second hand car salespeople.
I believe Financial Planners should be looking at how the large life companies are paying the people that they (the planners) deal with daily as this will give them an indication as to what these companies true commitment is to making the industry a better place. We all understand that shareholders interests are important, but should they come before your employees?