You can read an excellent summary of the Life Insurance Framework (LIF) reforms here: New Life Insurance Framework will test advisers.

I had to smile. Just the other day someone told me the best way to deal with the 33.3% cut to commissions on 1 January 2018 is to churn every client before December 2017 and:

  1. move every client to a shorter waiting period
  2. move every client to a level premium
  3. move every client to an agreed sum insured
  4. increase every sum insured by 33.3%.

That someone is not on her own. Amazingly, some expert articles in the financial planning press boil down to the same four strategies. These are articles from experts at well-known AFSLs. Their approach is embarrassingly cavalier: not much more than “Don’t worry. Be Happy. And increase the premiums”.

The Life Insurance Framework does not work that way. 

The Corporations Act does not work that way. These experts are breaching the best interests duty, the prioritisation of interest duty and the appropriateness of advice rule. Follow their stupid suggestions and you could end up on the wrong end of a banning order.

Clients do not work that way. They are smarter than that.

LIF and risk insurance practice viability

Dover estimates a start-up risk insurance practice will suffer a drop in real income of almost 40% over the ten-year period to 1 January 2028.

In other words, the LIF commission reforms mean it’s no longer viable to run a risk insurance only financial planning practice. Older established practices will get by for a few years. Their service commissions will keep them afloat. But over time, as old policies lapse, profit, cash flow and value will fall and one day it will be all over.

What can you do about this?

You can do two things. You can get more clients. And you can provide more services to your clients.

How do you get more clients?

Dover ACES helps you get more clients. And its free. Part of Dover’s service to you.

Dover understands how hard it is to run a financial planning practice in the current environment. 

We are on your team, helping you help your clients. 

You get one of the best looking financial planning websites in Australia and you are presented as:

  1. the leader of a highly skilled and experienced team including solicitors and accountants
  2. the author of a series of easy to read e-books that showcase your knowledge and skill as a financial planner, and prove your technical competence and credentials
  3. the author of a monthly newsletter that is by far the best thing going to clients anywhere in Australia, and which is sent automatically to each of your clients, your potential clients and to 500 selected social media recipients and
  4. the author of a weekly blog or diary entry sent to each of your clients, potential clients and up to 500 selected social media recipients each week.

Your Dover ACES website is dressed to impress, and brings your clients into see you, and brings your potential clients into see you.

That’s the key to maintaining net cash flow, profitability and value after 1 January 2018.

How do you provide more services to your clients?

And once your client comes in to see you the key is to provide more services.

A theme of our pilot fee for service workshops has been the need to provide a range of services to your clients, and not just rely on risk insurance services.

Dover helps advisers provide:

  1. Property advice (but no off the plan properties!)
  2. Legal advice
  3. Accounting services
  4. SMSF services
  5. Superannuation services
  6. Risk insurance services
  7. Direct share advice
  8. Retirement planning
  9. Employment counselling
  10. Debt management services
  11. Aged care services and
  12. Estate planning services.

Dover can introduce you to an expert in each of these fields. You are the primary adviser and the expert is the secondary adviser. The secondary adviser keeps you informed a and does not provide any other service to the client. The secondary adviser pays an agreed percentage of the fee, usually 20 to 30%.

The primary adviser can direct the secondary adviser to transfer the client relationship to a third party. This means the primary adviser gets the goodwill. For example, if the primary adviser refers $100,000 of SMSF administration fees to Dover SMSF, ie the secondary adviser, the primary adviser can direct Dover SMSF to transfer these fees to another SMSF provider in return for a goodwill payment of, probably, about $100,000. This $100,000 will usually be a CGT free capital gain.

Dover Accounting Outsourcing

Dover’s SMSF services are provided by Aaron Crosthwaite, a director in McMasters’ Brisbane Office.

Aaron is a solicitor, an accountant and a financial planner with years of experience in SMSF and general accounting services.

You can contact Aaron on 07 3338 5721 and

Aaron is supported by one of Australia’s largest SMSF service providers. Dover Accounting Outsourcing is based in Vietnam and comprises 45 SMSF accounting experts, some of whom have more than 12 years practical accounting experience and are amongst Australia’s most expert SMSF administrators.

The role of institutions