Mr Klipin said that endless debate about adviser remuneration is clouding the real issues which are inadequate levels of retirement savings and chronic levels of underinsurance.

“There is now a plethora of research supporting the fact that if commissions are banned, many ordinary Australians will not seek life insurance advice,” Mr Klipin said. “Without advice, Australians are often significantly underinsured or more commonly, and more worryingly, not insured at all.”

Mr Klipin referenced a Zurich consumer survey conducted in December last year, that paints a bleak future in which many ordinary Australians will not be able to afford life insurance advice if commissions are banned.

“All the noise about remuneration has railroaded the real issue which is consumer protection,” Mr Klipin said. “People need financial protection against life’s uncertainties. This summer’s floods and cyclones, last summer’s bushfires all served to highlight that need. Let’s not wait for the next natural disaster to tell us again what we already know – that people’s lives are worth insuring.”

Underinsurance is expected to cost the federal government $1.3 billion over the next 10 years, according to the Lifewise/NATSEM Underinsurance Report released in February 2010.

Mr Klipin said lobby groups with vested interests which attempt to camouflage the issue of underinsurance with an unnecessary debate about adviser remuneration do consumers a great disservice.

“These groups clearly have their own agenda and are working in their own, rather than the consumer’s best interest,” Mr Klipin said. “We are calling on Mr Shorten to work with us to help protect consumers against the financial impact of death or disaster and to resist tinkering with a remuneration system which is not broken.”

The AFA will shortly be undertaking the third tranche of its consumer/adviser research. The research, which is sponsored by AIA and conducted by Coredata/brandmanagement, will investigate why people – including those who use financial advisers and those who don’t – seek life insurance cover.

The post Minister Shorten: Please read the writing on the wall, lives are worth insuring appeared first on AdviserVoice.

Yet, I’m continually refreshed in my outlook on the future of financial planning in Australia.  I’m convinced the majority of planners are well intentioned people who genuinely care for their clients and can only conclude that successful financial planners are incredibly determined individuals who can ‘weather’ the storms of criticism.  As much as anything in their business lives, they thrive on the personal satisfaction of helping to improve the financial lives of their clients.

But that’s not to live in denial because there have been problems (and continue to be so) around education, compliance and supervision, conflicts of interest and remuneration methods.  That said, on the whole, progress is being made and in ten years we will look back at a decade or so of growing pains.

The most recent Suncorp Life Confidence Index result which shows a drop in overall financial confidence by consumers points to two key issues. More Australians need the comfort and piece of mind which comes from having a professional financial planner in their lives and secondly, it falls to financial planners to deliver the standards expected of professionals of all persuasions in order to underpin what in time will be demand which outstrips supply.

This really is a noble profession and it deserves to succeed in the Australian community.

The post Financial planning in Australia: a bright future appeared first on AdviserVoice.

The mid year Report outlines how the Global Financial Crisis brought to light numerous structural problems, resulting in various moves to strengthen remuneration practices. However, while some improvement is needed, it’s important to carefully assess any unintended consequences that may come from new hard and soft rules.

In fact AMP Capital Investors Director of Sustainable Funds, Michael Anderson identifies that with each company having its own unique characteristics it is difficult to find a remuneration structure that will be right for everyone.

“There are many remuneration methodologies that can be used and while each approach has its merits, there is no perfect tool that satisfies both shareholders and employees, and no one-size-fits all solution. It’s this balancing act that regulators and boards must consider and it’s no easy feat.”

Despite the complexity, AMP Capital Investors has a preference for performance hurdles that include a measure of long-term relative Total Shareholder Return (TSR). This model compares the performance of different companies’ stocks and shares over time by combining share price appreciation and dividends paid to show the total return to the shareholder.

“AMP Capital strives to invest in companies that will provide our clients with the best long-term returns, and in our opinion relative TSR typically provides the greatest alignment with that objective. As a performance hurdle, relative TSR is not only aligned with shareholder interests, but also has the added benefits of being easily defined, measured and communicated. While every approach has its problems relative TSR is one of the most robust in a wide range of situations.” Mr Anderson said.

The latest Corporate Governance report also examines gender diversity on the boards of Australian companies. The report identifies how discussions around board diversity are now becoming more focused on how to accelerate the progress of women into senior positions.

“As this focus on gender diversity continues, the selection of company boards will need to change. Having more women on boards has been linked with better performance and there have been many reasons cited as to why. Increasingly, shareholders will consider gender imbalance when engaging with the companies they choose to invest in,” Mr Anderson said.

The Corporate Governance Report, which is released twice a year, provides a summary of AMP Capital’s corporate governance activity. AMP Capital takes seriously its responsibilities as an investment manager, as an agent of shareholders in companies and as a steward of its clients’ assets. The latest Report included an analysis of the first half of the 2010 proxy season, detailing the votes cast and the governance issues considered.

The post Few easy answers when it comes to remuneration appeared first on AdviserVoice.