The survey, which questioned 210 advisers from across the UK, Europe, Middle East and Asia, found that two thirds (60%) of international advisers are changing their business model by reducing the amount of business they write on a full initial up-front fee or commission basis.
Old Mutual said a whopping 88% of advisers recognise the benefits of moving from full initial up-front fee or commission to taking less up-front and more on an ongoing basis.
The life insurer said the top reasons cited for the change include building better long-term relationship with clients, improving the value of the business and that lower initial charges help improve client outcomes.
Regulation welcome
The survey shows that the overwhelming majority (92%) of international financial advisers are aware of the regulatory change taking place in their region and the need for advisers to transition to a new model.
Earlier this year, the UAE’s Insurance Authority confirmed it will ban indemnity commissions, limit fees and charges of industry products and put in place tighter rules on financial advisers.
Meanwhile, Hong Kong introduced regulation that eliminated indemnity commission on both investment-linked assurance schemes (ILAS) and long-term insurance products last year.
Around 89% of advisers believe regulatory change is a good thing, said Old Mutual, because they believe it ensures greater transparency which benefits the client.
Other reason cited by advisers include that it helps to professionalise the advice industry and puts a greater focus on advice rather than being a sales-driven process, said the company.
‘Future Fit’ programme
Brendan Dolan, sales director, Old Mutual International, said: “With the international advice landscape rapidly changing, it is really encouraging to see advisers recognise the need to adapt.
“The vast majority of advisers are evolving their charging model towards an ongoing service proposition with their customers, and they recognise the significant customer benefits this can bring.”
Dolan added that for advisers who are interested in “transitioning” their business model, but are not sure where to start, Old Mutual International has developed a Future Fit programme to support them.
The initiative consists of an online resource centre, which provides advises with access to expert guidance, downloadable learning packages, articles, and videos.
