Myth: I Have to Pay for Insurance Advice
One reason people put off talking to an insurance adviser is the assumption that getting professional advice will automatically come with a large bill. But how insurance advice is paid for may be different from what you expect.
At IFO Peace of Mind Advice, we generally don't charge you a fee for the insurance advice we provide.
If you proceed with the advice, we will usually receive commission from the relevant product provider when the risk insurance policy is issued. There are some circumstances where a fee may apply, and these are disclosed as part of our advice process.
Why Do People Think Financial Advice Is Expensive?
The words “financial advice” can sound like a service reserved for people with large investment portfolios or complex finances.
That can lead people to assume they will need to pay a consultation fee before they can even ask questions about insurance.
Insurance advice often works differently. At IFO Peace of Mind Advice, our usual insurance advice model allows us to provide advice without charging the client an upfront advice fee in most situations.
So How Does Insurance Advice Usually Work?
We Understand Your Situation
Your adviser discusses your circumstances, financial responsibilities, existing insurance, goals, priorities and budget.
We Provide Advice
Your adviser considers appropriate insurance solutions and explains recommendations, policy features and important considerations.
If You Proceed
If a risk insurance policy is issued after you act on our advice, IFO will usually receive commission from the applicable product provider.
What Does It Mean When an Adviser Receives Commission?
The insurer may pay the advice business rather than you paying an upfront advice fee.
If you proceed with a risk insurance policy based on the advice provided, IFO Peace of Mind Advice will usually receive commission from the insurer.
Commission can include an upfront payment based on the insurance premium and, depending on the arrangement, ongoing renewal or trail commission.
Receiving commission creates a potential conflict of interest, which is why transparency and the advice process are important.
IFO's advisers are required to prioritise your interests. Our disclosure information explains how commissions and potential conflicts are managed, and your adviser can provide more information about commissions relevant to the advice you receive.
What Does Insurance Advice Actually Include?
Insurance advice should be about more than simply showing you a premium and asking you to choose an insurer.
Understanding Your Needs
Looking at your income, debts, family responsibilities, existing cover, financial goals and the risks you want to protect against.
Comparing Suitable Options
Considering available products and explaining important differences in policy features, definitions and structure.
Structuring Your Cover
Helping determine how different types of protection may work together and considering an appropriate level of cover for your circumstances.
Helping With the Application
Supporting you through the application process and helping you understand any terms offered by the insurer.
Ongoing Reviews
Reviewing insurance as your circumstances change can help ensure your protection continues to reflect your current needs.
Claims Support
Your adviser can also support you through the claims process and help you understand the information the insurer may require.
Does That Mean Insurance Advice Is Always Free?
No. That's an important distinction.
IFO's general position is that we do not charge clients a fee for the advice we provide because we usually receive commission if the client proceeds. However, there are exceptions where a fee may apply.
Examples may include:
- You request advice or services relating to a product where IFO does not receive commission.
- You request services relating to a provider or product outside IFO's usual provider arrangements.
- A product provider requires commission to be repaid within the period covered by IFO's disclosed commission-repayment arrangements.
If a fee is going to apply, it should not come as a surprise. IFO's disclosure information explains the circumstances in which fees may be charged, and applicable arrangements are communicated during the advice process.
Should I Avoid Advice Because the Adviser Receives Commission?
Commission by itself is not a reason to avoid receiving advice. What matters is understanding how the adviser is paid and how potential conflicts of interest are managed.
A good advice process should start with your needs and goals rather than simply choosing a product based on how an adviser is remunerated.
You can ask your adviser how they are paid. Your adviser can explain the commissions and other incentives relevant to the products they can advise you on.
Why Speak to an Adviser Instead of Choosing Insurance Yourself?
Price is important, but insurance policies can differ in more than just the monthly premium.
Definitions, exclusions, benefit structures, optional benefits and claim requirements can vary between products and insurers.
Advice can help you understand those differences and consider whether the policy you are looking at actually addresses the financial risks you want to protect.
Frequently Asked Questions
Do I have to pay just to speak with an IFO adviser?
Generally, IFO does not charge a fee for the insurance advice it provides. There are exceptions to this general position, which are set out in IFO's disclosure information.
How does IFO get paid if I don't pay an advice fee?
If you proceed with a risk insurance policy based on the advice provided, IFO will usually receive commission from the applicable product provider when the policy is issued.
Will my adviser tell me about commissions?
Yes. Information about commissions and incentives relevant to the advice you may receive is disclosed as part of the advice process.
Can a fee ever apply?
Yes. There are circumstances where a fee may apply, including some services where IFO does not receive commission or where commission must be repaid. You should refer to IFO's current disclosure information for the detailed terms.
Does talking to an adviser mean I have to buy insurance?
No. Receiving information or discussing your circumstances does not mean you are required to proceed with a policy. Your adviser can explain your options so you can decide what is appropriate for you.
Have questions about insurance but aren't sure where to start?
Our advisers can help you understand your existing cover, discuss the risks that matter to you and explain the insurance options that may be appropriate for your circumstances.
Talk to an AdviserThis article provides general information only and is not personalised financial advice. Fee, commission and remuneration arrangements can change. Please refer to IFO Peace of Mind Advice's current disclosure information or speak with your financial adviser for information relevant to the advice and products being considered.