How much could you save by only paying for the advice you use?

Rather than leave you wondering, we thought we might share how we calculate if our fee for service insurance model will work for each client.


The premium p.a. below is based on our typical methodology to provide sufficient cover for the following typical profile and needs:

Age 39, Female, Non-smoker, Medical Specialist - General Practitioner
Income: $200,000pa (sole trader), Mortgage : $500,000, Working spouse, Children: Daughter age 2 and Son age 5.

Try entering your own premium p.a. (double tap for mobile) to see how our fee for service advice model might work for you.

 
 

This simple calculator uses real projection data from a high quality retail insurer’s quoting system generated on 25/11/2022. This insurer was selected as they use a middle range dial down of 27.5% and have had mid range premium increases in recent years, this has not accounted for any base rate increases. Fee for service for this client was based on standard fee/commission of $4,400 (before tax deduction) to recommend and implement a new suite of personal insurance.

 

Option 1 - With Commissions (standard across most advisers)

Insurance products include a commission as part of your premium, advisers can choose one of 2 remuneration options across all insurers:

  • An upfront remuneration which is 66% of the insurance premium in year 1 and 22% ongoing

  • A level remuneration which is 30% of premium per year.

More often than not this means the adviser does not charge a documentation (SOA) or implementation fee for insurance advice and clients “cross subsidise” each other. Your adviser is paid more for clients with higher incomes and sums insured so, assuming that the work to provide you insurance advice is the same, they will share some of the profit from these larger clients with you in the hope you will hold your insurance long term and become a larger client yourself.

Option 2 - Fee for Service (remove commissions)

Using a “dial down” option removes commission payable on your policy and your yearly premium reduces by up to 30%. Why do we offer this option where most don’t?

  • We believe that our clients should only pay us when we undertake work for them.

  • We remove the conflict of interest we believe commissions create.

The majority of our clients are Doctors in their mid 30s, they often have high debts and very high potential future income. Insurance premiums naturally rise each and every year while the need for cover tends to reduce. We don’t believe that paying your adviser an ongoing fee or commission works in your interest, so we remove it from the equation. We understand that our business model isn’t for everyone and we tell potential clients where we don’t think they will benefit from our services.

 
 

What does this mean for me?

We understand that the way we operate is different from most other financial planning firms, particularly when providing insurance advice on a fee for service basis. NOR Financial was built from the ground up to help young doctors as and when they need our help. We don’t charge for the first meeting so if you want to know more we are always here.