Partners is no longer paying override commissions to dealer groups. This is likely to have a major impact on some groups which relied on these commissions to run their businesses.

These payments, and fixed dollar marketing support, will stop on July 1.

Instead the life company will pay overrides to FAPs and payment will be made based on customer outcomes including initial advice and replacement advice process, cancellation advice, non-disclosure and misstatements, service activity and customer advice complaints.

“We are redirecting all previous over-riders and fixed dollar support payments into FAP over-riders (FAPOs) which will be payable to FAPs.”

These overrides will be based on the bonus commissions earned by the advisers within the FAP.

“This financially aligns the interests of advisers and their FAPs with customer outcomes.”

Partners Life managing director Ballantyne says these changes and some changes to commission structures are about who gets the money, rather the quantum the company pays out.

“It is the same amount of money in the system,” she says. “the difference is whose hand it goes too.”

In the past money had gone to dealer groups but hadn’t been used in the way it was intended. Under this model the adviser will make the decision how to spend the money to grow their business.

There is potential criticism that the money won’t be spent on the business, but Ballantyne doesn’t think this will be a big issue as adviser are facing increased costs and will need support.

Ballantyne says the changes are being made in response to pressure from the regulator.

“The regulator thinks that upfront commissions are too high and can incentivise poor adviser conduct.

“We want to demonstrate that commission can incentivise good adviser conduct.”

She says advisers will face increased costs in running FAPs, and these changes are designed to support FAPs.

Partners Life has been encouraging advisers to be become FAPs through the transistional licencing process.

“We are encouraging as many advisers as possible to become their own FAPs,” she says.

If they have a licence then they are keeping their options open.

Measuring customer outcomes
Partners has developed a points matrix to help measure customer outcomes and this will be released soon.

Measurement and reporting on these outcomes will start on April 1. However, scaling of the commission bonus will not start until March 31 next year.

This one year transition period is designed to facilitate an understanding of customer outcomes being achieved by each adviser and to provide a reasonable time period for advisers to adjust their business practices.

Advisers will get feedback each month on how they are going.

Ballantyne says the process will “encourage people at the bottom to change their behaviour.”

Adviser bonus commission rates will remain at current levels during this period.

Partners  will be contacting clients at application time to measure an adviser’s performance. Ballantyne said was wasn’t appropriate for the company to be involved in the process earlier as that would be a potential conflict.

“We are not expecting to find a lot of issues,” she says. However, when they do they can help the adviser improve their processes.

She expects that there will be pushback from some advisers,  but they have nothing to fear if their advice process is good.