Financial advice groups have called for the recommendations of the Trowbridge report on life insurance to be modelled and their impact costed.

It follows complaints that advisers will lose money from a proposed initial advice payment of $1200 and a level commission of 20%.

Synchron director Don Trapnell has called for a “strict modelling process that demonstrates to government and regulators the real effect of the changes on consumers, advisers and small advice businesses”.

He says small business advisers could earn less than the cost of production and cannot wait years to recoup losses.

ClearView Wealth also wants a study into the effects of the proposed changes.

It says recommendations to legislate level commissions or heavily restrict upfront payments and overall commission levels “go too far and threaten the sustainability of independent advisers”.

The proposals will probably drive further consolidation into vertically owned groups, it warns.

MD Simon Swanson says remuneration should support quality advice.

Rice Warner CEO Michael Rice says the report lays out a “middle path” between upfront fees and renewal commissions, but the initial cost of providing advice is likely to top $1000 and most consumers will not pay it.

He expects some advisers to quit the market and lapse rates to fall, making retail life cover more profitable.

Mortgage Choice says the recommendations would encourage advisers to focus on clients with more complex needs and a greater capacity to pay fees.

Financial Planning GM Tania Milnes warns proposed remuneration structures are likely to drive advisers to vertically aligned channels and shut new licensees out of the industry.

“It would be very difficult for a new licensee that is not vertically integrated to generate a sufficient return on the start-up investment required to build a robust model,” she said.