ClearView wants the words “commission” and “incentive” removed from the financial advice vocabulary, because of their negative connotations.

In a submission to the life insurance and advice industry working group chaired by John Trowbridge, MD Simon Swanson says “adviser service fee” or “financial support” are better descriptions.

He says while the working group’s interim report does not identify preferred language for adviser payments, it is a crucial issue.

“Whenever change in attitudes is called for in society, changing language to focus on the desired outcome is always an important element.

“This would also potentially help advisers better explain their value proposition and remuneration structure without the discussion being overshadowed by the negativity surrounding the word ‘commission’.”

Mr Swanson says any remuneration change must be well planned.

“[It] must recognise the real cost of providing advice and the unwillingness and inability of many customers to pay a fixed fee upfront for insurance advice. Advisers should be remunerated fairly for the cost of providing advice.”

He warns a significant reduction in life advisers’ remuneration will drive them towards the major institutions.

“Such a move would severely affect the profitability and sustainability of independently owned advice practices. This will force many advisers into institutionally aligned dealer groups with narrow approved product lists as the only means to survive.”