Wealth management firm Hewison and Associates has become the second firm in a week to announce it will no longer earn commissions on risk insurance.

The Melbourne-based firm claims a move to fee-for-service insurance advice will “save its clients thousands of dollars in hidden fees”.

The company is now the second firm this month to announce the abolition of commissions earned on insurance, following a similar move by National Australia Bank subsidiary Godfrey Pembroke.

The decision goes a step further than reforms proposed by the Financial Planning Association (FPA), which has excluded risk insurance products from its move to a fee-for-service policy by 2012.

The Hewison fee-for-service model will apply to life insurance, total and permanent disability, trauma and income protection insurance arranged by the firm.

It plans to will rebate all commissions paid on insurance policies to clients, and instead charge for advice provided to establish and annually review the policy.

“Wiping out commissions on insurance is a sure-fire way to reduce the cost of personal insurance as well as encourage people to seek advice on how to best protect their income and their family, without paying excessive premiums,” CEO John Hewison said.