And so, another top honcho from an insurance company has voiced his concerns about moving to a fee-based financial planning model.
He thinks that the need for fees may lead to people being even more under-insured.
Ever since FAIR was announced, there have been many views exchanged about what is best for the industry (and for oneself). Before we start debating about the merits of whether paying commissions or fees is better, it is good to get an understanding of the different models. They are:
Actually, they each have their own economic bias. A financial planner who is out to exploit the customer will be able to do so on all models. Here are three very short clips that explains the three models and their economic bias:
I hope you found the videos useful. In my opinion, whichever model we use, a lower commission for the same product with all else being equal can only be beneficial for the consumer.