The bulk of group benefit advisors already disclose how much they are compensated to their clients, according to a survey released Wednesday by the Canadian Group Insurance Brokers Inc. (CGIB).
The survey, conducted along with marketing firm DJG, questioned 2,600 advisors in the group insurance market across the country.
The survey revealed that 88 per cent of advisors questioned said they disclose their compensation in one of various ways – as a dollar amount, a percentage range or a percentage of premiums.
Dave Patriarche, owner of Mainstay Insurance and founder of CGIB, said there is no reason why all group brokers do not reveal how much they are making to their clients. “If you’re not disclosing now, start doing it,” he said.
Patriarche said he has also suggested to advisors who only give a percentage amount that they should set out the entire amount clearly.
“I will say there are a lot of brokers who are charging a lot of money and the clients don’t even know they exist.”
Almost a year ago, the Canadian Life and Health Association (CLHIA) published a guideline that set out a framework for advisors to disclose how much they get paid to sponsors of group retirement and group benefits plans pay advisors. It originally said that it would be insurance companies and not advisors themselves that would be responsible for disclosing the fee. It later agreed that advisors would deliver the compensation disclosure documents to the client.
The reporting date for new plans was originally set for July 1, 2018, but that has since been delayed until January 1, 2020. Disclosure for renewal programs will be implemented January 1, 20.
About 46.5 per cent of the advisors questioned in the survey said they believe there would be a negative impact on their business if they have to disclose compensation.
CLHIA does not have the regulatory authority
Patriarche reminded advisors that the CLHIA does not have the regulatory authority to impose these disclosures, noting that what the insurance industry association has put together is merely a guideline, called G19.
The CGIB survey indicates that some 34 per cent of the advisors believe either the CLHIA has the regulatory authority to impose the guideline or they weren’t sure.
The Financial Services Commission of Ontario (FSCO), which does have authority over the advisors, has generally told group advisors that they must disclose commission, who they work with and whether the advisor is eligible for travel rewards and bonuses, said Patriarche.