In an upcoming episode of The ifa Show, Risk Hub founder Marc Fabris suggested that the industry needs to focus on building efficiencies in the risk advice process to make it more appealing for the wider advice profession to engage in this sector.
According to Fabris, currently there are around 1,000 financial advisers writing three quarters of risk business, while around 5,000 are “part-timers” doing some level of risk work but focusing primarily on holistic advice.
Even though there are still 10,000 advisers unaccounted for, Fabris suggested that the focus should be on making it easier for the “part-timers” to provide more risk advice and take some of the load off risk specialists, many of whom are “bursting at the seams”.
Based on past research, Fabris said financial advisers can spend between eight and 14 hours for a risk advice process before they even have to deal with underwriting.
“That is way too long. So, that needs to be compressed to make it more viable,” he said.
“The bottom line is at the moment, there is too much inefficiency in people’s delivery of risk.”
In order to make risk advice more commercially viable for firms that currently lack the in-house skills, Fabris suggested that outsourcing skills and AI adoption could be the solution.
“We’ve seen massive growth in outsourcing over the last few years. It’s not just offshoring either. There’s a lot of onshore support groups around paraplanning. You’ve got a number that are specialised and support that risk paraplanning,” he said.
“So, you might go, ‘Well, hey, I want to conduct this process but I just don’t have all of the skills internally’. There are ways to deal with that and that way you can scale without having to expand staff dramatically. There’s some options there.
“There’s certainly tools that can be used and systems in the process. Obviously AI has been a topic of, I’d say, topic of the day, but topic of the last two years and it’s just getting bigger by the minute.”
Fabris added: “If you’re not getting your hands dirty, getting familiar with these tools and systems, then I think you’re getting behind.”
While the industry is experimenting with how to best utilise AI in the advice process, Fabris said the most obvious starting point for boosting efficiency is file notes.
“If I can cut out 30 or 45 minutes in doing my file noting after a client meeting and help make sure I don’t miss stuff and help streamline the next steps, streamline the process for my paraplanner so that they’re not trying to understand my scribble, you’re in a better position,” he said.
However, Fabris also stressed that advisers need be careful that they’re not just “jumping at shiny objects” when it comes to adopting new technologies but taking on tools they can leverage without having to overhaul too many of their processes, ultimately creating disruption in the business.
“Whether it’s tech or people or process, a combination of those can help,” he said.
Adoption of AI is all nice and well. But when it comes to file notes and risk advice in particular, compliance with privacy laws should become a major concern for advisers. Simply “getting your hands dirty, getting familiar with these tools and systems” to not fall behind may send the wrong message and have severe consequences if privacy implications of specific AI solutions are not or poorly understood.
I completely agree, which is why I highlighted the importance of data security, privacy, and compliance in the conversation. AI has perhaps made this even more front of mind—it’s not just about AI platforms but also poor data practices in emails, CRMs, and other systems.
The key is using AI safely and effectively, just as we should with any tool handling client information. That includes ensuring security, being mindful of compliance, and keeping clients informed when AI is part of the process.
Thanks – Marc
The real inefficiency is having to allocate excessive administration resources to chasing up quotes and following up new business. It’s difficult to be efficient when the product providers continue to drop theirs at the adviser’s expense.
Yep it’s the adviser’s fault, not using enough AI or not being efficient enough. If Industry can’t change the red tape, poor regulatory oversight, and badly written compliance requirements, and if the only solution is efficiencies, I’m certain Risk Advice is dead. Until we stop attacking Advisers and get to the heart of the matter Risk is dead.
Just to clarify, my point wasn’t that advisers are to blame or that efficiency alone is the solution. I’ve highlighted multiple challenges that need addressing to support the growth of risk advice—software needs to improve, insurers need to do more, and yes, the LIF commission caps need reviewing. Efficiency is just one part of the equation, not the entire answer.
The reality is that risk advice has been hit hard by regulatory changes, and unless we address a range of issues—including but not limited to practice efficiency—this sector will continue to struggle. My goal is to advocate for solutions across the board, not to shift blame onto advisers.
Thanks for taking the time to comment – Marc