Speaking at the AFA’s Life Insurance Roadshow in Sydney last week, Elixir Consulting managing director Sue Viskovic said that with the Life Insurance Framework set to reduce how much risk specialists earn, these advisers should look towards expanding their services with estate planning as a means to recoup their losses.
“There are a number of really natural adjuncts to a risk-only advice proposition and it astounds me still that so many specialist in risk do not handle the estate planning element of clients’ affairs,” Ms Viskovic said.
“[Risk advisers] already take [clients] half-way down a journey and talk about their mortality, what is going to happen to their family, and how they are going to handle that.
“That is a really important and valuable part of [risk advisers’] value proposition,” she said.
Ms Viskovic said that another area in which risk specialists can recover their losses from the Life Insurance Framework – if they do not want to introduce fees – is by becoming more efficient.
“Have a look around at where there are some stages that you can get better at what you do, and help your team become more efficient,” she said.
“Are you using technology as best you can? Are you improving and streamlining the administrative processes that will still allow you to have the face-to-face human bonding relationship advice time with your clients?
“You may need to attract more clients. It makes sense, if you are getting less revenue per client and you want to keep the same income – you need to get more clients,” Ms Viskovic said.
Hi Rob, I didn’t say every adviser worth their salt provides an estate planning service, only that they consider the impacts. This means taking into account when structuring the insurances and calculating the required benefits. As far as being directly involved, I am regularly involved, and this aspect is not something I expect everyone to provide, I see it as a point of difference that I give my clients (though not all), and no I do not charge a fee, but probably should.
As Winco explained, estate planning does not refer to the process of creating a will. The role of the estate planner is to manage all related parties and ensure that the process runs smoother. They are the one responsible for liasing with the clients lawyer, financial planner, super fund trustee, accountant etc etc. An estate planner must be across all aspects of a clients plan and this means that they need to ensure that all aspects of the plan are meeting their objectives. When was the last time you were directly involved in the way a client constructed their will? Things like this are most definitely not expected from someone providing risk only advice. You saying that every adviser worth their salt provides estate planning services only goes to show your failure to appreciate the level of work that should go into being an estate planner. If it is something that you are doing thoroughly and not charging for (outside of the commission you receive) then you are either not valuing your time enough or you are not doing a good enough job to warrant a fee – an effective estate planner is most definitely worthy of a fee.
Hi Winco, I think you may have misinterpreted my comments. Though I could have been clearer. i have seen a trend of advisers using online engines to actually prepare Wills and other legal documents which they charge their clients for, usually in the same price vicinity as what a lawyer would charge. When I prepare a risk strategy I consider all aspects, including the estate, however I do leave the preparation of those documents and additional advice (if it is required) to the lawyer, the clients do not go in blind, the lawyers have all the info they need, and when it comes to claim time, both the lawyers and myself work together to ensure the plan is realised as expected. I do not see this as an extra service. This is what I am compensated for when I am paid by commission, including the trail. I also expect that any adviser also worth their salt would consider the estate impacts and help at claim time.
I’ll just jump in on 2 points here: one for Enva and the other for Connection Engine.
From an Enva perspective (our Fin planning firm) Estate planning is absolutely integrated in our approach and I agree with Sue’s statements. Insurance provides the majority of the capital for the estate of an accumulator client. We must think about how that capital is used and deliver the most effective solution; eg how much should be allocated to the children to maximise the income generated. Even the best lawyers will often just facilitate the instructions from the client and we are best placed to play a very important role in this process.
We will go as far as using insurance commissions to pay for a clients Will if we’ve received enough to cover our costs and they have insufficient savings to pay for a complete estate plan.
On the Connection Engine side, the important role an adviser plays in estate planning was built right into our software. If a client’s health check suggests that they need a will and they book in with a lawyer the adviser is notified and brought straight into the process. We believe that we, the advisers, are the best placed to manage a comprehensive solution.
Sorry to disagree with you here Katherine. You are missing the point (and maybe the opportunity) It is you, the adviser who can be the star with all your clients acting as the ‘estate planning facilitator’ who brings together the various components of the estate plan. The qualified solicitor only provides the legal component (that is, the personal will or for a business, the buy/sell agreement). That is all he or she really does. That in itself is not estate planning. Many in our industry wrongly believe estate planning is the domain of the lawyer. It isn’t. The will does not form the estate plan. Only part of it. The life insurer provides the other component – funding. The two are needed to make up an estate plan. You as the estate planner, facilitate your clients to realise the plan by bringing together all the components to ensure ‘the right amount gets into the right hands at the right time’. So what Sue was attempting to communicate was this is where you can offer so much more than ‘life insurance’ e.g. only product – reframing the conversation to a fee for service model. Hope this makes sense?
The real issue is that a 3 year claw-back makes no business sense.
The last paragraph is possibly the most obvious statement I have ever read, what insight!
I certainly believe in the value of estate planning, which is why I refer many of my clients to a qualified solicitor who specializes in estate planning. I have a solid understanding, but at the end of the day it is another specialization which should be performed by the appropriate person. At the end of the day the message is pretty much the same, advisers are going to bare the brunt and have to do more with less. I’m sure many adviser would love more clients, but for many that is easier said than done. If is was that simple, I’m sure more advisers would have been doing it already.