Speaking at the AFR Super & Wealth Summit on Tuesday, Jack Standing, group head of advice at WT Financial Group, said there are simply not enough advisers to service the insurance needs of Australians.
“Consumers need to be able to get advice and education from the appropriate people. We can service there or thereabouts, 10 per cent of households in Australia. So, if we want to have a serious conversation around solving the advice gap, it needs to be expanded in those services,” Mr Standing said.
“I think the QAR’s [Quality of Advice Review] initial proposals around the distinction between relevant and non-relevant providers was a good first step. Our view is different to that, which is we have a solution to provide low-cost affordable advice. It’s called general advice, and it needs to really just be reframed and broadened.”
He added that with the current legislative restrictions, insurers and superannuation funds find it difficult to give their members and policyholders the information they need.
“We talked to insurers and super funds regularly, obviously more on the retail side than from an industry super standpoint, and they are overwhelmingly afraid to talk to the policyholders and members,” Mr Standing said.
“There are thousands upon thousands of retail clients over the age of 80 still in accumulation phase. There are loads and loads of policyholders that want to pick up the phone and call one of their life insurance companies to talk about something as simple as extending waiting periods to reduce premiums and they have no one to talk to.
“So, that has to be the core solution to solve any advice gap back in the risk space and also from the retirement income perspective.”
One of the biggest roles for advisers, Mr Standing said, is to “rattle clients out of inaction and into action”.
“It’s great that there’s been some very exciting product development in recent years, particularly the retirement income sector. I think that one of the difficulties or the problems that they will face is not dissimilar to what life insurance faces, which is they’re fairly complex products, and complex products generally need to be sold, not bought,” he said.
“The way to deliver that is to increase the number of people that can provide advice services around those products. I think, certainly from a retail life insurance perspective, and an adviser community standpoint, we’re limited in a sense by the amount of people we can service.
“I think until they are able to solve the advice gap that we have in this country, whether that’s through expansion of general advice, whether that’s through enabling super funds and insurers to get back to dealing with the members and policyholders, that’s really going to be a key.”
Christine Cupitt, chief executive of the Council of Australian Life Insurers (CALI), also speaking at the summit, added that there is a real need to improve the advice framework to get more advice, support, and customer service to the people that ask for it.
“For life insurance, there’s two things for us. One is that we stand ready to bring capacity into the market with the right appropriately trained people, the right compliance frameworks, the right guard rails,” Ms Cupitt said.
“We are the people that know our products really well. We know a lot about our customers, we stand ready to support them, understand what their insurance needs are and get them that help if that’s what’s appropriate for them.”
Ms Cupitt added that there are 13.5 million working age Australians who all need some level of advice about the risk protection that “suits them and their family”.
“So, that’s what we’re thinking about in terms of the gap in the advice market,” she said.
“But certainly, there are limits to the role that life insurers can play, but equally supporting our superannuation fund partners to provide more advice about life insurance to them and this is a huge priority for us and something that we’ve spoken to the government a lot as part of its stream two work.”
According to Ms Cupitt, this is something the government has been receptive to, particularly as it relates to the lack of advisers available to provide the services.
“There’s 4 million policies that sit outside of super and there are about a thousand financial advisers who regularly provide advice on life insurance, so we know that there’s a gap and we’re confident that [Financial Services Minister Stephen] Jones has heard that message from us,” she said.
Why would any advisers give life insurance advice?
People typically don’t want to pay a fee for the advice, or not enough to make it profitable and that is only if we take the commission as well. Then our income is held to ransom for 2 years, so if the client’s situation changes and they cancel the insurance, we make nothing! What a great system that isn’t.
Years, maybe decades, of incompetence from the insurance companies and seemingly no communication between their actuaries and marketing people. The rule makers were warned for years that they were going to destoy the industry and look what’s happened. Advisers and clients have no faith any more in the insurance industry and this is not something that will be fixed for many years.
Don’t expect financial planners to start providing insurance advice out of the goodness of their hearts because some industry executives think they should. It ain’t gonna happen.
Interesting comment Jack. Many dealer groups require advisers to complete an execution only document, an ROA or an SOA to complete some of the simple tasks that you may be referring to for risk & what the industry is referring to in regards to where super funds may be able to get involved & assist clients. And your recommending that this would fall under general advice…….interesting
This also lost me at “there are simply not enough advisers to service the insurance needs of Australians”.
Its like listening to a broken record on a broken industry with the obvious elephant in the room continuously ignored.
The life company execs have completely failed the industry through the LIF and their own greed. They have failed customers with constant price hikes to protect their profits and worsening products to protect them from claims. I am sure not a single one has not protected their own salaries and will continue too until they get out with as much money as possible.
Advisers spoke with their feet as they constantly told the exces they would and customers have suffered.
They will desperately try to hang onto the LIF, push for direct advice, make products worse and claims harder and back to the good old days of direct junk until another Royal Commission, probably after they have sailed into retirement.
WT states; [i]”there are simply not enough advisers to service the insurance needs of Australians” [/i]I stopped reading there.. There are plenty of Advisers to service the needs it’s just that the regulatory burden of providing advice, especially Insurance advice, have caused Advisers to exit this space. If we keep thinking it’s all about the numbers the real problem of bad regulation will never get addressed. If we talk in numbers saying we need more advisers then the obvious solution is for Super funds to give Insurance Advice and that’s not the solution.
Just No….
General advice is not the answer if my experience of under a week is anything to go by.
Prospective client (a qualified individual) came in to see us to look at his whole portfolio. He’d had issues with his superfund affording the insurance premiums and wanted to pay the premiums himself. He went to see his usual adviser (who, since he saw them last had opted to carry on selling insurance as a Life Insurance SPECIALIST using the general advice model).
The client ended up with a new policy – previous policy got cancelled – with a different insurer.
It’s quite possible the client chose the levels of cover because it’s a mess.
What onus is there on the general adviser to insist that the client sees a professional / licensed adviser?
What conflicts are disclosed with the commissions recieved (since the client was clearly surprised to learn the commission that was paid).
How does someone call themselves a “[b][u]Specialist[/u][/b]” if they are UNABLE to give advice under the general advice model they have adopted?