Calling on all financial advisers, time to make a difference

Simply cut and paste the letter template below and choose an email address from the list provided underneath:

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Dear MEMBER OF PARLIAMENT,

I concur with the sentiments of the ASSOCIATION OF INDEPENDENTLY OWNED FINANCIAL PROFESSIONALS [AIOFP]  and endorse the following comments.

The AIOFP agrees in principle with the TROWBRIDGE Report and the general findings of the FINANCIAL SERVICES INQUIRY but disagrees with the severity of the recommendations presented to the Minister by the three Institutionally aligned Associations.

On June 25th 2015 the Financial Services Counsel [FSC], Financial Planning Association [FPA] and the Association of Financial Advisers [AFA] jointly submitted a proposal to Minister Frydenberg [the Proposal] which has been publicly accepted by the Minister. The AIOFP believes that the contents of this Proposal does not reflect the views of the 17,000  advice community, furthermore we believe the AIOFP was intentionally excluded from this process due to our propensity to positively support consumer and adviser issues.

We believe the Proposal is too Institutionally needs focussed and as a consequence will disadvantage CONSUMERS, exacerbate the nation’s UNDERINSURANCE deficiency and commercially damage sections of the SMALL BUSINESS community where 10,000 jobs will be lost.

We  believe the Minister has been misinformed about consumer/adviser issues and recommend that a compromise should be sought between what the Institutions are seeking to achieve and what is in the best interests of consumers, the nation and small business.

Please consider the following facts -

CONSUMERS – There is a significant marketing trend towards risk insurance policies being sold directly to consumers via telemarketers and online solutions by the Institutions. Due to the very simplistic [and inadequate] underwriting procedures with these policies, the rejection rate at the point of claim is around 50%. This is a very poor outcome for consumers with only one ‘winner’ – the Institutions who do not have to pay claims. It should be noted that the rejection rate for policies underwritten by a professional adviser at the point of claim is less than 4%. Clearly, consumers need professional advisers to ensure they get adequate and reliable cover.

NATIONS UNDERINSURANCE POSITION – It is a well - known fact that Australia has a massive underinsurance problem that desperately needs addressing. We do not believe the direct sales approach to consumers by institutional telemarketers or online strategies will protect families or assist the nation underinsurance dilemma.

SMALL BUSINESS  - A consumers family risk requirements  is not a one size fits all approach, each family needs a professional adviser to assess their specific needs. The Proposal’s recommendation to impose a 3 year ‘claw back’ period and half upfront commission payments unfairly treats the adviser with uncertainty of cash flow over 3 years making it very difficult to stay in business. Furthermore, the claw back penalties are solely focussed on the adviser with the institutions avoiding any culpability if the policy fails due to circumstances outside of the advisers control. [ie loss of job, health, changing family circumstances etc]

It is predicted that over 5,000 professional risk advisers will move/retire from the industry [with 5,000 support staff losing their jobs] leaving  the majority of advisers working for specific institutions offering conflicted and  biased advice to consumers. The industry and consumers cannot afford to lose professional advisers greatly diminishing choice for consumers.

SUMMARY – The Proposal is clearly too heavily weighted towards favourable outcomes for Institutions. Consumers will be disadvantaged, small business destroyed and our nations underinsurance challenges ignored. Consumers and the nation need professional advisers to assist families to make the right decisions that deliver positive protection outcomes for their family’s and the country’s benefit, not just the Institutions. 

The Institutions want to return the industry back to a tied agency culture where consumer choice and independent advisers are eliminated from the landscape. Their preference is the  heavily conflicted, vertically integrated model where advisers are acting in the best interests of the Institutions not consumers. This is in total contradiction to the theme of the FOFA manifest. The direct internet/telemarketing approach is also fundamentally flawed with far greater benefits for the Institutions over the best interests of consumers.

FOFA and the previous Minister deliberately excluded risk commission from conflicted remuneration for compelling reasons. Consumers generally need to be convinced of buying risk cover, they rarely pursue it. This is precisely why the Proposal needs to be modified to allow professional advisers to commercially survive, assisting the nations needs and offering choice to consumers.

Regards

NAME/BUSINESS.

Please contact your local MP from the list provided:

The AIOFP would like to thank you for your support!