Speaking at the FSC’s virtual Life Insurance Summit on Monday, MLC Life Insurance chief life insurance officer Sean McCormack said the risk advice sector was facing a major “talent challenge”, with the exodus of retiring advisers having significant “downstream implications” on new business for life insurers.
“The consequences are quite crucial – in 2019, 5,000 advisers exited the industry and just 38 joined, and in the first quarter of this year 950 advisers existed with just 12 joining,” Mr McCormack said.
“We know we’ve got challenges attracting talent to the life insurance industry, and I think the advice industry is seeing some of those talent challenges coming through as well.
“And what we’ve seen over the last five years is new business premiums have reduced by 60 per cent, which is a significant impact on insurers that are managing the delicate balance of our insurance pools, and it’s a substantial change from an expense perspective.”
Mr McCormack said advisers were under significant strain as a result of decreasing margins in the industry, as well as the challenges of an onerous new education regime.
“I’m deeply concerned with the toll this is taking on the advice community – many advisers feel their sense of identity is being stripped away through the challenges of the past couple of years,” he said.
He added that insurers should be taking action to make the advice process as painless as possible for those who remained in the industry, and should oppose any further cuts to commissions in the lead-up to ASIC’s 2021 review of the LIF.
“Firstly, how can we work on reducing the costs of advice and fulfillment and make that process as efficient as possible on our end? We did some research with Plan for Life that indicated that the cost of advice needs to reduce by 20 to 25 per cent for risk advisers to make it profitable,” Mr McCormack said.
“The LIF review is also a good opportunity to talk about the consequences of remuneration, because i’m concerned if we eliminate the commission model we’ve got in place that will further exacerbate a looming availability issue.
“For us as an industry and regulators, it’s important we ensure good risk advice doesn’t become the domain of the wealthy, it’s there for the many and we don’t want it to become the domain of the few.”
How funny is this! NOW they want to help advisers? Give me a break!!! Also its NOT the cost of advice that needs to reduce- its the income that needs to increase SIGNIFICANTLY to make it viable. There’s only so much juice you can squeeze out of a lemon.
good luck trying to attract anyone.
advisers now is our time to give these a-holes a kick in the teeth. we should exit en masse and let Jane Hume and James Shipton figure out what happened.
I did my part and left, found a new job within a week and couldn’t be happier watching the industry chew itself up from the inside.
Everyone should leave and let ASIC, APRA, AFCA, FASEA and all the other dumb associations run out of the money we are feeding them.
Yeah and bring back that other fool O’Dwyer back to fix up her mess she left behind. Claw back her government pension in the process for the Sh*it job she did.
MLC’s new system and admin make me want to leave the industry for good!
Yes, great point. I wonder how much in costs to an insurance application MLC’s dysfunctional processes add. 20%? 25%? Do I hear 28%? If they would get it to the level of OnePath that may solve some of their issues.
However, it is great they are publicly pointing out the need for change.
The FSC is finally receiving the major wakeup call about how useless it has been for the past few years. By caving into FASEA & the Union Super fund driven “consumer lobby” baloney (that is conveniently blind to intrafund advice bonuses), the FSC life companies have witnessed the destruction of their own nest. They are morons living in cloud cuckoo land. Its the life agents out here in the trenches that bring in the business. Not university graduated wafflers, that couldn’t write a life policy to save their life.
Attract talent? You’d have to be a little dim to join this industry now…so many other opportunities without the constantly shifting goal posts, without the stress, without the constant badgering, without the over bearing compliance, without the extreme costs of doing your work, without the threat of ASIC sanctions, etc, etc.
100% correct!
B.S You pushed advisers under the bus. Now the bus is coming your way – that’s the only reason you’re concerned.
Regrettable that sounds quite true.
Top job FSC and O’Dwyer, you should both be so proud of screwing up the Life Insurance Industry.
Really feel for you that the Dodgy Direct Life Insurance you were so desperate to flog got killed at the RC. Karma might be a good term to use here.
No you want to help Adviser sell your Life Insurance products.
AND ACT LIKE OUR BUDDIES AFTER YOU HAVE DONE SO MUCH TO TRY TO COMPLETELY SCREW US.
PATHETIC.
They must think we are as stupid as them?