According to Risk Hub and LFG Financial Services (Loyalty), risk advice has become more complex and costly to deliver than ever, with “remuneration models that don’t always support its integration into financial planning practices”, adding that it is a “crucial element that can’t be ignored”.
Risk Hub and Loyalty are teaming up to undertake a pilot project, with a goal to explore diverse business models within Loyalty’s network, identify the core challenges they face in providing risk advice, and then provide innovative solutions.
As the pilot project rolls out over the coming months, the firms said they aim to produce actionable insights and practical tools that can later be scaled to broader adviser communities.
“Risk Hub is excited to work with Loyalty in this pilot. Our platform is continually developing, and this partnership will enable us to align our resources with the real needs of advisers,” said Risk Hub founder Marc Fabris.
Loyalty director Andrew Whelan said that the licensee believes all advisers should accommodate risk advice.
“We see this as an industry-wide problem that demands cooperative solutions,” Mr Whelan said.
“While this pilot focuses on our own network, the discoveries and improvements we make have the potential to benefit a larger community of advisers and clients.
“We believe that all practices should be accommodating risk advice – whether it’s providing the advice themselves or referring to a specialist practice within our network.
“We are committed to improving the delivery of risk advice within our network through this pilot project with Risk Hub. Elevating the quality and accessibility of risk advice is not just good practice but a social imperative. It strengthens advisers’ business, enriches client relationships, and provides critical protection when it’s most needed.”
Speaking with ifa, Mr Fabris said he has already had talks with other licensees around expanding the scope of the project and working with a larger cohort of advice practices.
“I’ve had preliminary conversations with a couple other licensees who are keen on this stuff, who are in the same position where they have a spread of an application of risk,” he said.
Mr Fabris added: “There’s some analytics you can do at a licensee level and then you can try and figure out the different challenges and grab two or three or four mini solutions, then push that across a few practices and measure the effect. That’s the plan, but it’s very hard for me to do without a licensee buying into it.”
Speaking more broadly on improving the provision of risk advice, he said that the simplest fix is just having more statements of advice (SOAs) including risk advice.
“That’s a simple, simple measure. Bottom line is, if you get more SOAs with risk advice in, more risk premium will be sold, more people will be covered,” Mr Fabris told ifa.
“It’s the easiest to implement, but it’s not easy to do. So to do that, we need trust, competence and education, and we need some process improvements.”
The announcement follows Adviser Ratings last week finding that just 40 per cent of advisers wrote a life insurance policy in the last six months and that 493 advisers wrote half of all policies.
“The retail life industry is currently surviving on a small cohort of advisers to bring in new business,” Adviser Ratings said.
“With 15,634 advisers in Australia at the end of June, in the last six months, only 40 per cent wrote a life insurance policy, what was once a standard part of an adviser’s armoury when onboarding a client or reviewing as a staple of their annual meeting.
“As advisers have shifted to servicing more retirees and ‘riskies’ have fled in droves, underinsurance is worse than ever.”
There’s an undeniable link between remuneration and life-insurance product sales… why is this so difficult for the regulators to understand?
Sales is not a dirty word.
Totally agree. Solicitors “sell” legal advice. Accountants “sell” tax advice. Doctors “sell” medical expertise. Journalists “sell” articles. Musicians “sell” their music to entertain you…..etc, etc, etc. We are all selling something.
I just can’t be bothered “selling” insurance. Premiums are too high and responsibility period too long for me to risk having to convince a client against their will. Yes, many clients have had trauma events for which they were uninsured / underinsured and thankfully, my SOAs contain enough warnings to make any claims against me redundant.
In agreeing that LIF (among the many well meaning reforms of the past decade) contributed to the significant fall in new premiums, pushing the Life insurers and CALI to agree on an industrywide data format would be a simple measure to adopt in improving the cost to serve clients in the implementation of their financial protection strategies.
For me, the simplest fix is to replace the bag of peanuts with decent remuneration for the people who have to do the hard-sell for this grudge-purchase. I’ve been selling insurance since 1986 with an average premium $30,000 per couple, super and non-super and it continues to be highly lucrative with trails. I abruptly stopped when they slashed commissions and I now focus on other areas that are far more rewarding.
Your use of the word [b]sell[/b] says it all.
how many clients have ever presented demanding insurance? Of course this is sold, along with the value of advice more generally and charging someone $5000 a year to rebalance their super…
60% of my clients ask for their insurance to be reviewed. The rest are blissfully unaware, but when it is bought to their attention that they are underinsured they are happy to take our advice at it. Don’t need to sell them anything.
Also don’t charge someone $5k a year to rebalance their super…
Firstly, the client should not have been unaware they were underinsured in the first instance. Secondly, almost all clients have some level of life / tpd within their default super. Getting them to understand the value of IP / Trauma cover is the hard bit.
If insurance companies did not need advisers to sell product, they would do away with us, in a heartbeat.
Sorry… average premium per couple of $30,000
Many clients have made trauma claims – this comprises the biggest chunk of premium. Many advisers neglect this because of the high premiums and subsequent push-back.
I have found that, when properly explained to clients (ok, sold), they understand the benefits and proceed with the advice. The highest premium I received was $130,000 p.a. taking 13 meetings to place in-force. Client subsequently had a trauma claim 11 month’s later for $1m.
Looks like we have a few more weeds to pull out of our industry as everything about this comment is just wrong.
Are you opposed to receiving commissions and/or the idea of having to “sell” insurance?
Some of my colleagues will not lower themselves to having to sell insurance – they prefer the easy option: let the client decide whether or not they want to pay the premium and obtain their signed ATP.