Separate risk and financial advice: Synchron
Risk advice should be treated as its own discipline and should not be licensed under the same regime as financial planning, argues Synchron director Don Trapnell.
In a statement issued by Synchron, Mr Trapnell said that given the skills of risk advice are very different to investment advice the two should not be lumped together as a single discipline.
“If you are giving financial planning advice, you are talking facts and figures – how to take a client’s wealth from where it is today and project it forward. That’s an analytical conversation,” Mr Trapnell said.
“[In] risk advice, you are talking about protecting a client’s current and future lifestyle and that of their family. That is an emotional conversation,” he said.
“For some reason, risk products continue to be linked together as financial planning products rather than insurance products. I do genuinely believe there is a strong case for separating the two.”
Mr Trapnell pointed out the solution to separating risk advice from financial advice is for licensees to hold a specialist AFSL to deal with investment advice or hold a life insurance broker licence.
“One licensee could hold both licences and their authorised representatives could be authorised in both areas, or they could be authorised to provide either risk or investment advice,” Mr Trapnell said.
“I really don’t believe they should be bundled together the way they are at the moment,” he said.
Mr Trapnell added that while he acknowledges that there are advisers that can do both, they are either classified as one or the other, not both.
“I know outstanding financial planners who give very good risk advice and I know exceptional risk advisers who give very good financial planning advice,” Mr Trapnell said.
“But they are either a financial planner who gives very good risk advice, or a risk adviser who gives very good financial planning advice. I have yet to meet a truly holistic financial adviser,” he said.
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