Director of Queensland-based risk specialist practice LFC Financial, Richard Monroe, talks about his experiences offering pro bono advice and how the impending industry changes may make helping clients in need more difficult.
How important is it to be able to offer pro bono risk advice to Australians who would otherwise be unable to afford it?
It is very important. When you think about it, we should charge for it because it is expertise and time. But sometimes you just don’t want to [charge them] because clients are really in no position to pay. So, you figure if you don’t give them pro bono advice, what are they going to do?
Generally I find these pro bono opportunities, or discussions that I have had in the past, have been as a result of people not having advice at the time when they [got a policy] and now have got themselves caught up in mainly inferior products or even super fund insurances.
I have had a client recently who is in the position where they are going to have to get access to super under compassionate grounds and that is just an example of a client lost in it all. This client is very unwell, they’ve already gotten lawyers involved – and that has been dragging on for who knows how long – and I said to him, let me have a look, and I have been organising some things for him.
You don’t ask for these people to pay money – you help them out and maybe there is a little bit of goodwill that comes back to you down the track. I think it is extremely important that we are still able to give that where we can.
In your times working as a risk specialist, how many clients have you helped on a pro bono basis? And, how have you come across these cases?
Including the one I am finishing off on and working on, I have probably had four different client experiences where I have had to get really deeply involved in helping them through problems and dramas. All of them were clients in need because of poor health. One in particular was pretty massive and took me a long, long time.
Each one has been because of relationships I had with referral partners. Like an accountant, in particular, would say: this very sad case has come across my desk, it has kind of got insurance in the mix, you know insurance, you know the contacts in the industry and the knowledge, can you have a chat and see if there is anything you can do? So it is introductions from accountants.
How much out of pocket are you for doing pro bono advice and helping clients? Or how much additional revenue could you have made had you charged?
It is an unknown. But I did, out of interest, work it out for a large protracted battle that I had with a client and insurance company and that easily could have been $10,000 of billable hours.
I don’t know what people charge, but I do know people in complaints resolution charge $250 an hour or above – so it is getting up there.
With the current remuneration structures allowed in the industry, how much of that is allowing you to have this goodwill towards clients who would otherwise not receive an insurance payout or have a successful claim?
I think that is part of the value and the advantage of having the remuneration structures we have now. It is hard to get clients to pay fees when they have money in their pocket and when things are going well, let alone paying fees when things turn very sour. So, the [current remuneration structures] do enable me to do it because I think, well, at the end of the day it is all swings and roundabouts and I have clients that are paying me an ongoing trail and will never claim. So on occasion, when someone is desperately in need of my help and they can be helped and I don’t charge, well, I can kind of afford to do that.
However, I don’t necessarily think of it in those terms. I just think most people like me get involved. It really is just the human nature of the people we are. We are passionate about helping people and we are driven by that. When you see the inferior products being sold to unassuming clients, you don’t want to say, 'too bad, you bought that policy', you want to redress whatever you can to get things at least as good as it can be.
At the end of the day, I just want to help. It is a tough one because in the new regime of risk remuneration when upfront [commissions] are being cut right back and write-backs could potentially be extended to three years I would probably have to harden my stance on [pro bono advice]. As I said, it is not happening a lot, I am not getting a client every five seconds looking for pro bono advice, but next year and the year beyond I think the fee culture would probably have to be injected into these discussions and clients will have to pay.
Looking across the industry and at the number of cases that risk advisers have taken on pro bono, is it at all concerning that the number of clients that could be helped in the future may dwindle and it may become more difficult under the new remuneration structures?
It is concerning, yes. I think there are lots of people who say, we shouldn’t be offering it in the first place because it devalues the expertise we have and we should charge for our time. But sometimes it is just not palatable to say, for example, to a woman who is about to lose their house that they now owe me $5,000.
It is something I can possibly see myself not being able to do. If I start losing money on other areas of the business and things become harder to make money, well clearly I can’t spend time giving my advice away to people who desperately need it. And I am not alone in thinking that. Pro bono advice will be harder for anyone who relies on risk-only payments. If you are a fully-fledged financial planner, you could probably still, to a degree, offer these services. But risk-only advisers, they will struggle to continue to do it.
For those willing and who can offer it, it is a wonderful thing. Although, I don’t want people to think pro bono advice is something we should be offering. It is a personal choice – we are business people and we shouldn’t be offering everything for free. I just like the ability and the affordability to be able to do it when we get to clients who have no other way of going forward.
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