Businesses for a post-LIF industry
Risk Adviser asks four risk insurance professionals what changes they will be making to their businesses in order to manage under the Life Insurance Framework.
Katherine Hayes, director, Tiffen Insurance Services
I made the decision to exclusively utilise hybrid commissions from day one of starting my business. Fortunately this means that we aren’t in the position of having to wean off up-fronts. However, due to the planned reduction in the hybrid rate, we plan to introduce a nominal, one-off fee next year for all new business, which we will charge in addition to receiving commissions.
In terms of the three-year clawback policy, we tend to have very low lapse rates as most of our clients are Gen X and Y who take up level premiums and understand the long-term value. However, we now focus on placing more risk via superannuation splitting arrangements and encouraging clients to make extra contributions to super which they can temporarily suspend to manage any short-term cash flow issues without jeopardising their valuable cover which could otherwise result in a lapse. If a client genuinely needs to change insurers within the three-year clawback period, then whether we charge a fee will be on a case-by-case basis.
Sacha Loutkovsky, director, Orion Financial Group
We see these changes and reforms as a bigger opportunity than a threat and now is a great time to be enhancing our business. Our biggest focus goes back to an early tenet of John Trowbridge's in that financial advice providers need to raise their customer service engagement and quality. For us, this means a greater commitment to client education and making advice accessible and easy to understand. We want our clients to feel comfortable and get to know us, as well as help them take advantage of technological advancements to make advice more engaging and more of a household topic.
We have spent time developing a value-driven plan for our clients, including regular blogs, webinars, more robust and regular contact and other ways that our clients can easily access us and advise from wherever they are, whatever their concerns are.
Michael Ord, director, Miners Insured
We have been in planning stages for a number of months, based on the worst-case situation. I came to realise we need to look inwards and see what we can do better and how we can grow the business by being even better at what we do. We have also undertaken the following:
- We have examined all our business costs and have begun cutting.
- We will not replace one staff member who was moving on early next year. We have begun trialling offshoring some of our admin and paraplanning.
- We will increase our cash holdings to counter any unforeseen clawbacks.
- Saying no to clients that are a higher risk to us – contractors, and new entrants to mining (green employees) come to mind.
- An active focus on a more holistic practice, whilst still specialising in our chosen market.
- We are reviewing all insurers that are able to offer us real support in efficiencies, and a proven history of managing their premiums responsibly.
- Looking to innovation, not lip service from insurers.
- Move over to level commissions with a combination of fees and new services to replace lost income
- We are reviewing how we pay any referral fees.
- I will also be heading back to do more study part time.
David Bourke, director, Bourke Financial Services
The main points I will need to consider will be staffing, technology and relationships with insurers.
In regards to staffing, I have already engaged with them about the potential changes and helped them understand that their roles are going to become more critical for the business. Other advisers should start doing this also, but sooner rather than later.
Staff are loyal and will bleed for you if they feel loved and wanted in an organisation.
Diversification and adaptability are going to become paramount and you need to make sure time is not wasted on mundane tasks that may best be outsourced. We have two staff members and we are constantly giving them new fresh challenges to learn and understand.
Technology will be another critical piece in the new world, and will be integral for a lot of advisers. Advisers will need to make sure they get the most from the platforms they are using. If not, engage your BDM as soon as possible and make sure they are accountable for this.
I will continue to use Google Hangouts, Skype and GoToMeeting as a means of engaging with my clients.
We will also be making sure we are making efficient use of the services offered by insurance companies. We need to find ways to leverage the massive resources they have available to help improve the bottom line.
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