Only 15 per cent of advisers fall into the category of “risk specialists”, down from 34 per cent five years ago, new research from Investment Trends has found.
While advisers continue to regard life insurance advice as a key component of their proposition, many are looking to broaden their advice services, said Investment Trends.
The research regards “risk specialists” as those advisers who derive over 50 per cent of their total practice revenue from providing risk advice.
Investment Trends senior analyst King Loong Choi said as more advisers seek to diversify their advice proposition and focus more on holistic advice, the risk specialist adviser has become an industry niche.
“The admin burden of compliance and paperwork, coupled with an uncertain regulatory landscape, are the top challenges that prevent financial planners from growing their insurance advice. As a comparison, fewer planners consider client-related challenges to be significant, with only 16 per cent saying it is challenging to demonstrate the value of insurance to their clients and 12 per cent citing client engagement/retention as an issue,” Mr Choi said.
“Still, a growing proportion of planners (37 per cent, up from 29 per cent) are challenged by inefficient processes that relate to underwriting, the application process and limited integration between systems. This highlights the opportunity for insurers to further support financial planners and their clients but improving their onboarding process.”
The research also noted that the insurer landscape has seen material change in 2019 arising from of a series of high-profile takeovers, mergers and departures.
Despite the changes, there is still intense competition, according to Investment Trends, with financial planners using 3.9 insurers each, on average, out of 8.9 insurers available on their approved product list.
“The insurers that were most successful at extending their planner relationships in the last 12 months were TAL, AIA, Zurich and MLC Life, but many planners are open to switching insurers,” Mr Choi said.
“Industry-wide, 28 per cent of planners say they intend to start using a new insurer in the next 12 months, with the new, less established insurer brands such as NEOS, Integrity and MetLife leading in planner perceptions.”
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