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.”
That’s a pretty alarming stat when you look at it..”Only 15% of advisers fall into the category of “risk specialists”, down from 34% five years ago…”
As one of the 15% left, I have to agree with earlier comments that it’s just become so damn hard to do the work we do now. I’m not far away from being another one of the many casualties that have realised, it’s just not worth it anymore.
I’m now dealing with a complaint from a millennial I spent 20+ hours trying to help last year with a policy that I got paid a meager $265 for – who chose to cancel her policy 5 months after it went into force! She now feels I’m the one who’s being unreasonable for sending her an invoice for the work I did.
Honestly, it’s just so disheartening staying in this industry now when all I’m trying to do is help people get covered.
Unless there is a return to Hybrid 88/22 and a more meaningful responsibility period (less than the two years now in play) we will NOT be offering (stand alone) risk advice to anyone with less than $11,000.00 in annual premiums, and if compliance gets any more difficult (and expensive) then that number will rise , this is based on there being no “other” advice in play. In other words we will want to be seeing holistic advice clients only and there will be a minimum threshold on fees. the “so called” reforms have basically put advice out of reach of most Australians who probably need it the most. However, the architects of this shambles have never run a small Financial planning / Risk specialist business, and are so self absorbed in the ideology of what they’re doing, they cant see wood for trees. the best we can hope for is to do our best to survive the next few years and wait for the obvious fallout to finally be rectified and then maybe, just maybe sanity and logic will prevail…….. I’m not hopeful
ASIC, FASEA, LIF – All we supposed to regulate and “restore confidence to consumers” All they have done is decimate the industry with their incompetence
Sad to say this will only get worse. The LIF has made writing new risk business unprofitable. You only have to see the facts with new business down between 20-50% across the main insurers to see that the LIF has been a disaster for customers and advisers and will see under insurance worsen and worsen.
Add in the absurd increases in premiums the insurers have been hitting existing customers with and lapses are of course increasing.
Then add in the new education requirements to stay in an unprofitable business area and you have the perfect storm.
The FSC and insurers have brought this upon themselves but sadly its looks to be the underwriters and BDM’s starting to be culled, not the execs of course.
Well said