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The 3 C’s of risk advice

Complexity, compliance, and commissions are the most important topics for risk advisers.

According to Adam Crabbe, risk strategy specialist at Zurich Financial Services Australia, there are three topics that are top of mind for risk advisers.

“If I think about the current advice landscape for risk, and certainly chatting with riskies, I find that the most common things I hear is complexity, compliance, and commission,” Mr Crabbe said on the FAAA Podcast.

Looking at complexity, he said that while products have certainly become more complex in recent times, particularly with changes in Individual Disability Income Insurance (IDII) products, there is also room for advisers to help clients with their financial knowledge.

“I think there are many advisers out there perhaps even listening who don’t feel as though they’re that competent when it comes to risk advice that can provide some significant value add,” Mr Crabbe said.

“You don’t need to be a specialist to be able to provide a decent [understanding] or even open up the discussion for a client to say, ‘Here’s an opportunity, let me at least partner you up with a risk specialist that can provide you with that insight’.

“So, it kind of reduces the need to be over the top of that complexity.”


Mr Crabbe is also hopeful that the government’s response to the Quality of Advice Review (QAR) will ease the compliance burden on not just risk advisers, but the entire profession.

“Advisers are often telling us that the way in which they need to go through the process of providing documentation can be a little bit onerous, particularly when you add in the fact that the remuneration piece has decreased,” he said.

“Fingers crossed when QAR starts to make its way through that we do see some easing of the documentation side of things. If there was a reduction in what needs to be required from SOAs, ROAs, I think that in turn will actually start to see an improvement in the amount of life risk advice starting to be written once again.

“Perhaps even more advisers willing to look back into it, to see if this is something that would provide a differentiator for them, and their business compared to maybe their colleagues that might be working in the community around them.”

On the commission front, Mr Crabbe acknowledged that while it is the main source of remuneration for risk advisers, there is a growing interest for different models.

“There does seem to be an increasing appetite to look at an additional remuneration model on top of [commissions], typically through the likes of a fee for service,” he said.

“Not something that necessarily comes naturally or easily, I would think, particularly for riskies where often there’s not even need to be a talk about remuneration of another form other than the commission received from a product.

“I think because of this complex market, the changing product nature, and even the strategies that often underpin the work being done, whether it’s through super, the policy ownership, the tax implications, some are really able to now better articulate the value.”