In a statement issued yesterday, Mr Trapnell said under the current legislation both financial advisers and risk advisers are treated as the same profession, but that they should be treated as separate disciplines.
“If you are giving financial planning advice, you are talking facts and figures – how to take a client’s wealth from where it is today and project it forward. That’s an analytical conversation,” Mr Trapnell said.
“If you are giving risk advice, you are talking about protecting a client’s current and future lifestyle and that of their family. That is an emotional conversation.”
“For some reason, risk products continue to be linked together as financial planning products rather than insurance products. I do genuinely believe there is a strong case for separating the two,” he said.
Mr Trapnell said the solution in separating the two professions lies in both holding a specialist AFSL to deal in either financial advice and or risk insurance.
“One licensee could hold both licences and their authorised representatives could be authorised in both areas, or they could be authorised to provide either risk or investment advice,” he said.
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Don, Why not take the industry back 20 years, more regulatory compliance, duplication of audit to say the least.
Not a good idea
What a retrograde step back to the 1990s. The two regime system failed previously so why would it work now?
which parts are you trying to avoid Don – Best Interest Duty perhaps? There is much more wrong with the industry than this.
WOW, the conversation in 1994 was to join risk and investment together. 20 years round and round and round we go.
FANTASTIC IDEA Don & long overdue. Why should we (as Risk Only writers for the past 30 to 40 years & longer) be paying for the ‘sins’ of The Financial Planners & their stigma of The GFC of 2008 ??
With the way the Industry is forcing us experienced Risk Writers out of the business, the ultimate losers are the clients & the general public – that is the SAD REALITY of where this mess is heading. United we (Risk Only Writers) stand – Divided we fall !! Keep Pushing HARD Don !! Tony
This is an interesting suggestion from Don but I fear it will add another layer of regulatory obstruction. Many planners deal with both investment and risk advice. If they were subject to two licensing regimes, and were advising the one client on both risk and investment/super related issues, the licensing disclosures would be very confusing for the client. Would a “duel licensed” adviser need to provide separate advice documents for each aspect of the advice being provided? I think we should aim to simplify regulation, rather than make it more complex and potentially confusing.
I have the two conversations if there is a need to cover both. Its all about wealth whether its protecting it or creating it. Why separate the two. SMSF trustees have to look at insurance in their investment strategy – they can’t just focus on what the fund is invested in. All advisers need skills in both areas these days or the financial advice is compromised. Two licenses – I don’t see a reason why.
Hmm, sound like the 1990’s regime where APRA supervised the Risk guys and the ASC (now ASIC) supervised the investment people. We fought for 14 years to unify the regulatory environment. Risk product advice and client’s needs for risk and insurance is COMPLETELY related to financial planning. Investment advice is but one small part of the Financial Planning puzzle. I couldn’t agree less with these comments.
Retirement planning and investments are emotional considerations for most people last I checked. Advisers help take the emotion out of it by being analytical. Same goes for risk advice. It’s all about your client having enough money (or possibly lacking it) at crucial points in their lifetime. The strategies should be considered together by advisers as they are not mutually exclusive. What’s the point of having the best insurance if it bleeds your retirement savings dry?
This sounds like a firm that loves to sell back office compliance to bewildered advisers who get fed up with stupid regulations.
That is so far off tap it’s not even funny. That’s the equivalent of saying a divorce lawyer should be licenced differently to a corporate lawyer. Same discipline, just specialities with in it.
I am a financial planner specialising in risk.
This is a suggestion reminiscent of the “good ol days” of the 70’s! Backward and dumb
Yes, and risk advisers, financial planners, bankers, remittance providers, stockbrokers, they are totally different but all require the same AFSL. It’s just the conditions that may change depending on the nature of the services being offered by the AFSL.
Why do risk advisers need a wholly different legislative regime from the rest of the financial services sector?
Absolutely agree.
It was obvious even before the aggregation that the regulations were driven by who the regulator could readily deal with and not who the regulator should be dealing with.
These are separate functions with very different parameters. Nothing stopping someone doing both but it shouldn’t be assumed that they are, or force people out of the industry who just want to do risk.