The proposed introduction of a new class of advisers has been widely discussed, with varying levels of acceptance and anger from across the advice profession since Financial Services Minister Stephen Jones announced it in December last year as part of the Delivering Better Financial Outcomes (DBFO) reforms.
Although advisers are still waiting on a draft of the tranche two reforms, institutions appear eager to take advantage of this change that will allow them to provide members with simple, personal advice, although this has also been met with some disdain from advisers.
Independent research, commissioned by the Council of Australian Life Insurers (CALI), found that more than 40 per cent of Australians want personalised advice to help them make better financial decisions regarding product purchases.
“Under proposed reforms, this is the kind of advice life insurers would be able to give their customers when they ask for it, at no extra cost to them,” CALI said.
To this end, CALI chief executive Christine Cupitt told ifa that insurers want to utilise the new class of advisers to help bridge the advice gap for Australians that advisers cannot.
“The role life insurers want to play in providing simple advice is very different to the important work of financial advisers in this country. We don’t want to get in their way, we just want to help fill the advice gap for Australians who have simple needs,” Cupitt said.
“This is about providing basic customer service. Australia’s life insurers want to be able to give people simple advice about their own products, at no extra cost to the customer.”
The issue of how the cost of the new class of advisers is covered has become a hot button issue, with reports of clashes between industry stakeholders over the issue.
According to CALI’s research, less than a quarter of Australians report wanting only basic information, highlighting the enduring value of professional financial advisers as well as the role institutions could play in the advice ecosystem.
Cupitt argued that insurers understand the importance of professional advisers, but that institutions still have a part to play in meeting their members’ unmet needs.
“We understand that life insurers can’t provide the level of advice that financial advisers do, and that’s not what we’re asking for. What we want is to give Australians more choice when they have simple questions and can’t afford or don’t want a comprehensive financial plan,” she said.
“Of course, for people whose needs are more complex, life insurers will continue to put them in contact with their own adviser if they have one, or a financial planner who can give them more holistic advice.”
Cupitt has consistently been in support of the new class of advisers, arguing that, with so few risk advisers, institutions can play a key role in bridging the underinsurance gap.
“We want to see legislation introduced that allows life insurers to provide simple advice on their own products, when customers ask them to,” Cupitt said in June.
“Of course, this should only happen with appropriate limitations and strong consumer protections.”
She added: “People need someone to talk to. Making these decisions is hard, and they should not have to do it alone.”
I assuming simple advice will mean a simple fee and with no commission being retained by the life insurance provider.
“New Class of Adviser” = old class of sales rep.
Basic customer service includes factual information. Factual information is not personal financial advice. One step too far CALI.
This is just self interested rubbish. Insurers care about no one other than themselves and will sell inferior products to clients who don’t know any better now that they have effectively forced advisers out of the risk insurance space. In addition if simple advice is basic customer service then the insurers are poorly placed to assist given their pathetic customer service.
“This is about providing basic customer service. Australia’s life insurers want to be able to give people simple advice about their own products, at no extra cost to the customer.”
“What we want is to give Australians more choice when they have simple questions and can’t afford or don’t want a comprehensive financial plan,” she said.
“Of course, for people whose needs are more complex, life insurers will continue to put them in contact with their own adviser if they have one, or a financial planner who can give them more holistic advice.”
CALI Is tying itself up in knots, trying to get favours for their insurers members, Hoping to hop on the bandwagon Mr Jones has created for his friends in the industry funds to flog cheap advice without charging a fee. They should know that the industry funds are now the biggest contributors to Labors electoral funding, so there might have to be a price to payTo get real impact
Yesterday the AFR carried a story of much grief being delivered in the discussions betweenTreasury (which has Mr Jones on a string) the industry funds and life insurers about the so-called “simple advice” regime. The life insurers, represented by CALI, seek the same freedom that the industry funds want. BUT It appears the insurers want to be able to charge a fee, where is of course the industry funds ,Whoare in the business of providing “advice for no fees”. Or to be more accurate, a large number of members pay for the advice given to a few.The industry funds don’t want to levy fees on that advice and suddenly the insurers find themselves with a deal that doesn’t look as good as it did a while ago
CALI should stop shuffling at the front door and explain what it means by “simple advice” and what will be the determining factor when the insurer, having been contacted directly by the client, decides whether or not to put that client in touch with the adviser. You can bet that will stretch a little. What indeed is a “simple question”
And while we’re at it please explain what is the meaning of the new phrase from CALI: “providing basic customer service”. That implies handling claims, fixing up missing credit card authorities., You know all the stuff advisers do in return for their renewal commission.
Advisers have a REAL FEAR that what will actually happen is that a policyholder, who they put to with that insurer, and who for some reason this has been unable to contact the adviser to complain about yet another round of premium “GOUGING”, is that the insurer will suddenly offer an inferior policy for an illusory saving In the first year.That’s what the actuaries call Duration Based Pricing and it is most certainly misleading and deceptive
And then, surprise surprise, if the replaced policy is still within responsibility period., THE ADVISER WILL WEAR A LAPSE !!
If CALI had the best interests of this industry at heart they would get off their backsides go straight to the government and tell them that “the Emperor is not wearing any clothes” – LIF has been a total unmitigated disaster for this industry.
CALI prefer backpacker sourced inhouse tied agents instead of retail advisers, as they want to make sure there is even less accountability for all of their internal stuff-ups (ie CBUS/Link Admin). Red flag time.
Rubbish. CALI wants advisers out of the way. They promoted the lie of policy churn in the hope of not having to pay advisers. The only problem was the royal commission highlighted the bad practices of the direct insurance call centres, and then insurers found out that people don’t seek out insurance from insurers, it is recommended by advisers. The only way to turn this around is to make it easier for qualified, experienced and professional advisers to give advice, not give a crave out to insurers to provide simple advice, i.e poor quality conflicted advice from an unqualified inhouse staff members.
How can I client know what product is best as “Qualified adviser” working for “A” product will always sell “A” product – I am sure it is in best interest in clients to deal with a planner who doesn’t know anything about other products.
When is advice not advice? When it is “customer service” according to this bloke.
You can’t make this stuff up…!
Love watching this movie unfold what’s next?
Life Insurers still looking for ways to eye-gouge advisers in spite of their despicable and ultimately self-sabotaging actions (think about reducing commissions, increasing responsibility periods, increasing premiums, increasing claim hurdles, etc.,).
Sorry, Christine, we need a little more evidence that Life Insurers are merely trying to “bridge” gaps.
Any reason why “important work” is in quotation marks there?
If it is customers service just charge an admin fee why do you have to change financial advice laws… because they are giving personal advice and unless the rules change for everyone and everyone not just the banks and super funds and insurance companies and provide it then we know it is about the customers and not making huge profits for not delivering any service…
just call it was it is they needs sales back but don’t call it advice