In response to the draft bill unveiled earlier this month, Synchron director Don Trapnell said that because risk advisers are specialists, they need a unique education stream tailored specifically to life insurance and which recognises existing knowledge and experience.
“Financial advisers should be able to elect to study a specialist stream, just as students of any discipline can choose to specialise in a particular area,” Mr Trapnell said.
“In the case of risk specialists, this would of course mean specialising in life insurance.”
Mr Trapnell added that existing advisers with experience over the long-term should be provided with an appropriate education pathway which recognises that experience as well as their knowledge of life insurance and their “unique set of client relationship skills”.
“The average age of Synchron advisers is 43. These people understand what they need to do in order to meet changing education requirements,” he said.
“But we need to also ensure that older, highly-experienced advisers are provided with an appropriate professional pathway that recognises their extensive knowledge, experience and expertise so they can continue to provide the intricate insurance advice and deep emotional support their clients need.”
The government’s draft states that an independent, industry-established body – set to begin operating on 1 July 2016 – will develop the new standards and the transition pathway for current advisers.
Provisions of those details will come into effect by July 2017, and existing advisers will have until July 2019 to complete any further study, pass a one-off exam and subscribe to a new code of ethics.
The draft bill is open for public consultation until 4 January 2016.
We could have fun with the medical analogies couldn’t we. GPs often don’t get the recognition they deserve, just like financial advisers. The risk specialist could be compared with a medical specialist but they still need the full holistic knowledge of the GP because, for example the heart specialist, needs to be fully aware of how any recommendation or action they take can affect or be affected by the patient’s overall condition and health.
I think though the insurer or fund manager is more like the manufacturer of a medical tool or advice. They can make the “tool” but lack the skills to implement its use. I might also add that interestingly a GP cannot accept incentives from a supplier but a medical specialist is exempt from that restriction.
If a Risk specialist is giving advice, how do they understand which is the right structure that the client has is insurance in.eg A farmer ,unless he is paid a salary from the right structure when it comes time of claim will he get paid?Most farmers have variable income,this could be due to the slow down in China meaning less of his product is sold ,thus no income.With any of my farmer clients they have multiple entities,complex estate planning issues and if the advice on insurance did not take all of there financial planning needs I would be concerned that the wrong insurance would be put in place.A doctor would be the second most complex client to deal with in relation to financial planning needs and appropriate insurance and dealing with multiple entities which is used for protection of assets.But I suppose your answer to that is that the Accountant will give all the needed advice on Financial planning.I could easily mount an argument that a Insurance specialist should be the most educated of all the financial planning disciplines.What I have shown at no stage has the Government truly sat down and looked at the ADVICE industry and then considered the correct way forward, in that the client is protected and affordable advice is given to the client.IT HAS ALWAYS BEEN AROUND PRODUCT and what the Government is putting up is for you to sell product you must hold a degree or higher(CFP) and and belong to an Association.Its that simple.
It is true that there is a specialist risk line and specialist risk adviser. But the line between the knowledge such a specialist needs and the knowledge required for full assessment and solution of a client’s needs is pretty blurred. (And of course the reverse is equally true for the generalist adviser providing risk advice.) We also don’t want to see a repeat of when CFP status was handed out like gift certificates based on tenure. The industry needs to be sure that if it does have a recognition and special education stream for existing risk specialists it is for true specialists and not just someone who has been in the industry for a long while and has “client relationships skills”. There should also be a requirement, if an adviser is to get special risk status, that in their business model, or in their practice, the holistic needs of the client are addressed by an appropriately qualifed holistic adviser.
In theory the risk specialist is easy to accomodate but in application, and supporting an increasing professionalism of our industry, it is quite difficult.
Seems simple. Licenses could be issued for product advice only. If you’re a risk specialist, then you just need to maintain that area of advice. If you’re a financial adviser who wants to provide risk product advice, you need to meet the same standard of knowledge as the risk specialist.
As for the medical analogies (even though they’re slightly over the top), a risk adviser is more like a paramedic and a financial planner a general practitioner. Surely the insurer and the fund manager are the specialists, and the finance broker the anaesthetist?
Don Trapnell is absolutely correct. Currently (as a risk specialist), we have to read the monthly blurb put out by Kaplan, then answer a series of questions to score CPD points and remain compliant. Over the past 2 months, not one question has related to Risk Insurance, so everything we read will soon be forgotten as it is not required by a risk specialist on a day-to-day basis.
Technical questions relating directly to PDS’s from all the companies would be much more appropriate in maintaining a sharp understanding of the products and options available to us to put forward as a solution to our client needs.
After all, what does a slowing of the Chinese economy (a Kaplan question) have to do with researching an appropriate Income Protection plan for a farmer with a bad back?
I’m sure heart surgeons don’t need to know the intricacies of the colon, but they are experts in their field of heart surgery so why should risk specialists need to be tested on the intricacies of financial planning, when their only desire is to be experts at writing risk insurance?
And will a Financial Planner or Financial Adviser be permitted to provide Risk Insurance advice without having completed the specialised education stream and call themselves a Risk Insurance adviser ?
No problems. Just don’t let them call themselves financial planners or financial advisers.