Responding to the recommendations of the Trowbridge report, Mr Trapnell said that as they currently stand, the recommendations will be detrimental to small advice practices, which is of great concern to his dealer group.
“The report suggests that businesses will recoup losses in a few years’ time. Small businesses simply cannot withstand losses for that period of time and would be forced to shed staff and cut costs simply to survive,” Mr Trapnell said.
“If the recommendations are implemented, we estimate that job losses, both direct and indirect, suffered by Synchron practices alone would number around 500 people,” he said.
Mr Trapnell pointed out that now the report has been released, a strict modelling process should be undertaken to demonstrate to the government and regulators the real effect the reforms will have on consumers, advisers and small businesses.
“We believe the report missed a golden opportunity to conduct this modeling before handing down the recommendations,” Mr Trapnell said.
“The report marks a starting point; however, before we knee-jerk to implement such wholesale changes, we must ensure they actually do benefit consumers and are meaningful.”
Mr Trapnell added there is an opportunity for insurers to innovate on the products they offer.
“We now have an ageing population, and we see government suggesting we may need to be working longer – unfortunately, and to the detriment of consumers, many products available just do not suit the changing lifestyles of Australians in their current form,” Mr Trapnell said.
Let’s see what my crystal ball tells me;
5 years time: A shrinking pool of highly qualified but still heavily over-regulated advisers servicing a shrinking pool of wealthier baby boomer retirees who can still afford to pay for advice. The rest of the nation will go direct and accept the risks.
Maybe planners will lose their jobs, but very few politicians or the general public really care about that. What we all should be focusing on is the broader impact this will have.
The broader impact is that more people will be acquiring insurance without advice, and ending up in products that are not suitable for them and don’t pay claims. A good result for the FSC members who sponsored Trowbridge, a terrible result for consumers.
ny great comments on this topic far and wide. It appears Trowbridge wants to be remembered for something and its possible not going to be for the goodness he hopes
Maybe just by the underinsured and those hat had underwriting completed at claim time. I will go to the beach maybe
My dealer tells me it costs them between $25-$30k to cover my license & all the back office compliance, PI, payments etc. This does not include my own fixed & operating costs. So the first 25 polices I put in place covers a small part of my expenses before I make $1. There will be few new entrants into this model & only mass exits if this was to proceed.
I agree with Trapnell on that one – the govt should survey FP businesses to see how many would exit the industry or not offer the service at all once these ridiculous changes are implemented. If such changes make it thru then our financial planning business will not be offering risk advice at all, scaled advice limited to investments and estate planning only. What idiot would risk getting sued or some other law case made against them only to make 20-30% commission on the product they sell? The risk-to-reward ratio doesnt justify!
The headline is misleading. It should read ‘Trowbridge will mean job losses’.
That would be an understatement, if the Trowbridge recommendations are adopted, more than 50% of the Independent operators will CLOSE, and given on average each practice employs 3 staff plus at least one adviser that will be a lot more than 500.