Advisers must be aware of the ‘perception gap’ that exists in the minds of Australians in order to assist them in tackling the underinsurance gap, according to reinsurer, Swiss Re.
Addressing the recent IFSA Life Insurance Conference, Swiss Re ’s Managing Director, Life & Health, David Gott, said the Global Financial Crisis appears to have opened the minds of many Australians to the need to address their financial future, but warns there is a gap between what consumers believe they need, compared with what they actually need in order to secure their future and that of their family.
According to Mr Gott, key messages stemming from the firm’s Insurance Report 2009 include:
- The financial crisis has left individuals much more aware of self-responsibility for financial provision/financial security
- But as individuals begin to realise the need to protect their own economic futures, many remain in the dark about what this means in practice
- At the same time, a growing number of Australians believe they are financially self reliant, but when you delve deeper into their finances it becomes clear that they are not. This is the ’perception gap’ that exists.
The report also suggests that although the GFC is being seen as a trigger for action, many Australians are thinking about it, some are making plans, but few are actually taking material steps to address their financial future.
Another key message is that when consumers do take steps to address their financial future, financial advisers rate below all of the following sources when it comes to accessing financial information:
- Internet
- Television
- Newspapers
- Magazines
- Radio
- Family, friends and colleagues
- Banks
While the challenge for adviser is to find a way to engage with this growing number of prospective clients in the first place, and then to address issues of perception about their medium to long term needs, another Swiss Re report, the Swiss Re Survey of Risk Appetite Asia-Pacific 2009, indicates that the importance of word of mouth has declined and the use of financial planners as a source of financial information is increasing.
Mr Gott points to IFSA’s Lifewise public education program as an initiative that helps address the perception gap by sending a message to Australians, in plain language, about the importance of looking to the future and understanding exactly what it will take to achieve financial security and protect personal and family lifestyle if the worst should happen.
