February 6, 2018
Are you easily able to demonstrate the value of your life insurance advice to your clients and/or prospective clients?
- Sometimes - some clients appreciate the value of my risk advice, but others do not (40%)
- Yes - my clients are easily able to appreciate the value of my risk advice (38%)
- No - I find it challenging to convey the value of my risk advice to the satisfaction of my clients (17%)
- Not sure (5%)
Our latest poll stems from a contention that there is “…a problem with the perceived value of life insurance advice.”
A research paper recently released by boutique insurer, NobleOak, noted that one of the findings pointed to a problem with the perceived value of life insurance advice and presented “…a significant challenge for financial advisers who often need to fund high upfront advice costs to provide the right advice under strict compliance rules to their clients” (see: Consumers Cautious on Cost of Advice, Premiums).
The insurer also commented, “Clearly illustrating value to clients has always been a challenge for many advisers, and with the increasing access to online information and resources that consumers have, this is getting even harder…”
We received a number of comments responding to our article last week and welcome any additional thoughts you may have on this critical question surrounding the percveived value of risk (life insurance) advice in the mind of the consumer.
I don’t think there is any question about the value of Risk insurance cover, however since Adam was a boy insurance has been sold and this will never change. What has changed is the remuneration and probably a bigger issue is the compliance landscape. Our Licensee requires a ridiculously time consuming and complex Compliance process to simply review existing clients…even if it is to assist the client to alter their existing Risk portfolio of products and not replace with a new insurance company. It feels that the only way you can be fairly remunerated for the following Compliance
Process is to charge an addition Advice Fee on top the premium or strategically replace their products. So by the time you have tried to explain to the client how the new landscape looks so you can ensure you are being paid appropriately; provided the FSG and explained the purposes of the document; obtained the client’s feedback about your FSG and file noted the discussion and their responses; collected the information for the updated needs analysis and filenoted that discussion and the client’s responses; satisfied the 7 steps to BID safe harbour and file noted that process; created the necessary Advice documents and file noted how you did it; presented the SOA or ROA and filenoted how you presented it and the clients responses; completed the paperwork and filenoted that event; submit the paperwork and follow up on the outstanding requirements and filenoted that event; then document that the submitted application has been completed and finalised and Filenote that; is it any wonder Risk is in jeopardy. It’s not the value of life insurance Advice that is in question but the value of the Compliance burden that now exists that never existed when the law was all about “appropriate”. BID has changed the industry forever…
Too true. But the sales reps with a half day training who work for the direct insurers can sell their JUNK direct policies without the compliance burden or any fear that when the client cannot claim due to existing conditions they will get sued. What a joke providing risk advice is when ASIC allow sales reps to sell their junk under general advice.
Clients only realise that they needed/appreciate the advice when its claim time. Sadly many try to insure themselves without the help of an “independent” adviser only to realise at claim time they have a worthless policy they bought cos they saw an add and the sales rep said it is better than their Advised Policy.
How can ANY client be expected to differentiate between all the different policies and understand all the features.
Unfortunately ASIC through their endless quest to remove the risk adviser from the insurance sales process think it is better for regular clients to pay more for rubbish direct policies and then give 30% of the lump sum payment to a blood sucker from a legal firm.
At the end of the day, it is not about clients just appreciating the value of the advice, it is also about what they are prepared to pay for it. They think they can get it for nothing from all these direct insurers, so why should they pay for it? Just the same as all the other things on-line that people think they don’t have to pay for (movies, fitness apps, etc) and then wonder why they get no real benefit.