AFA,FPA Life Insurance Task Force Latest

The AFA and FPA have released further details on their joint life insurance task force initiative (see: AFA, FPA Join Forces…).

AFA CEO, Phil Kewin …aiming to create a greater understanding of how risk commissions offer an affordable way to access life insurance advice

Positioning the formation of the task force within the context of being two years out from ASIC’s review of the Life Insurance Framework reforms, AFA CEO, Philip Kewin, said the task force has been set up in order to have a combined association approach to the future of life insurance and that the ultimate objective is to arrive at a life insurance industry that delivers the best possible outcomes for consumers.

According to a combined statement, the task force will comprise:

  • Two senior representatives of the AFA
  • Two senior representatives of the FPA
  • Four advisers – two from each association

The statement adds that a key focus of the task force will be helping to improve the general understanding of the role financial advice plays in improving insurance outcomes for consumers and the importance of offering them choice in how they pay for that advice.

FPA CEO, Dante De Gori …united task force seeking to make an impact for well-considered, positive change

Kewin said the aim is to create greater understanding of financial advice, the role of advisers and how life insurance commissions offer consumers an affordable way to access life insurance advice. He also stressed the importance of having a united and consistent message from the advice community about the future of life insurance, that can be shared with Government and the regulators.

From the FPA’s perspective, its CEO, Dante De Gori, said “The FPA and AFA collectively represent many, many thousands of financial planning professionals, who in turn serve millions of Australians who care about life insurance. So, as a united taskforce we can make an impact for well-considered, positive change much more effectively.”

The task force will also report back to advisers with a common view on what will be required of them after ASIC’s 2021 review of the industry.

  • Concerned

    Great initiative AFA and FPA. May I suggest that you get the life insurers on board as well. We have read in past editions of Risk Info that they are now supporting the maintaining of commissions. The message you are looking to bring to the government and the regulators would be greatly enhanced with support from the insurers. As I have repeatedly said in past editions, there needs to be a strong collective representation to get the message across. However, the AFA and the FPA joining forces is a good start. Also, please don’t ignore the other areas of concern – this 2 year clawback and the FASEA requirement for all existing risk specialists to complete a financial planning degree. These need to be addresssed sooner or we will still see a mass exodus of professional advisers in the next few years.

    • Wayno

      Concerned,
      You along with others need to get off the band wagon of “risk specialists” that shouldn’t have to do the additional education requirements. Stop talking yourselves down. You need to talk yourselves up if you are a specialist. Same goes if you are a superannuation, investment, SMSF or any other specialist. I’m not sure what makes risk specialists so different. In any other profession everyone needs to do the same base education then if you wish to specialise in an are then you should need to do additional education to specialise in that area. Don’t let me mislead you here, I agree that the exam along with the additional education is an absolute overkill BUT the only way we will get anywhere is if we all band together………

      • Concerned

        Wayno. I am in now way talking myself down. The issue here is that the “base” education FASEA are imposing on the industry is a financial planning degree – in that regard it is not “base” education! It is like a practicing GP suddenly being forced to complete a degree in some speciality such as opthalmology or cardiology, to continue practicing as a GP.
        As a result of ASIC’s 515, all advisers in our dealer group were required to complete a 25 question exam. I don’t have a problem with such an ongoing requirement, but most of it included matters that had nothing to do with risk insurance – matters that risk specialists are not involved in. I have been advocating a collective approach by the AFA and the insurers for months, so at least we are on the same track there, but I find it extremely difficult to accept that I suddenly need a financial planning degree to do what I have successfully been doing for 30 plus years. So please don’t tell risk specialists we have to get off the band wagon. That is not working together!

        • Wayno

          Concerned.
          GP – Degree required
          Specialist – requires further education on top of Degree
          My point is we all need to get to the same level, whatever that be. Risk specialist or anyone else specialising in any area without exception. Everyone needs to be on the same bus to get to the destination we all want. If we do not no one will listen to anyone because they will be saying that even within our own industry we can’t agree……..
          Problem is who is going to arrange that first. Are the FPA & AFA combined with a few advisers the right people to do that. I just hope so

          • Concerned

            Wayno. I think generally, we are on the same page. Yes, we all need to be on the same level – agreed. However, the point I am making is that this base requirement as far as FASEA is concerned, is for all advisers to do a Financial Planning degree. Let me reword my analogy from medicine by using your terms – it is like a GP having to do the extra study in a specialist area so he can continue practising as a GP. Not a perfect analogy because a GP is degree qualified, but I believe the message is clear. In summary – a base educational requirement for all advisers? Yes. But should that base educational requirement be a full financial planning degree for all advisers to include those who decide to specialise in risk? No.

          • Wayno

            Totally agree with you. I think I am as frustrated as you with all this nonsense going on with the FASEA requirements…..

  • Jeremy Wright

    This is a step in the right direction, though Dante is out of touch with how the Life Insurance world operates and he must either get up to speed or remove himself from any dealings around Life Insurance when representing advisers.

    Dante, from day one, has shown that his thinking and idealism has pushed his reasoning towards a Utopian world that the rest of Australia does not share with regards to Life Insurance advice and administration.

    It does not matter what Dante thinks should occur.

    It is what consumers want and how they are prepared to pay that matters.

    That is the only consideration and has already been decided by the vast majority of Australians.

    As to ongoing education and how the 2 year responsibility should operate, what Dante needs to understand, is that he and the FPA are supposed to represent their members, as well as promote strategy that is good for the Australian public.

    The FPA and especially Dante, has failed miserably in this regard, as they have never understood risk advice and by being party to the FASEA fiasco in it’s current format and not pushing for Life Companies to be held as responsible as advisers, for how the 2 year responsibility period is managed, is a national disgrace and the FPA should hang their heads in shame.

    I will put my hand up to help guide the direction that the FPA and AFA should take, though I am not politically correct and my only interest is for the long term survival and profitability of the Life Insurance Industry.

    The FPA and AFA will be told what they need to hear and I will not be fobbed off if they do not listen, or continue down the path to advisers decline, or closure.

    The AFA and FPA need to give advisers the opportunity to put their hand up and then allow the advisers to choose who represents them.

    • Daryl La’ Brooy

      My concern with the FPA Board members is that they are representing the “new way”, commission free, fee for service, when the bulk of their members who fund the organisation for not in this new/ideal world. So the members’ views are poorly represented because many on the Board see commissions as dirty and want to get away from this “tainted” remuneration as quickly as possible so they are considered professionals. I’d love to be proven wrong.

    • Squeaky_1

      Jeremy, I’m always glad when I see a comment from you as it is always considered, logical and invariably makes ultimate sense. My regular comments are a little more ‘from the heart’ shall we say. I like the balance. I’m afraid, however, I have lost all patience not only with the industry and the duplicitous creatures who are ruining it for us all, but with these online stories that simply keep rubbing our noses in the lack of support from industry bodies and life companies re commissions and claw back. Seriously, what the hell is this noise FPA/ALA are making about fixing commissions and clawback NOW. If they were ANY shade of serious and had ANY integrity it would already be done and dusted prior LIF. Sadly, I’ve no doubt this will be a smoke&Mirrors dance around to make it LOOK like they’re still on our side but all the while not hurting their real masters. Sorry, fool me once . . . as poor ‘ol George Bush tried to say once . . .

  • Gruntled

    Unless I am much mistaken the FPA has long stated its antagonism to Risk Commissions.

    I would like them to publicly state their current position before getting in bed with them.

    Great to see that “The statement adds that a key focus of the task force will be helping to improve the general understanding of the role financial advice plays in improving insurance outcomes for consumers and the importance of offering them choice in how they pay for that advice.”
    It is gratifying that the statement excludes any mention of the welfare of the advisers who pay their salaries.

  • Old Risky

    My first reaction – this is a positive. There is a possibility, at long last, of a joint policy position on a major issue in the advising industry.

    Then I read Mr De Gori’s comments. “So, as a united task force we can make an impact for well considered, positive change much more effectively.” On that evidence, the FPA has not changed its attitude – it still believes in NIL commission on life risk, but it wants to take the AFA along with it.

    I understand that the FPA no longer has any life risk only members – no surprise there. The question is therefore is the AFA leadership going to be that easily led by the nose, and ignore a core component of AFA membership – advisers whose income is at least 80% from life risk sales and renewals. It’s not yet clear who initiated this Project, but if it came from the FPA and their attitude to life risk commissions is unchanged, then the whole exercise will be a farce.

    FPA has apparently said it has to be for the consumer. Well Dante, consumers speak all the time and they are saying advice fees between $500 and $900 may get up, but that’s it, regardless of statements of self-interested promoters of alternatives. We are on Stage 2 LIF, and that level of fees is not sustainable !

    There are apparently four advisers in the Project, two each from each of the memberships. But there’s nothing in the media release to say that any of these four advisers are predominantly life risk advisers. As a risk only adviser I do not wish to be represented by an investment advisor who cross subsidises a lack of insurance commissions by inflating the overall advice and implementation fee.

    Unofficially the word is out from various insurers that genuine new business risk business is down by 25% and heading south towards unsustainability, and APRA is concerned. Surely the God there is enough research available today that clients who are agreeing to discuss their life risk needs, without necessarily seeking investment advice, are not interested in paying a fee to an adviser for life insurance advice ONLY, no matter how well its value is communicated.

    The insurers have apparently been traipsing off to government advocating for the retention of commissions, but carefully not being seen to advocate any particular commission level nor the withdrawal of the two-year clawback. Insurers are reducing underwriting and new business staff in the face of less demand. Just this week there are signs of panic in life insurers, with one insurer offering 10% and 5% discounts in the first two years, but full whack afterwards. According to my life risk research, another insurer is winding down its term rates significantly. Remember all of the insurers are screaming out that profitability is down, yet somehow some can afford to reduce rates. And this trap for young advisers – there is a hint that some of these cheaper rates are a bit of “bait and switch “, with a “catch up” after 2 years. Quell surprise !

    If the FPA has still not changed its position on life risk commissions, then this little Task Force project can self-destruct 30 seconds after it first meets for all I care.

    • Squeaky_1

      Well said Old Risky. You’re a lot more considered and detailed than I. Reading through your comment i could feel the anger welling up again on how we’ve been shafted by AFA, FPA & life companies over and over again as risk advisers. Hence, my comment above. Cheers mate.

  • Squeaky_1

    These two entities – AFA and FPA – we naively trusted to champion our cause throughout FOFA, TrowbridgeNightmare and LIF. Is ANYBODY here REALLY thinking we can rely upon them to do ANYTHING in our best interests. FPA alone REEKS of self interest and self absorption. WHY do we have lower commissions if these muppets were on the case? Why do we have a 2 YEAR responsibility when these clowns were supposed to be supporting risk advisers AND planners who wrote risk? No credibility whatsoever, sorry gents. get out of our industry and clear the way for an industry association who does what they are designed to do – support advisers on important issues for advisers best interests. Do it NOW! Be gone! You are proven WORSE than USELESS. Don’t even start me on the life company execs who should have stood with us.

  • Brian Howard

    I’m calling for all active and employed Australian politicians to sit a mandatory ethics exam by 1st January 2021. They will have 18 months to plan for it. This is the precursor to a degree each politician would be mandated to complete by 30/06/2025. After this date it will be necessary to hold the degree in order to be registered as a minister in Politics in charge of a significant portfolio.
    .
    A RELEVANT degree to each specific portfolio must be held for that minister to be assigned to it for the time which his party/government is in power. This will be adequate time to do the 100++ hours of study required for the ‘Australian Politicians’ degree, a degree designed to restore faith in the wider community in politicians after the onslaught of abuse certain ‘bad apple’ politicians have displayed with disregard for the Australian people over the last few decades.
    .
    The new degree, to be ratified by a fully qualified panel of chosen individuals from many walks of life. would focus not only on Australian law but on ‘best interest’ duty and duty of care to the Australian public who elected them.
    .
    We are, after all, talking about the management of our country, that of essential services and the best interests of the entire population. Far too much fraud and corruption has been demonstrated and proven in this ‘political’ industry for it NOT to be regulated properly from now forward. Who seconds the motion?

  • Gruntled

    In an article in ‘Professional Planner’ June 17, 2018 Dante De Gori is quoted as saying
    “There are a lot of things out of our control, including the royal commission recommendations and some parts of the political process. What we can control is what we do, our actions and the decisions we make. There is absolutely an opportunity for us to talk about what we can do and how we represent our views,”

    In the same article it is said that

    “The life insurance industry movement, designed to shape policy outcomes, has been likened to the movement led by the mortgage broking industry earlier in the year, the result of which ended in policy makers first accepting and then rejecting the Hayne royal commission’s recommendation to ban trailing commissions paid by lenders.

    Where is the similarity when DeGori is quoted as accepting the Royal Commission recommendations and the Mortgage Brokers successfully having them overturned? DeGori’s position is apparently unchanged from the one he has voiced all along

    Good to think that DeGori will be…. talk…. about what to do. This is far more powerful than a submission.

    We need him to state his position on commissions publicly before he represents us.

  • BKY

    I wish I could be more hopeful in my comments but I think the ship has sailed. The problem is, the client doesn’t know what they want becasue they are not educated in the areas of Life Risk events and the financial crisis they will be in if an event occured. So that’s were a risk specialist earns their money (well used to) by educating the client. This education is only achieved via soft-skills and being able to help the client visualise life as if the risk event has already occured. But this is called selling and ASIC don’t want us to “SELL” and neither do the “Professional Associations”, becasue they want to drag us into this utopian world of “professionalism” and set ourselves alongside the likes of Doctors, Lawyers & Accountants (not in order BTW). Sorry but that, in my opinion, is not possible. You either have a conversation with the client that is logical (super/investment/retirement planning) or you have a conversation that is emotional and illogical (Risk). Who wakes up in the morning with the urgent priority for that day being implemting costly insurance cover they think they’ll never need. Sure it provides peace-of-mind for them, but I maintain it is never urgent. Now ASIC Regs say we have to analyse a client’s capacity to service the insurance cover but then we need to conduct a needs analysis that we all know they will result in levels of cover the client will never be able to afford..and that’s on stepped premiums…it just doesn’t make a whole lot of sense. Not to mention that 515 and BID has placed the risk industry (profession) in the position of being deemed guilty until proven innocence. OMG the whole thing is an absolute mess and sorry Phil but you need to separate yourself from the FPA. I know you’ll disagree becasue we’ve disagreed before, but you need to and you need to take the gloves off and go for ASIC’s juggular…the time is now otherwise the risk industry will implode.