New research has revealed that financial advisers are deriving a higher proportion of their business income from insurance advice.
Interim results from CoreData’s 2011 Risk Study have indicated that over 40% of all advisers (41.1%) are receiving at least half of their business income from risk advice. This number is up from 32.9% last year.
This trend is also apparent at the higher end of the scale, where over a quarter of all advisers (26.6%) derive more than 70% of their income from delivering risk advice (up from 19.2% in 2010).
CoreData says these interim results are based on feedback from a broad cross section of around 800 financial advisers, only one in five of whom specialise in risk. More than three quarters of respondents describe themselves as financial planners.
The researcher points to the cyclical nature of the economy to account for this trend towards increasing risk advice revenue share. Kristen Turnbull, CoreData’s head of advice, wealth and super, told riskinfo: “The increased focus on risk insurance that we witnessed during the GFC continues in 2011, providing further evidence of the countercyclical nature of insurance and hence the diversification benefits for advisers offering risk advice to clients.”
Other key interim outcomes reveal:
- More than two fifths of risk business is written inside super (45.9%)
- There has been a considerable increase in the proportion of advisers who expect the business levels with their main provider to increase over the next 12 months (29.0% expect levels to increase by more than 20%, up from 20.8% last year).
- In 2011, 60.7% of advisers expect business with their main provider to increase while only 7.2% expect it to decrease. This is a big shift on 2010 when just under half expected business with their main provider to increase (48.8%) and 10.3% expected a decrease.
- Only one quarter of advisers support the FSC’s proposed removal of ‘takeover terms’ (23.1%), while only one third support the establishment of a consistent adviser responsibility period across the industry of two years (33.9%). However a number of advisers are unsure of whether or not they support the proposals.
CoreData’s 2011 Risk Study remains open until Friday 16 September for any advisers wishing to provide feedback on trends in their business during this transitional period in the financial advice sector.
Incentives for respondents include the chance to go into a draw to win one of five ipad2 tablets. Advisers can click here to access CoreData’s 2011 Risk Study survey.
