- Financial Protection an After-thought;
- Singapore Introduces Commission-Free Life Insurance;
- Advisers Optimistic About Growth Despite Negative Perceptions;
- IOOF Takeover Green-lighted by SFG Shareholders
Financial Protection an After-thought
Younger Australians would spend extra income on shopping for clothes and new mobile devices before considering using the money to get financial protection for the first time or increase their life insurance cover, according to new research from TAL.
The study asked Australians what they would do if they received a 10% increase in income. The majority of Gen X and Y said they would use the funds to build up savings or pay off debt. This was followed by saving for a holiday, shopping and upgrading the car.
Just 6% of Gen Y and only 3% of Gen X said they would put the extra cash towards life insurance.
“People have expressed a desire to increase their financial buffer by building savings and reducing their outgoing payments on debt, but life insurance remains a low priority for many,” said TAL Group CEO, Jim Minto.
“And for many people, a 10% increase in household income would more than pay for a policy or ensure adequate cover that gives this peace of mind.
“It is a massive challenge but we need to change this mindset,” he said.
Singapore Introduces Commission-Free Life Insurance
The Monetary Authority of Singapore (MAS) has announced that Singapore consumers will be able to purchase life insurance products directly from insurance companies, without incurring commissions.
An initiative of the Financial Advisory Industry Review, the program will introduce ‘direct purchase products’ into the Singapore market from 2015, enabling customers to purchase cover without the need for financial advice.
MAS will require all insurance companies that serve the retail market to offer the following direct purchase products
- Term life insurance products with Total Permanent Disability (TPD) cover
- Whole life insurance products with TPD cover
- Optional critical illness rider attached to term life or whole life insurance products
Lee Boon Ngiap, Assistant Managing Director for Capital Markets, MAS, said: “When direct purchase products are introduced in early 2015, they will provide consumers who do not require advice with cheaper access to selected life insurance products. Consumers will benefit from the greater price competition that will be introduced between the direct and commission-based channels. Consumers who are unfamiliar with financial products should approach their financial advisory representatives for financial advice.”
Consumers who wish to buy direct purchase products will still be subject to underwriting by the insurer.
Advisers Optimistic About Growth Despite Negative Perceptions
Nearly 100% of financial advice practices have said they intend to grow their client base in 2014, but it is not clear how many have a plan in place to achieve this.
In part one of the SLICE survey, a new study into the issues impacting financial advice businesses, 96% of advisers said they planned on increasing the number of clients they serviced this year.
However, less than half said they believed the FoFA amendments would have a positive effect on their business.
“The first survey was conducted in November, before the news about the FoFA amendments really hit the front pages,” said Susan Rochester, Director of people strategy consultancy Balance at Work, who co-authored the survey with Peter Dawson of the Dawson Partnership.
“Since then advisers have also had to deal with the fallout of the Senate inquiry into ASIC and Commonwealth Financial Planning. We’re really keen to see what advisers are doing at the grass roots level to market their businesses, and overcome those negative perceptions.”
The SLICE team are now calling for advisers to participate in the next round of research, to help determine the types of marketing financial planning practices use. Click here to participate in the survey.
IOOF Takeover Green-lighted by SFG Shareholders
SFG has announced its shareholders have voted in favour of the proposed merger bid from IOOF.
The shareholders voted almost unanimously in favour of the proposal, which would see IOOF acquire 100% of SFG.
The merger was first announced in May 2014, and backed unanimously by the SFG Board.
SFG will now seek Federal Court approval of the scheme, and, if approved, expects the scheme to become effective on 6 August.
