Financial advisers have indicated they will look at wider and more comprehensive advice models in the next 12 months while still maintaining or even increasing the amount of life/risk advice they currently provide.
A survey conducted on behalf of Zurich Financial Services Australia by Lewers Research found that among advisers who offered life insurance advice 39.2% planned to increase their life insurance advice while 49.8% would hold it at current levels with only 11% planning on decreasing their life/risk advice offering.
Nearly 50% of advisers with 5-10 years’ experience stated they would increase their life insurance advice as did 45% of advisers who had been practicing for 25 years or more.
The survey, which covered 209 advisers, also found that 36.4% of all respondents would be expanding their service offering to include offer more holistic financial planning advice with this being an area of strong interest for 51.7% of advisers with 5-10 years’ experience.
Nearly half of the advisers offering wealth management and financial advice indicated they were looking at increasing their service offering into advice while only about a third of life/risk advisers were considering the same.
The survey found other related fields of advice were also being examined with 41.2% of respondents looking to offer more retirement planning advice, with around 55% of advisers with 5-10 years’ experience interested in expanding into this space.
Estate planning was also an area of interest with 34.4% of advisers intending to increase their work in this area while 56.9% would maintain their current level of advice in this area.
The survey also found advisers were examining higher value client segments in an effort to deal with the cap on commission payments that will begin under LIF with older, white collar and business clients preferable to young singles and blue collar clients.
Nearly 40% of respondents indicated they would increase their focus on white collar professionals while 34.5% would work with more pre-retirees, and 32.1% would increase their participation in the small business market.
This is in comparison with 19.1% of respondents who stated they would become less active in the blue collar market while 18.7% said they would decrease their participation in the young singles market.
Zurich’s Life and Investments, Head of Retail Distribution, Kristine Brooks said advisers were looking at multiple efforts ahead of the implementation of LIF to tackle the changes to their businesses.
“With commissions soon to be capped, it makes sense to explore those segments where ages, sums insured and premiums are likely to be higher,” Brooks said.
“Taking a longer term view, these are also the segments with a higher capacity and propensity to pay fees for advice; many advisers are clearly positioning themselves to supplement commissions with fees at some stage down the track.”
All of these statistics (if they are to be believed!) add up to one thing. A worse outcome for the consumer for risk advice. Another exec trying to justify stitching up advisers and customers especially after the recent premium increases. These people will be the first to be surprised when their business and bonuses start dropping in the coming years!!
I drove down the road past a service station on Monday which was offering unleaded petrol at about $1.00 a litre, including the usual 4c off. Yesterday the same place offered the same petrol for $1.18 a litre with the four cents off.
I wondered how this would be allowed in our industry. On fuel, I don’t know of any oil price-hike but with impunity the oil companies simply artificially raise prices as they see fit. Yet, in our businesses and without any legal challenges, the government decides to cap commissions on life-risk business at 80% for the first year and decreasing to 60% later. Just like that. The smokescreen was ‘advice wasn’t up to scratch’, so with that red herring (no pun intended!), they set out on a witch hunt and it’s led to where we are now.The life offices wanted greater profits and the government acquiesced with ‘OK, when do you want it?’ and it was done.
In that light what they’ve done and are doing is simply outrageous. More than than, it’s almost unbelievable and in real terms may even be challenged as illegal.
So looks like now Advice practices will focus on higher net worth people, rather than those who need advice…
This is a beat up. People will have to have a degree to advise in these areas. How many respondents have one?
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