Risk Specialist Adviser Numbers Continue to Fall


The proportion of risk specialists among advisers who write risk business has continued to decline to its lowest point in five years, according to Investment Trends.

Investment Trends Senior Analyst, King Loong Choi
Investment Trends Senior Analyst, King Loong Choi

Outcomes from the researcher’s ninth annual Planner Risk Report reveal only 17% of financial advisers who provide advice on life insurance could be considered risk specialists.

In defining a risk specialist as one who derives 50% or more of their practice revenue from risk advice, the report found that many advisers were ‘risk generalists’, with 49% deriving 20% to 49% of practice revenue from risk advice, while a further 35% were more focused on investments and superannuation, receiving only 20% of revenue from risk advice activities.

The low number of risk specialists indicates an ongoing long-term contraction with their numbers falling steadily from 41% in 2012 to the current levels of 17% in 2017, among advisers who write risk business.

“…only 17% of financial advisers who provide advice on life insurance could be considered risk specialists…”

At the same time the number of risk generalists has increased from 28% of advisers in 2012 to 49% in 2017, while the number of investment/superannuation focused advisers has remained steady around 33-35%.

Investment Trends Senior Analyst, King Loong Choi said the drift in numbers from risk specialists to risk generalists was partly due to the incoming Life Insurance Framework (LIF) reforms but also because of the broader evolution of advisers’ practices following the Future of Financial Advice (FoFA) reforms.

Choi said LIF and FoFA were also impacting insurance revenues, which had continued to decline as a share of an adviser’s practice revenue among all advisers providing risk advice, and had fallen from a high of 32% in 2015, to 28% in 2016 and 26% in 2017.

Generally, however, fewer advisers reported year-on-year growth in practice profitability, according to Investment Trends, with 59% of advisers stating their practice was more profitable, down from 61% in 2016, 66% in 2015 and 72% in 2014. Conversely, the level of advisers stating their practice was less profitable has grown from 7% in 2014 to 15% in 2017.

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  1. Does this mean that we will be like the dinosaurs and become extinct or the rarer we become the more Valued we will be?

    • Yes Drew, see my comment to Ken above. I’ll be selling and retiring in 2023. That’s when the legislators, life companies and special interest groups have collectively decided they don’t trust me to look after my clients anymore (after 33 years of loyal service to them). Well, they will let me if, at the then age of 62, I agree to hand over dozens of hours (away from helping clients) of my time and thousands of dollars to “upskill” myself so I can simply continue to help my clients with income protection, death and trauma cover. Ridiculous doesn’t begin to describe this absolute farce and corruption of our industry. Sickening is a word more apt.
      Good risk advisers everywhere being ripped off for time and money. Clients being ripped off with higher fees to cover this bureaucracy and lunacy and cut-down robo advice being pushed by nefarious life companies. Client best interest isn’t taking a ‘back seat’ in all this – it simply doesn’t even exist in the minds of these entities. If it did then they wouldn’t be behaving like they have.

      • Like Squeaky, I have drawn a line and leaving in 2022 (aged 65) after 49 years in the business. I am exhausted and my passion has waned in the last 2 years. I also was going to keep going after 65, but the Government and Insurers have made it impossible for me to even think about going on. I have had enough. Bring on 2022.

  2. Risk generalists ?? That’s a new one !! How about an old fellas description of this
    These are people who once had a view that they were in this business to assist people but have now been kicked from pillar to post by the regulators banks and out of touch politicians so much that they are seeking refuge in the investment areas just to stay in business
    Wait until this legislation really kicks in next year
    The specialist risk adviser won’t be valuable they simply will be hard to find as they will be heading for extinction ( more chance of finding a Tasmanian Tiger) and the on line sales institutions will finally have their day along with their owners the banks and insurers. This is an agenda they have been pushing for for years

    • Well said Ken, very well said. Our client bases will be more valuable too. This is a good thing as MANY of the advisers kicked from post to post, as you say, will be leaving the game and selling, if they’re smart.

  3. Ask the wrong questions of the wrong people you are bound to get misleading answers
    I suspect many pure risk advisers couldn’t be bothered. Some are under pressure from institutional AFSLs to call themselves “holistic” advisers.

  4. I am absolutely gobsmacked this would be the case.

    Lets see they decrease the pay by up to half, increase the workload and then say oh by the way you cannot spend your revenue until the 2 year clawback period passes.

    Truly surprising.

    • You’ve articulated the farce well Robert. In your comment we can clearly see how the life companies are doing well to monster the advisers out of the industry. Make no mistake guys and gals, if the life companies had not wanted these changes they would have fought against them.
      Let me shout out these oft quoted lines from the life companies and our PD days: “We are passionately comitted to the advisers and the adviser distribution channel” and my fave: “everything we do must be in the client’s best interest”. Jeeeezzz, client best interest eh?.
      This is what client best interest looks like from a life company: roboadvice, roboclaims, no advice from trusted professionals, higher premiums, cut down policy definitions with barriers to claim and underwriting at point of claim. This is what our industry will be by 2025 no risk (pardon the pun). You cannot look me in the eye and say the life companies couldn’t formulate a defence about lower risk commissions, or a 2 year chargeback or the provision of a separate risk licence for pure risk advisers. It was just too easy to sit back, do nothing and let govt take the blame for driving risk advisers from the industry.
      They should be heavily ashamed of themselves as this is a deep betrayal of clients best interests by the life companies and the governemt and all the vocal special interest groups both of these entities ‘whipped-up’ to bring these changes about. Big end of town wins against the little guy yet again.

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