Latest Poll – Options for Risk Specialists

1. I wrote the piece below earlier today and stand by it. Of course, if the government/regulator moves against this too we’re pretty much all in the desert without a compass.

   “It’s early days yet, isn’t it? Still, it is an alternative to quitting the business entirely and allows risk specialists to continue earning an income for now. As it is, there seems to be no future for those who choose not to do FASEA.

   Apart from that, general advice means not having to shoulder the burden of compliance, ASIC Levy, AFA membership, TPB membership and CE. Carrying those things alone requires having to drive a B-double truck, whereas only yesterday you could get by with a ute!”

2. The Government should be asking a different question as a priority and the relevant adviser associations should have already found this out, though as usual, they seem to be incapable of seeing just how serious this situation is.

   It is all very well for a suggestion that thousands of advisers become consultants, though the obvious question is, how many of the handful of new advisers entering the Industry, are going into Risk advice.

   It appears to be virtually none.

   This then begs the question. Why would you push existing advisers with vast experience out the door, when there is no-one to replace them?

   Even if there was a plethora of inexperienced, newly qualified on paper, L plated advisers wishing to provide risk advice, has anyone bothered to ask the Australian public who they would prefer to represent them?

   Given the choice between an apprentice who has yet to go solo and an experienced tradesman, I think most people would prefer the tradesman with years of successful operations under their belt.

   It is the same for specialist risk advice.

   • Existing advisers are not being pushed, they simply have to meet minimum standards. Do you think clients will be happy to discover their adviser of many years is not up to standard?

     • The minimum education standards risk insurance specialists are expected to meet are unnecessary and unfair. Up until the last few years, risk insurance specialists had always met their standards via the obtaining of the required diploma or degree, ongoing CPE training, and let’s not forget experience. Along comes FASEA who decide that the standard of our profession needs to be raised. I’d like to know what the basis is for such an assumption? if it’s because of a few rogue advisers, then it is unfair to tarnish all advisers accordingly. However, when it comes to the minimum standards all risk specialists are now expected to meet, then as some advisers have asked, how is doing an ethics exam going to make someone ethical? Also, to have risk insurance specialists complete a full financial planning degree is just plain silly. A medical specialist may undergo training in their early years which would encompass a good knowledge of medicine. From there, they would undergo specific training in their chosen area of speciality. They would not be expected after 20, 30, or even 40 years of practice, to undergo a degree in general practice in order to continue specialising. So it is with risk insurance specialists. They covered all areas of financial planning in the early days of their training, and went on to specialise in risk. Completing a full financial planning degree is unnecessary.
       Lastly, your question, “Do you think clients will be happy to discover their adviser of many years is not up to standard?”, implies that the performance of advisers has never been up to par period. But as stated above, advisers have always met their standards, standards that have been enforced by their licensees, and annual audits. Just because FASEA says otherwise does not automatically mean they are correct. It is apparent that the regulators, including, FASEA, never bothered to ask those Australians who have a risk specialist/ financial planner, how they felt about the services provided. In that regard, I wonder if they really do want to discover the truth?

       • I’d like to know what the basis is for such an assumption? if it’s because of a few rogue advisers, then it is unfair to tarnish all advisers accordingly

         Not everyone is a terrorist either however a few checks and balances while boarding a flight make for safer airline industry.

         how is doing an ethics exam going to make someone ethical?

         The irony of this question is that the exams have shown that advisers are not great at identifying conflicts of interest.

         Also, to have risk insurance specialists complete a full financial planning degree is just plain silly. A medical specialist may undergo training in their early years which would encompass a good knowledge of medicine. From there, they would undergo specific training in their chosen area of speciality. They would not be expected after 20, 30, or even 40 years of practice, to undergo a degree in general practice in order to continue specialising.

         The problem with your analogy is that medical specialists had an underlying qualification from day 1 and an admission to the relevant medical body.

         • Some good points “My Heart will go on”, Nevertheless, let me further clarify my position.
           1. As I said, advisers had always met their standards via the obtaining of qualifications and ongoing training. Furthermore, licensees and audits ensure advisers also meet their ongoing compliance requirements. In that regard, all advisers have already been meeting their “checks and balances”.
           2. There is no irony in my question re the ethics exam. Even if a few advisers struggle with conflicts of interests, it does not make them unethical.
           3. It seems that you are missing the point. You’re correct, medical specialists had an underlying qualification from day 1. However, they are not required after years of practicing as a specialist, to go back and complete another degree in general medicine, in order to continue practicing as a specialist,

         • 1. And yet somehow there was a Royal Commission in to financial advice.
           2. Even if a few advisers struggle with conflicts of interests, it does not make them unethical. Lol read that back to yourself and have a think about it.
           3. This is untrue. Medicine is constantly evolving, as is the law to name a few, and practitioners must keep up-to-date to advances and changes (either hands-on training or education) in order to perform to the standards expected of the field. The expectations of an adviser have shifted, so advisers need to shift with them.

           But ultimately these are moot points as the industry is beyond salvageable. Clue: it is not even LIF – LIF was a symptom of the underlying issue.

         • 1. The origins of the Royal Commission had nothing to do with Financial Advice. Granted, the commission uncovered issues within the advice sector, but they were centred mainly around the banks and AMP. To use your original analogy – “Not everyone is a terrorist either however a few checks and balances while boarding a flight make for safer airline industry” – if an airline discovers a potential terrorist is about to board a flight, they don’t put all other passengers in jail.
           2. Let me be more clear. It has been stated as fact that FASEA literally rewrote the law with their code of ethics. The AFA have subsequently asked FASEA for clarification on some standards due to their ambiguity. (refer to past Risk Info articles for detail on this). Furthermore, late last year, one of my colleagues received different interpretations from two Compliance experts regarding a simple life insurance issue, according to their interpretation of the FASEA code. So even Compliance experts can’t always agree. My point is that even if an adviser makes an honest mistake while trying to adhere to the law, it doesn’t make them unethical.
           3. Let me make my point as simple as I can. A medical specialist and an adviser who both start out, will complete training that cover all areas of their profession. After completing that training, both decide to specialise (the adviser decides to specialise in Risk), and both continue to grow and develop through experience, and ongoing training for the rest of their working lives. But after 20, 30 or even 40 years of practice, the medical specialist is not required to complete a full degree in general medicine to continue as a specialist; and yet FASEA have decided risk specialists are now required to complete a full financial planning degree despite their ongoing training and experience. This is unnecessary.

           Having stated all of the above, I agree that these are probably moot points, and that the industry is beyond salvageable. However, may I suggest that it is the “personal” advice industry that may be unsalvageable, and the Life Plan initiative of offering advisers in the personal life space, the opportunity of continuing under a “general” advice model, is a way for life advisers to continue.

         • Hey stooge…I would have thought a regulator whose very existence relies on finding (or manufacturing fault to survive, as has been the case the last few years) was more conflicted than advisers. If you’re so confident that what you’re saying is so absolutely right, then agree to meet a few of us somewhere public so we can debate this properly, instead of hiding under your desk with your pathetic public service guaranteed income.

     • Hmm – you spoke of empathy above here. Pehaps a bit of that might be worth considering in your remarks.

       • I empathise with the customers and I can understand why advisers feel a bit upset but why on earth would I have sympathy for advisers now that easy street has suddenly become a little bit hard? Why would I have sympathy for a train that has run out of gravy? Remember: clients are not willing to pay for risk advice but you want to assert the value of this advice.

         • Perhaps a little emotional intelligence here would also assist in adding understanding and compassion. That’s it for me. Btw, are you and ThisIsTheEnd one and the same?

         • You will never catch me alive! I keep getting banned because the moderators don’t like hearing the truth. But hey, I guess the industry is thriving, isn’t it?

           Btw I’m sure you wept when subsidies in the car manufacturing industry ended and job loses ensued.

         • When I started as a life insurance agent in 1978, commissions were only paid for two years.. It was never easy street. Many of those clients (that remain alive) are still clients and friends forty years later. So imust have been doing something right.

         • Right but if they’re still clients it means you’re receiving revenue from them still… right? So did you churn them or is it through investment advice?

         • Okay, I’ve watched your idiotic (and clearly bitter for some as yet unexplained reason) comments pile in today and have had enough of your incorrect perceptions on anything to do with this industry so let me set the record straight on some of the points you’ve raised today.

           Firstly, LIF that you refer to earlier today was with triggered by an incredibly manipulated and incorrect report that was released by ASIC that came from hand-picked data – not random data from across the industry. They contacted insurance companies and ask them for client files of a scrupulous nature or that may have been written by an adviser who was known to turn business over. There are some advisers who were systematically taking advantage of upfront commissions pre:LIF but that percentage of advisers is no different to the number of lawyers, doctors, real estate agents, politicians, accountants or any other trade who have also crossed an unethical line.

           Unfortunately, that hand-picked data resulted in a report stating that 37% of advisers were non-compliant when that is so far from the truth it’s ridiculous but the media and the government who only thrive on bad news (like you) and never the good news – chose to run with that 37% figure that resulted in the LIF reforms. You’ve probably chosen to ignore the fact ASIC have since withdrawn many of the claims made in that report but it was too late by then because the damage has been done.

           Like I said to you in the past, if you focus on the scratch on the windscreen your whole life, that’s all you will see and that’s all ASIC does.

           Advisers were also put in a position of perceived ‘churning’ as a result of the absolutely ludicrous ‘Best Interest Duty’ where we were legally forced when we did a review of our clients insurance policies to put them in an equal or better position than what they already were. Insurance companies constantly jostle for number one rank when it comes to most competitive premiums so every time an adviser sat down with a client and did a review, they were faced with a situation where the insurance company premiums had reduced elsewhere which ‘technically’ forced advisors to recommend the now less expensive insurance policy. You say we are conflicted. I say to you we were put in this position by meddling and educated regulators. Commission rates were irrelevant. The highest commission payer pre-LIF was AMP at 127.5% I never even so much as kept an AMP PDS in my office such was the disdain I had for their product and pricing so it made no difference to me how much they paid me.

           My preferred insurers paid no more than 115% less GST, less Licensee fees, less expenses. They’re all now a pathetic and unprofitable 66% less GST, less Licensee fees, less expenses so I don’t know how much money you think us financial advisers make but your hourly rate (whatever it is the hell you do when you are not antagonising advisers on media sites like this) is probably more now than what we earn so your comment about us being ‘on easy street’ is so far removed from reality, its laughable. We also work more than 38.5 hours a week, which is all I suspect you work. I average about 55-60 per week for my ‘easy street’ lifestyle. How does that compare to your efforts each week???

           Furthermore, we have to undergo about 60 hours of ongoing education EVERY year now just to maintain our ability to practice. That’s in addition to the BS further education you think we need to undertake.

           Does a plumber need to get a trade to be a concreter, sparky or carpenter? No. Well thats exactly what FASEA is saying to Risk Advisers. If you think that makes sense, you’re more of an idiotic than I thought.

           The fact is pal…you’ve put your head into this industry for about 5 minutes, maybe read a few headlines along the way and now consider yourself an expert. You’re not. You know nothing. You’ve clearly never worked with an adviser or spoken to a client who’s been through the process of working with one who’s then had that very adviser deliver on everything they promised their client.

           Go away, get yourself acquainted with the facts; not some bitter twisted person’s opinion or some leftwing lazy clown’s opinion and let the grown ups deal with this. You are out of your depth here.

         • This is my favourite comment. Can we frame this one, Peter?

     • Have you thought about the time that it will take for an existing adviser (especially a risk one) with hundreds of clients built up over decades) to do the study required?

       Have you considered that an adviser in their mid-sixties (like me) may never get the return on investment of the dollar and time costs of doing a Grad diploma or Degree?

       More importantly, have you considered that advisers like me, may have learned much more through experience than any course will ever teach?

       Remember surgeons historically were trained on the job, as apprentices. Only doctors went to university.

       It doesn’t matter how you learned your trade, it just matters that you have.

       ps: I passed the FASEA exam on first sitting in 2019, so I do embrace a challenge.

       • Have you thought about the time that it will take for an existing adviser (especially a risk one) with hundreds of clients built up over decades) to do the study required?

         Have you heard about the thousands upon thousands of people that undertake study and full time work? It’s absolutely possible and done all the time.

         Have you considered that an adviser in their mid-sixties (like me) may never get the return on investment of the dollar and time costs of doing a Grad diploma or Degree?

         Have you considered that share traders in 2020 might have been in the wrong place at the wrong time and received rotten returns? Some times the market turns on you.

         More importantly, have you considered that advisers like me, may have learned much more through experience than any course will ever teach?

         Remember surgeons historically were trained on the job, as apprentices. Only doctors went to university.

         And aren’t we all glad we changed that system!

         It doesn’t matter how you learned your trade, it just matters that you have.

         A kid might have driven a paddock basher and now they think they can drive a car. Would you give them a licence to drive on the road?

         ps: Congratulations.

3. Remaining as a general adviser is fraught with danger as the clients will interprete anything said as advice from ‘their’ adviser (the risk specialist). Any complaint and everyone is sunk.

   • You’ve raised a good question, but may I suggest that advisers not reject the idea because of such questions. It is a given that questions always follow any new idea, especially if that idea is radical and/or different. I think it’s a matter of giving Life Plan a chance, as it may be a good way out of the mess risk advisers in particular, are in.

4. They should have included empathy training as a part of the curriculum for the minimum standards.

5. Interesting…. Both options appear to be different methods of trying to “get around” the various regulations imposed on us. The funny thing is that all the regulations imposed on us, culminating in the Code of Ethics, is all geared towards not “getting around” the regulations. Having said that it could be argued that the operations of a risk specialist adviser is more aligned with a GI Broker, and a lot of those seem to have been operating quite successfully under a general advice model for many years.

   Hopefully these discussions is the beginning of the understanding that a risk specialist is a very different beast than a holistic financial planner and that trying to get the risk specialists to abide by those rules is absurd and will lead to the demise of the risk specialist. If the regulators goal is to get rid of risk specialists then well done, if it’s not it needs a re-think.

6. Its interesting that the industry is coming up with options like this – and I’m sure these are just ‘pondering thoughts’ at this stage. My initial thought (personally) is how would an adviser struggling with the income we now have to deal with, actually survive financially if they’re suddenly sharing their income with another adviser.

   It’s also interesting that the primary thought here ISN’T how are we going to save all these experienced advisers from leaving and save this ‘train wreck of an industry’ from going off its tracks, over the bridge and deep into an abyss?

   I also seriously wonder what in God’s name it is that ASIC and the Government ARE NOT SEEING to realise how badly suffering this industry now is as a result of their meddling interference and why they’re not rushing to rectify THEIR catastrophic mistakes yet.

7. Does anyone else think that these companies circling adviser portfolios sound like vultures circling a near dead animal in the desert?

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