- Retaining my current personal advice proposition (40%)
- Selling my book of business (28%)
- Not sure (16%)
- Remaining a consultant to my clients while 'outsourcing' the personal advice (7%)
- Moving to a general advice-only model (6%)
- Another scenario (3%)
The results from our latest poll suggest many risk focussed advisers are in two minds about their future.
While different conclusions or assumptions might be drawn from the outcome of our question around the short to medium-term future of risk advice businesses, the nature of the results and the comments we’ve received indicate a potentially significant number of advisers and risk advice businesses are weighing their options as the industry continues to evolve – and as more pathways emerge.
One comment we received suggests that the present compliance regime is the real deal breaker when it comes to the future commercial viability of risk specialist practices – trumping even restricted commission caps or the FASEA exam and minimum education standards. On the assumption that risk commissions will continue, one adviser commented:
“…how long will it be before we are swept up in the issuing of annual renewal notices to retain ongoing commissions?”
This adviser thinks the only way for ward for risk specialists is: “…to operate under a separate Code of Ethics and Best Interest Duty that is relevant for that scope of advice.” But the same adviser is holding out little hope that this solution is a realistic possibility.
…there seems at the very least to exist an appetite for flexibility around emerging alternatives
With the future for risk advice specialists and the future viability of their businesses remaining unclear, there seems at the very least to exist an appetite for flexibility around emerging alternatives including potential general advice-only and ‘consultant’ models. While these options haven’t shot the lights out in the poll results, there nonetheless appears to be a quorum in the room. For example, from another adviser:
…we have to think outside this box
“In order to survive we have to think outside this box that is closing in on us rapidly…”
Another adviser got in touch after last week’s poll was released to point out that in future, many licensees may be in a position to offer a selection of models under which the adviser may elect to operate, depending on their circumstances. These models may include both general and personal advice as well as the consulting role supported by another authorised representative.
There’s much more to add, but as usual, it’s time to hand back to you – to vote if you haven’t already, and to add your own contribution to this debate, if you wish. Our poll remains open for another week and we welcome your contribution…
The 29%+ who are selling – call a good business broker like Derek Walsh.
Contact info please?
AFP Business Brokers
Mobile: 0400 662 931
Many thanks, Business, will call him next week. Even though I always thought I’d be serving my loyal clients ’til well into my 70s with good health, it is now simply untenable (see my comments above). I simply HAVE to remove myself from whatever the hell this ‘thing’ is now that was once our great LifeRisk industry. Thank God I planned well, early on, for my retirement because this one is coming about 15 years early. Cheers!
Personally, I can’t wait to see how many MORE advisers leave at June 30. If my business was ready to sell, I’d be gone too. On principal alone, I wouldn’t spend the money sitting the FASEA exam but I’m forced to.
This Government and the uninformed idiots that also work in politics have completely and blindly destroyed this industry. My deepest annoyance at it all though is that WHEN everyone realises what they’ve done, and things swing back to normality to some degree, those that made these stupid, unfounded and biased decisions won’t be around to be held accountable for the carnage they’ve caused and thousands of well meaning and EXPERIENCED advisers will have been lost, leaving just the ‘text-book Generals’ to look after consumers.
Well said, VERY well said! I share your thoughts exactly. The same goes for the heads of life companies who did NOT champion our cause when they rolled over for 2 year clawback, lower commissions, draconian and inappropriate exams and qualifications for THEIR risk advisers. Just look at their businesses now with profits through the floor and getting worse by the day due to lapses and little new business coming in the door. THEIR fault for sitting on their hands and not consulting and acting on advisers advise to them. We told them this would happen, numerous times, and they sat motionless! Idiots! It isn’t too late to get your business ready to go as you have until 1/1/22.
Motionless? They were leading the charge!
Hardly Matt, the only “leading” the life companies did was to lead in rolling over so others could create a toxic environment for risk advisers and advisers in general. The self-enriching life companies WELCOMED with open arms the 2 year clawback provision, commission reductions.
Life companies did NOTHING to say publicly that the FARCE-IA exam and 2026 degree qualification was inappropriate for risk advisers and/or suggest or make available alternatives which were more in keeping risk advisers IN the industry with a qualification that recognized the specialty we perform. It is a very different knowledge base and discipline compared to full planners/investment planners. Current requirements are totally inappropriate for riskies and this is why so many 30 year+ veterans are leaving and taking their experience and mentoring skills OUT of this once great industry. Just too sad for words.
Only now, with some hindsight, can we see how self defeating their inaction became. We told them this would happen and gave solutions, early on, though and they chose to stay silent and SIT MOTIONLESS. I have no idea how you can say life companies were leading the charge, unless you are an employee/company exec/company shill. I’m not accusing you, just wondering out loud because what you assert defies the facts.
We’re on the same page mate. They were absolutely leading the charge on the reduction of commissions and 2 year responsibility period
Oh, I see, I took your first comment the wrong way. My blonde moment 🙂 Cheers!
If you are near retirement age and can sell and get out, just do it!
It is just not worth the angst and stress to keep doing something that is essentially not economically viable.
I saw the writing on the wall a few years ago so I made an orderly transition to retirement and now life is just great.
The Life Insurance Industry is teetering on the edge of a cliff and the LIF, FASEA solution, WAS and IS the reason for what has occurred.
If we cut through the maze of words, it is a very easy problem to recognise and a very easy problem to fix, though to date, the solution has been drowned out by vested interest groups.
The problem is that thousands of very good, experienced Risk advisers have exited and more are continuing to exit the Industry due to the FASEA farce.
Those that are staying on, are waiting for 4 years, then they also will exit due to the other restriction of trade impositions that have made it too hard to write risk new business.
Financial Planners who dabbled in risk, are scoping it out and the risk specialist survivors, are focusing on retaining and being forced to rewrite their current clients, who are justifiably, bitterly complaining about premium hikes and threatening to cancel their policies.
This is a guaranteed way to slowly kill off the Industry.
Congratulations to the Government and the vested interest groups who allowed this to happen, by NOT listening to reasoned and intelligent solutions, instead they grabbed onto the totally flawed Royal Commission and Regulators mazes of contradictions and came up with a solution that has had the EXACT OPPOSITE result to their stated objectives.
The solution is simple.
1) Bring some common sense back into the discussions.
2) Recognise that the current flawed Regulatory system WILL destroy the Retail Advised Life Insurance Industry, as there will be insufficient New Business to offset rising claims.
3) The Government to make a statement that they understand the issues for risk advice and to enact a moratorium so risk specialists can have some breathing space to enable them to reconsider exiting the Industry.
This will include a temporary exclusion for risk specialists to sit the current exam and a task force to restructure the ongoing education path that allows risk specialists to study in areas relevant to their field.
This will enable the Life Insurance Industry to regroup, as let me be very clear, this is a survival course, not an improvement strategy.
The 15,000 plus Financial Planners will be more comfortable re-engaging and or referring to what will be a growing pool of risk specialists if Life Insurance advise can become more efficient and viable, which is a project that is in progress as we speak.
What we need today, is a light at the end of a very long and dark tunnel, so risk advisers will stay in the Industry and not continue the current mass exodus out the door.
No arguments on any of these points Jeremy. Only one problem…no-one in Canberra is listening or cares.
I have no doubt that killing off all risk insurance advisers has always been a very well-planned strategy for what can only be pathway back into the industry for the banks.
Everything the government has said about protecting consumers with all these outrageous, far-reaching, ambiguous and duplicitous regulations has been nothing but an absolute and utter lie.
If that was their genuine plan, they would have identified the massive issues in the industry right now and rectified them already.
Skyrocketing lapse rates and premium increases and consumers being forced away by advisers who simply can’t cope with workload for the pittance were now paid should have been a big enough alarm bell for this government to realise they’ve made huge errors – yet they do nothing and a once strong industry, now borders on collapse.
Good words JADN, I strongly concur with all you’ve said in your response to Jeremy. I may be gone early new financial year but I’ll keep an eye on you and the others here ‘from the outside’. Cheers ’til next time. Chin up mate, don’t let the turkeys get ya down!.
Better keep voting against your interests then.
there will be insufficient New Business to offset rising claims.
That is quite literally the definition of a Ponzi scheme.
Hi Jeremy, Prescient words as usual. I’d like to mention something about one point you make:
3) “The Government to make a statement that they understand the issues for risk advice and to enact a moratorium so risk specialists can have some breathing space to enable them to reconsider exiting the Industry.
This will include a temporary exclusion for risk specialists to sit the current exam and a task force to restructure the ongoing education path that allows risk specialists to study in areas relevant to their field.
This will enable the Life Insurance Industry to regroup, as let me be very clear, this is a survival course, not an improvement strategy”
The above point is salient to me, BIGTIME currently, as this week I am involved in conversations with 2 potential buyers to finalise the sale of my risk book of clients built up over 33 years in our once great industry. I made the decision to get out BEFORE the FARCE -IA ‘ethics'(!) exam for a few reasons . . .
Firstly I do not have confidence I can pass the exam. I’m a good adviser, honest and never had a complaint against me. I am not, however, an academic. Haven’t sat an exam since 2001 when I did RG146 and before that was my HSC in 1978. So, due to the dozens of hours study and away from clients and family I have elected not to do this wholly useless-to-my-clients-and-business ridiculous exam. It is purely an exam to make politicians look like they’re doing something, I have zero respect for it or them. Secondly, what if I or any other riskie does pass. What for? To endue the next 4 years to 2026 with heavily increasing compliance and useless extra regulation and risk of breaches in every full stop of an SoA sentence? The looming spectre of removing commissions or reducing to the infinitesimal? Riskies would be totally stuffed as fees for risk do not work, we all know that. Not to mention the intractable skyrocketing premiums and cancellations problems which will only get worse, sadly. No place for a thinking individual, that’s beyond doubt in my mind. No thanks.
So, if as you say, that light at the end of the tunnel may save us then, please, tell us about that light and the exact ways it will save us because I have finalization decisions to make probably next week or the week after. Decisions I can’t come back from so now is D-Day for me.
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