Future of Risk Advice – Warning to Governments


CoreData’s Andrew Inwood has cautioned those in power to heed the lessons learnt by other jurisdictions when it comes to retaining a viable risk advice sector.

In a presentation at the recent 2021 AFA Evolve Hybrid Conference, Inwood was asked how he sees the future of risk practices.

Within the context of his presentation which reflected on global trends around the economic impact of change and the drivers of growth in the financial services sector, Inwood was unequivocal in his support for the retention of risk advice services.

He told the remote audience of hundreds that risk advice practices have been much derided in the last couple of years and that he believes “…there are people in positions of power who see risk sales as a rant.”

In supporting the retention of a viable risk advice model for consumers, however, Inwood argued that the cost associated with risk rests only in a few places: “It either sits on the State – which means the Government’s responsible for it, or it sits on the family, which means the extended family is responsible for it, or its sits on the private sector.”

…in every country in the world which has had great success, the risk has been moved from the family to the private sector

Applying a global perspective which supports the retention of risk advice in the private sector – that is, a model in which insurers hold the risk and risk advice businesses form part of the distribution solution, Inwood remarked “…in every country in the world which has had great success, the risk has been moved from the family to the private sector.”

Moving the risk

In moving the risk from the family (ie self-insured consumer risk) to insurers (ie consumers taking out insurance policies), Inwood said this transfer “…allows real growth and the people who are smart enough to run these countries know that.”

Of those in power, he said “They know that by grouping risk, aggregating risk and moving it to the private sector, it’s going to allow the country to be more successful.”

In a warning to present and future governments, Inwood reflected that “Around the world, people have tried to take the risk off the private sector, which means taking away the way in which people have been remunerated for it – and they’ve had to put it back on because they’ve woken up and found that the risk has moved to the family.”

…a combination of either self insurance or reliance on the State …is not a formula that has proven to work elsewhere

Inwood is sending a cautionary message that – at least from an economic perspective – that a combination of either self insurance or reliance on the State for support in times of personal crisis is not a formula that has been proven to have worked elsewhere, such as in the United Kingdom, whose financial services sector is similar to that of Australia’s but which, according to Inwood, is in a more advanced position in terms of the (Retail Distribution Review) regulatory reform which took effect in the UK at the end of 2012.

Calling on the industry to unite, Inwood said the sector needs to find a way for the risk industry to “…find a voice” and articulate the value it produces for businesses, individuals and families, while finding a way for advisers to be “honestly rewarded” for the value they deliver: “And that’s something which has to change. We have to find our voice on that and make sure that we drive it forward,” concluded Inwood.

CoreData Group Principal, Andrew Inwood, speaking to advisers at the recent AFA Evolve Hybrid Conference …people smart enough to run countries know real growth happens when risk is moved to the private sector


  1. Further to Andrew’s comments that the industry (is) to unite, and find our voice, I have said this on a number of occasions in Riskinfo these past few years – the AFA, FPA, the CEO’s of the retail life insurers, the heads of the larger licensees, all must go to the govt collectively and put forward a water tight case highlighting the serious problems caused by over-regulation, LIF, and FASEA. Specifically, that involves restoring commissions to the 80/20 level (it is not a matter of giving the 60/20 split a go, as Brett Clark from TAL says – 60% upfront does not cover the amount of work involved in getting business across the line), getting rid of this 2 year clawback, and doing away with these ridiculous FASEA requirements. This also includes presenting a road map out of this mess. The longer you all leave it, the longer the recovery – that’s if the retail life industry ever will recover.

  2. Andrew is correct in his summation of how risk is spread and that the Government, the Regulators and Australians in general, are unaware of the intricacies of risk advice and the implications of misplaced directives and Regulations.

    It is a fault of Australian Regulators and the Government, that they ignore the lessons of other Countries like the UK and instead push through their own agenda’s, even after consistent and verifiable advice from experts on the ground and at the coal face, that their direction is wrong and will cause untold damage, for little gain.

    Australia was a world leader in common sense and innovation, which has, over the last 20 years, been smothered under red tape and unworkable restrictions of trade.

    Innovation and the blood, sweat and tears of a few, can make a tremendous difference, though it should not have to be so hard.

    The United States has a different mentality to innovation, hence the reason why so many talented Australians need to leave our shores, or give away most of their Business to get a chance to develop what could be world beating Business models.

    The Federal Government has R&D incentives, though these are swallowed up in red tape costs and a rear vision mirror approach to supporting innovation.

    What the Government has done to risk advice, is similar to many other Industries in Australia and it is not the Governments per say who cause the mayhem, it is the Public servants who have never risked anything and do not listen to constructive advice, that causes the misdirected approach that ends up weakening a good Business model that really only needed a few tweaks.

  3. Does anyone here really think that our petty bought-and-paid-for govt bureaucrats in Canberra care one iota about risk being placed on families? As long as they get the soundbites in each day to ensure their re-election well, that’s good enough. It is reprehensible that there is ANY discussion about the possibility advised risk clients should be denied advice through killing commissions. We know beyond a shadow of doubt that risk-only fees do not work and cannot.

    To attempt to remove advice risk commissions should be seen as a crime against the mums and dads. We know a client dealing direct with insurers has ZERO leverage when it comes to claim time and most clients have little experience or expertise discerning contractual definitions and/or features and benefits. Where will clients be without risk advisers? Once again, we see politicians, bureaucrats and life companies demonstrating they have scant regard for TRUE client best interest.

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