A cross section of industry stakeholders is generally supportive of the recommendation that life insurers should have the ability to provide limited personal financial advice to their policy holders.
This was the consensus at the recent MetLife Industry Round Table, where panellists reflected on the decision of the Financial Services Minister to initially allow a Quality of Advice Review recommendation around broadening access to financial advice to apply to superannuation funds but not to other entities.
While there was broad support for the decision to allow super funds to provide limited advice to their members, panellists also pointed out the issue of underinsurance in Australia is equally urgent in its need to be addressed as the pressing need to provide a solution for the existing retirement income advice gap.
Some personal advice does not need the skills, expertise and judgment of a financial adviser…
The rationale underpinning QoA Review Leader Michelle Levy’s recommendation to allow institutions the ability to provide limited financial advice includes her argument that in order to make personal advice more accessible and affordable, the range of people who are able to give that advice needs to expand. In the Chapter 5 summary of the Quality of Advice Review Final Report, Levy adds “Some personal advice does not need the skills, expertise and judgment of a financial adviser and should be able to be provided by other people (and entities).”
Levy also argues that if the regulatory framework continues to require all personal advice to be given by a financial adviser, “…it would exacerbate the existing accessibility and affordability issues which are part of the reasons for this Review.” She added “…I do not think it is necessary or in the interests of consumers to require all personal advice to be given by a financial adviser.”
Responding to a question as to how advisers would respond to the prospect of product manufacturers providing limited advice to policy holders, Council of Australian Life Insurers CEO, Christine Cupitt, suggested there would be mutual benefits were this to take place.
She said the proposition ticks the box around a shared interest in making sure that consumers have the right level of life insurance protection and it also means that customers who receive some level of advice from a life insurer will develop a greater familiarity and confidence with the advice process ahead of potentially taking the next step to obtain a holistic financial plan if that’s what suits their circumstances.
We’re all trying to solve the same problem here…
“We’re all trying to solve the same problem here and work towards the same outcome, which is better financial outcomes and better risk protection for Australians,” said Cupitt.
The adviser and licensee voices around the table were supportive of this proposition, where the only caution was around ensuring the client’s best interests are protected and that the quality of the advice being delivered did not compromise the hard-won gains in the re-emerging trust in advisers and the professionalism of financial advice being delivered to Australians.
Riskinfo will report further developments in this area as the industry, particularly via representations made by CALI, continues to state its case to Canberra to extend to life companies the same capacity to deliver limited financial advice as the Government has decided to approve for superannuation funds.
I bet the insurers are salivating at the idea they can get rid of those commissions paid to those pesky advisers now they can “compete” with them!
Yes, LOL, just live they salivated when they sat on their pudgy little hands in FOFA and LIF. All while our commissions slipped to 60% and clawback period inflated to 2 years. Both those things will be the death of advisers and consequently the life companies. How stupid they were not to see this?! Everyone will have to take their ball & bat and go home by 2027, latest.
Like Old Risky said somewhere, there’ll be 3 or so insurers left in a few years, the rest will be gone. Sounds accurate to me. Three insurers should be able to handle the clients who are in the market to BUY insurance. There will certainly be nobody left to SELL the amount of insurance that’s truly needed. Haha sad joke – client best interest – don’t hear life companies OR the government mention THAT much anymore. If they do then they should be ashamed of themselves, it is obscene! Can you spell UNDERINSURANCE ?!
What a nightmare! The Fox in the hen house. Once again insurers are believing that their policies are being sold because they are a very well-known and trusted insurer.
Rubbish! Insurance is sold on relationships.
You can see what the plan here will be. They’ll start ringing up advisers clients (not just orphans) without an invitation, when a premium is missed. They’ll then ask when they last saw their adviser and suggest that there could be a reduction in the premium if the policyholder agrees that renewal commission should not be paid to an adviser they haven’t seen for years, or one who has retired and sold the business.
And those “consolidators” who purchased the books of departing advisers better start looking over their shoulders .
An old industry hand once said to me that advisers should always have a love/hate relationship with insurers. They love you while you’re putting in new business, but they’re not keen on you if you start impacting their claims paying record. And they won’t continue to like you if you move a policy because it’s in the best interests of the client -internally, lapse ratios are still monitored.
I was told a long time ago that most insurers hated advisers, but had to put up with them because they could not do without them. And Ms Levy has just given insurers a way through the back door, while the consumer guard dog is still sitting out the front, on a short chain.
Insurers are like banks – they should never be left anywhere near advice.
If they do indeed get their way here, Oldie, it will be a Pyrrhic victory only. As you so eloquently describe, they hate advisers but once advisers are gone we will see life companies collapse. I think you alluded in another comment recently that they were dipping into the stat funds. I’ve often thought they may consider this as their income dries up. Wonder what APRA will say when they do?!
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