Issues around minimum standards for ‘qualified advisers’ drew a lot of interest from Riskinfo readers this week…
Peak life industry body, CALI, has confirmed its position on the minimum educational qualification required for employed life company staff who will be providing limited financial advice in future.
Speaking only for the life companies, CALI CEO, Christine Cupitt, said the council had thought deeply around the needs of life company customers and the complexity of the service they would like to provide to them and believe the Australian Qualifications Framework Level IV Certificate should be the minimum qualification level required for these qualified advisers.
The customer need that we’re trying to address is the need that we see every day
“The customer need that we’re trying to address is the need that we see every day,” said Cupitt, adding that policy holders contact life company call centres with basic or simple questions about the nature of their cover and how to navigate simple choices around cover maintenance such as top-ups or reductions.
…it’s not anywhere near the same sort of complexity that a risk adviser would provide
In reference to the respective roles played by employed qualified adviser staff and authorised representatives, Cupitt said “We believe that this is an important service but it’s not anywhere near the same sort of complexity that a risk adviser would provide when helping their customer navigate those complex financial needs.”
Cupitt added another key point is that in addition to the formal AQF Level IV Certificate qualification, licensees – including life insurers – have enforceable legal obligations to adequately train, monitor and supervise their team, which would include in-house training on products, the advice process and compliance controls:
“And that in-house training is ongoing. It’s not a set and forget process. Licensees need to be continually thinking about whether they’ve got appropriately qualified team members,” added Cupitt.
Role of Financial/Risk Advisers
Cupitt also emphasised the very strong view held by CALI that financial advisers and risk advisers play an essential role in helping people navigate complex financial needs, “…and that there is a very clear distinction between that work and what we’re proposing to provide.”
a significant objective here is to make sure that customers understand the very big distinction between the advice they get from a financial adviser …and what they can expect from their life insurer
She said CALI believes customers will be able to understand that distinction. “But we really want to be clear that a significant objective here is to make sure that customers understand the very big distinction between the advice they get from a financial adviser or a risk adviser and what they can expect from their life insurer.”
Cupitt said the aim of life company-employed qualified advisers was to complement the important work performed by authorised representatives “…and help people with those day-to-day questions about their cover.”
Mandated as part of the rollout of those elements of Michelle Levy’s Quality of Advice Review recommendations accepted by the Government, life companies will be joining banks and superannuation funds in their ability to employ salaried staff – currently referred to by Financial Services Minister, Stephen Jones, as ‘qualified advisers’ – to deliver limited personal advice to bank customers, super fund members and life company policy holders.
Riskinfo will report further developments during this industry consultation phase, where there appears to be a range of views about a number of issues, including:
- What the minimum qualifications should be for qualified advisers
- Whether that minimum qualification should be the same across life companies, banks and super funds or whether, because of the different nature of the inquiries, different minimum qualifications may be appropriate
- How, in practice, the qualified adviser can determine at what point their simple or limited advice conversations become sufficiently complex to the extent that a referral to an authorised representative would be required
The Life Insurance Industry cannot be a Cobb and Co where they held onto the ideals of control, based on their historical dominance in transporting people and goods, while ignoring how people actually wanted to utilise services.
Cobb and Co went from being a huge player, to very quickly being taken out of the game by a better transportation service.
The Life Insurance Industry is not a piecemeal component that on it's own will thrive.
The market and the future of this important part of all Australia's economic prosperity, is much bigger than what in-house Advisers could provide, as they will mostly be reacting to client circumstances and will not be able to create the exponential growth required in true New Business to drag the Insurers back to long term profitability and sustainability.
I and others have been saying for many years that there MUST be a separation of risk advice and Investment advice, so new people can get into risk advice without the maze of complexity, huge cost and time being spent on mostly irrelevant studies, that has been proven by the results.
What results you ask? Twelve thousand Advisers exiting the Industry and tell me if I am wrong, NIL or maybe a handful of risk specialists who went down the University pathway with the specific intent of ONLY being a risk writer.
There could NEVER be a clearer picture of total failure in Regulatory oversight and Industry response in Australia's history than those figures.
Today, the blinkers are still on and wishful thinking with a belief that Santa will rescue us all and pigs can fly, seems to be the standard train of thought.
Let me put it even clearer.
There is a much bigger percentage of current policy holders paying most of the premium income who are aged in their 50's who are GOING to cancel their covers over the next 5 years because they are no longer in need of it.
Historically, this was remedied by true new business from NEW clients who, by paying TRUE NEW premiums, offset the policies falling off at the other end.
With all the "improvements" in the Regulatory regime, in a large part due to the insistence and co-operation of vested interest groups who sought to get financial gains by screwing existing Advisers into the insane new education miasma that ignored decades of experience, this, as we warned time and time again, would lead to a revolt from risk Advisers and New Business would suffer, which it did.
It is not a long term solution to hit loyal clients with massive premium increases, then manipulate premium figures to build in false narratives and ignore the facts that triple the amount of business is going off the books than what is supposedly coming in.
That is less than a diploma, an advanced diploma, a degree, a graduate certificate or graduate diploma.
Certificate IV vary widely. Some are very, very easy. A very few, such as book keeping, represent a fair amount of learning.
In most cases It means you mainly learn on the job.
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