PPS Mutual CEO, Michael Pillemer, has called on Canberra to release the handbrakes preventing the delivery of more life insurance advice.
Pillemer made this call in the wake of the release of Adviser Rating’s 2025 Australian Financial Advice Landscape Report, which references early signs of recovery for risk advice (see: Growth in Risk New Business a Positive Trend).
In speaking with Riskinfo, Pillemer expressed his frustration with the delay in any meaningful action from the regulators and the law makers to address the seemingly never-ending red tape which hovers over even the simplest levels of personal financial advice. The CEO says he is now less optimistic than he was in June 2023 following news of the Government’s initial acceptance of 14 of the 22 recommendations contained in the final report of Michelle Levy’s Quality of Advice Review (see: QoA Review Decisions – SoAs Replaced, Risk Commissions Retained).
At a time when advisers are telling him it has been over a decade since there has been so much demand for their new business advice – due in part to the almost halving of adviser numbers in recent years – Pillemer says it’s past time to remove the roadblocks preventing advisers from reaching more consumers.
With another potential downward spike in adviser numbers as the sector approaches the 1 January 2026 minimum adviser qualifications deadline, Pillemer wants action from Canberra sooner rather than later. He says a number of steps need to be taken and they need to be taken quickly – for the existing advisers who he says are mostly doing well: “There’s a lot of demand at the higher end because they tend to be the established advisers serving that sector and because there aren’t many new specialists coming into the industry. So it tends to be the existing advisers which have established very robust back offices and have good referral networks.”
…the middle-lower sector of the life insurance market is equally suffering from the effects of excessive red tape
In reinforcing the fact that the middle-lower sector of the life insurance market is equally suffering from the effects of excessive red tape – leading to this sector being “frozen out” of much needed life insurance advice due to many advisers not being in a position to cater to this significant sector, Pillemer is calling for swift action including:
Action on Statements of Advice
Pillemer notes it has been 2½ years since the Quality of Advice Review recommendations were released “…and most of the meaningful reform hasn’t happened yet. It’s just taking so long.” He likens action on removing the current settings on SoAs to picking the low-hanging fruit:
“The client is never going to read the 60-70-page SoA. They might if it was five pages. The cost in producing the SoAs is prohibitive. It’s a no-brainer and should have been implemented in the first six months following release and acceptance of the QoA Review recommendations.”**
Action on Adviser Remuneration
Pillemer reflects the view held by a number of influential industry contributors that the Life Insurance Framework remuneration settings need to be reviewed.
In his previous role as a dealer group principal, he says that from both a sustainability and pricing perspective, he always felt a hybrid commission structure was a better option than upfront commissions in terms of building the longer-term value of an advice business.
…the current LIF settings have taken the hybrid model too far
He believes, however, the current LIF settings have taken the hybrid model too far and that “…it needs to be tweaked back to the 80/20 model” which existed in the market prior to the implementation of the LIF reforms.
Pillemer is in full agreement with FAAA GM Policy, Advocacy & Standards, Phil Anderson, who has also recently called for commission caps to be reviewed (see: Anderson Calls for 80/20) and has been advocating this position for some time.
Action on Better Industry Facilitation of Advised Life Insurance
“Advice led life insurance is not the problem. It’s actually the solution.” This is Pillemer’s position in arguing that the life insurance and superannuation sectors should be doing more to promote and facilitate advised life insurance solutions to superannuation fund members and policy holders.
He points to APRA reporting which consistently returns data demonstrating a higher proportion of claims are accepted when an adviser is involved in the process.
Pillemer says the regulators and the insurers should be doing more to encourage and promote the benefits of individual advised life insurance solutions.
While he acknowledges that APRA’s IP intervention was well-intended and, in some cases, necessary reform, he laments the fact that the regulator’s intervention did not level the playing field: “…you’ve now got a situation where you’ve got group superannuation schemes which on the surface appear to be more advantageous than they used to be, relative to individual disability income insurance.”
He cites the example of income replacement ratios where an insured member of a super fund can in some instances still access a 90% income replacement ratio compared with the basic individual advised IP offers which have been reshaped by APRA’s IP Intervention.
“At the end of the day, Group [Salary Continuance] – in most scenarios – is inferior to the outcome achieved when receiving advice from an adviser.”
Most importantly, says, Pillemer, typical group life and salary continuance offers are not guaranteed renewable. He says a member can be in a group scheme which has an adverse mental health claims experience. Because the fund does not operate under a guaranteed renewable condition, however, Pillemer makes the point that it is within the remit of the super fund to exclude mental health related conditions from future claims.
He says an employee member could leave their company and no longer be covered for mental health-related conditions under a continuation option or the fund could also exercise its discretion to exclude that range of claim conditions, even if the member/employee did not leave.
…the danger in consumers believing their life insurance needs are adequately covered through group and direct insurance solutions
While acknowledging that both group and direct life insurance offers have a key role to play, Pillemer nonetheless highlights the danger in consumers believing their life insurance needs are adequately covered through group and direct insurance solutions, which he warns can be misleading in a significant proportion of cases.
Pillemer is calling on the regulators and the life insurance firms with large books of group business to step up as a collective to better promote the benefits that flow from advised life insurance conversations.
Action on Ease of Doing Business
Pillemer stresses that insurers must also urgently make it easier for advisers to do business with them, particularly when managing existing policies – such as new quotes, increases, or ownership changes. Addressing this pain point, he says, would make a substantial difference to advisers.
Action on Removing Other Red Tape
In summarising the current state of play for risk advice in Australia, Pillemer believes financial advisers are very well positioned to deliver this service but aren’t writing as much business as they could because of the existing impediments to their productivity. He adds the business they do write isn’t as profitable – even at the high end – because of the excessive red tape and other compliance requirements.
“That’s where we need to remove the handbrakes.”
In again calling for action to be taken quickly, Pillemer says taking the handbrakes off would see the high end of the risk advice market fly and would also allow advisers more time to deal with the low-middle market sector.
…an influx of new advisers means there would be more new clients coming into the life insurance pools
“And we also need to bring new blood – new advisers into the industry,” says Pillemer, adding that an influx of new advisers means there would be more new clients coming into the life insurance pools – particularly at the low end of the age and premium spectrum.
“We just can’t afford to bring in a new generation of advisers into the profession where there’s a perception that the life insurance advice proposition is under-paid and under siege,” concluded Pillemer.
**Editor’s Note: Draft legislation containing the second tranche of the Government’s Delivering Better Financial Outcomes reform package, was released in March 2025, including the transitioning of Statements of Advice to Client Advice Records (see: SoAs Out, CARs Back to the Future). The draft legislation received a lukewarm reception from the sector, leaving a number of key stakeholders underwhelmed by the productivity gains they felt the draft changes, including the move to Client Advice Records, would actually achieve.
