- Yes (56%)
- No (38%)
- Not sure (6%)
Results from our latest poll suggest many advisers hold concerns about the potential for general advice services to be a catalyst for further reputational damage to the financial advice sector.
As we go to print, more than half of those voting on this question (56%) agree general advice may be a ticking time bomb when it comes to the potential to cause reputational damage. 38% disagree, while the rest are unsure.
The context for this question relates mostly to the future delivery of general advice services applying to life insurance solutions for Australians, which has emerged following the alarming decline in the number of risk specialist advisers and holistic advisers who also advise on risk who remain in the personal advice sector.
As we reported last week, this issue was debated at the recent AIA Australia – Advice at the Crossroads Round Table, where a range of views was tabled.
We suspect concerns held by at least some of those about the potential reputational damage they believe may be caused by general advice activity might be traced to a lack of confidence in the controls being applied to this service offer.
In what looms as a perfect opportunity for the sector to self-regulate, here is a list of three guide-rails suggested by industry stakeholders that might have value in applying to the delivery of general advice in future:
- General advice should only ever be delivered remotely. That is, GA should not be available in-person. It should only be delivered via phone, email, video conferencing or other remote communication methods.
- All general advice conversations should be recorded and held by the advice business for compliance purposes. This will ensure total clarity in the event of any disputes related to the general advice conversations.
- No adviser should be allowed to offer general advice to anyone to whom they delivered personal advice prior to switching from a personal to a general advice service.
In addition to these guiderails suggested to Riskinfo by advisers and other key industry contributors, another suggestion has been to seek an alternative descriptive term for ‘general advice’. This suggestion involves finding a term that removes ‘advice’ from the description of the service which seeks to offer what is mostly a lower-priced alternative for low-middle income Aussies to access much-needed life insurance packages appropriate to their needs.
Yet another suggestion made to Riskinfo as part of this debate is for the law-makers to re-visit the requirement that anyone delivering life insurance advice should be required to meet the same minimum educational requirements as other advisers and that they should also be made to deliver often ridiculously-detailed Statements of Advice currently required for even basic life insurance solutions to cover a house loan.
There’s more mileage to be run on this conversation as the industry continues to evolve, and Riskinfo will continue the conversation into the future. In the meantime, our poll remains open for another week and we welcome your thoughts…
