The collapse of Shield and First Guardian Master Funds has stalled long-awaited reforms to create a new class of adviser according to the FAAA’s Phil Anderson, GM Policy, Advocacy & Standards.
Attendees at the Melbourne leg of the Riskinfocus 26 CPD Tour heard the delay is contributing to the shortage of advisers and limiting access to life insurance advice for consumers.
During a panel discussion moderated by Craig Parker, AIA’s GM Retail, Distribution & Retention, Anderson said the business failures – which cost 12,000 investors $1bn – had forced Treasury to shift focus away from reforming advice laws.
“There is no question that we are now facing a delay,” he said. “It’s very easy to understand why the government is reassessing,” adding that Dr Daniel Mulino, Assistant Treasurer and Financial Services Minister, was now prioritising broader system safeguards.
Panellist Keely O’Brien, GM Corporate Affairs and Strategy, CALI (representing insurance manufacturers) said: “We have a pretty problematic situation in Australia right now where less than 20% of customers are happy with the service they’re getting when they call life insurers.
“They don’t want general advice from them. They want something more, but they want something less than comprehensive advice.
“We have referral pathways out to advisers like all of you in this room. But what we hear from our customers, and your clients, is when they call us to ask a few questions, maybe dial up, dial down, make a few changes [to their policies], they feel like, ‘why aren’t you able to help me?'”
Adviser shortage
There’s about 15,000 financial advisers currently, down from nearly 29,000 in 2019. Anderson said there’s a widening gap between supply and demand for advice.
“There are heaps of clients to go around,” he said, citing growing superannuation balances and an intergenerational wealth transfer as drivers of future demand for advice.
However, the shortage is particularly acute in life insurance, where complex compliance requirements and high costs have reduced the viability of providing such advice to consumers.
The proposed new adviser class is intended to provide limited, lower-cost advice for simpler insurance needs while operating under supervision and with a pathway to full qualification.
The FAAA has backed the model, arguing it could improve access without lowering consumer protections.
A poll asking Melbourne attendees if they supported the proposed new class of adviser showed moderate support: 37 in favour, 17 against, and 25 not sure. Not all attendees cast a vote, but the result revealed plenty of those at the event are yet to be convinced it’s a good idea.
…This new type of adviser would be a potential opportunity for someone to learn…
Bradley Gecelter, an adviser with Steadfast Life, said: “Twelve months ago I sat on the panel here and said I’m not a fan of general advice. I [now] actually see that as a very valuable input into our business.
“We’re getting more Australians insured. I don’t believe it’s taking anything away from the ideal client that I can service and provide extreme value for. But I also know at some point that client is going to be the ideal client that I want to provide advice for.
“So let them start on the journey today under a GA model. Under the new class of adviser, they will come to me when they’re ready, or they’ll come to one of us when they’re ready and be our ideal client fit.”
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Fellow panellist Nial McConville, MD, Bombora Advice said: “A lot of advisers, businesses are full.
“I look at our network within Bombora, a lot of our practises would love to grow faster than they are today, because they have a load of people that want to speak to them. They can’t find advisers.
“This new type of adviser would be a potential opportunity for someone to learn and spend a few years talking to customers, providing some type of advice. It would certainly make it a lot easier for our practice to pick them up and bring them into personal advice where – if that’s where they wanted to go.”
Anderson suggested the new class of adviser should initially focus on servicing existing clients, including helping them manage premium increases and reviewing cover, rather than replacing fully qualified advisers.
“It’s about simple advice… And creating a pathway into the profession,” he said.
