How much of your time is spent advising on risk products? Do you outsource?
Risk planning is an important part of our practice income and our clients needs as 60 per cent of our clients are pre-retirees; high income professionals or self employed. We choose not to outsource risk and have employed insurance specialists in our firm to advise inhouse. All planners in our dealer group raise risk issues with clients, typically 10 per cent of time. The actual advice comes from our ‘insurance paraplanners’.
As I specialise in estate and business succession planning, 35 per cent of my time is spent in dealing with asset creation through risk products.
Suzanne Sutherland Smith, authorised representative/director, CIS Financial Services, Melbourne
About 20 to 25 per cent of my time is spent advising on risk products. It’s a sizeable part of my business, but it’s hard to gauge exactly how much time is spent advising on these products as the demand tends to come in fits and starts.
We do this all inhouse.
I would say that, if anything, the demand for risk products is decreasing, though. We offer more personal financial planning, so we don’t do a lot of corporate work. And risk products tend to be covered within a person’s superannuation plan. Then again, premiums have fallen.
When we advise on risk, it’s usually a part of reviewing a client’s circumstances.
I think, though, that five or six years ago, there was more of a demand for us to advise on risk products.
It’s about time the FPA did some sessions at their next conference on risk.
Gerry Lenihan, director, Nexus Personal Planners, Sydney
At Financial Management Services, we’ve considered being an agent, but we are concerned that this might create some conflict with our normal method of marketing ourselves as working solely for the client, in the sense that we’d be representing a life insurance company’s interests instead.
To avoid this conflict, we had the option of becoming a risk brokerage firm, but we found the demand in our business just wasn’t there to sustain this.
Our compromise solution has been working for the past four years. One of our advisers, who is very experienced in the field, has gained the status of a broker’s representative of an external brokerage firm. We have an agreement with this firm to protect the confidentiality of our clients’ details – we get a lot of referrals from accountants who don’t like us to refer their clients on to someone else, which is fair enough really. In these cases, the clients are the accountants’ clients and not really ours.
It’s a workable solution, but it’s not ideal. It is, however, worthy of the volumne that we write.
Andrew MacDonald, director, Financial Management Services, Melbourne
Not much of my time is spent advising on risk products but if someone does want this sort of advice, I can provide it to them inhouse.
Advising on risk products is really part of the whole financial planning service. My firm takes a holistic approach to financial planning.
But I’ve been in the business for 15 years, so I feel fairly comfortable offering advice on risk products as part of my general business.
Peter Loh, proper authority holder, AMP Financial Planning, Sydney
