Life/risk advisers have been unfairly grouped with financial advisers and is a specialist area in its own right which should have its own requirements and standards, according to Synchron director, Don Trapnell.
Trapnell said it did not make sense why life/risk was brought in under financial planning.
“I have always beaten the drum that we should separate the disciplines, we should totally separate life insurance advice from financial advice,” Trapnell said.
“Life insurance is not giving financial advice, you’re giving them advice in relation to the risks associated with them suffering an emotional or financial detriment in the event of the death or disability of a loved one.”
Synchron’s revenue was roughly 58% in the life/risk area and 42% in financial planning, and the life/risk area was seeing a greater share of resignations as those advisers struggled to navigate the new requirements.
“I have nothing against people being educated as long as the education is relevant to the discipline that someone is involved in,” Trapnell said.
“I believe until such a time that we separate the disciplines, we will continue to see life/risk advisers leaving the industry.”
Synchron saw about 20% of its force leave the industry, but had managed to replace departed advisers to maintain a static headcount, but this was not sustainable in the long-term, particularly for the industry in general.
Trapnell had received another resignation this week and shared the resignation letter with Money Management, which stated: “I’ve always put in a lot of effort to ensure a high level of knowledge, ethics [and] education to ensure the clients best interest were always best served. However, the unnecessary education requirements forced upon me – already a qualified, educated and experienced [adviser] – by FASEA [Financial Adviser Standards and Ethics Authority] has forced me into making this decision and forced me out of the industry. If I go through the pain of studying all over again, I’ll have achieved nothing, except lost income, time, ill-health, wasted effort and a further deterioration of my business. Requirements instituted by ASIC [Australian Securities and Investments Commission and] FASEA leave a financial planner open to ongoing legal challenges”.
The adviser, who Trapnell wanted to remain anonymous, had a Masters degree – but was not a FASEA approved course.
“That’s the attitude I’m getting from a whole lot of reps, they’re saying the return in our industry for the effort involved isn’t great enough,” Trapnell said.
Trapnell said the sum result was fewer advisers giving less financial advice to fewer consumers, with those who do receive advice having to pay more for it.
“Life/risk advisers are the lowest hanging fruit, they’re the easiest ones to have a crack at if something goes wrong,” Trapnell said.
“It’s a lot easier to have a crack at a life/risk adviser than it is to have a crack at a bank or an insurance company or even an Australian financial services licensee.
“If you think there’s something wrong in the world of financial advice, let’s make it harder for the adviser.”