Moving to general advice could be an alternative to providing holistic advice for advisers disgruntled with the current regulatory requirements, but they will have to get past the stigma, according to a risk broker who has made the shift.
Tony Smilevski, insurance broker for Tony Insurance, said the Financial Adviser Standards and Ethics Authority (FASEA) education requirements, as well other regulatory demands, had motivated him personally to pursue providing general advice instead of personal advice.
“Personally, I’ve done full advice and general advice when it comes to [risk] insurance I’ve done holistic advice as well with a few of the bigger licensees,” Smilevski said.
“Recently I moved away from doing full advice because of everything going on. I’ve passed my FASEA exam, I’ve got my education requirements ticked off but I thought there was no point going on doing risk-only advice in the post-FASEA world, it didn’t make sense.
“I know a lot of advisers are in that boat where they don’t know what to do; they’re either not passing the FASEA exam or they just not seeing it as being profitable to run a business that maybe specialises in risk-only [advice].”
Smilevski said it was a “massive mental shift” for an adviser to look at general advice as an alternative option.
“Because the way we currently look at it is general advice instead of personal advice is not good enough,” Smilevski said.
“And the stigma around it being sales-y, which in a lot of cases is warranted because that’s what happens with these things, is really what plays in a lot of advisers heads.
“Now they’re in this position that they don’t know general advice is an option so they’re leaving, clients are orphaned and the worst part of it is clients being turned away from an adviser because they’re not worth to the practice.
“It’s mind boggling to me, I walked into the industry to help people and now it’s gone the opposite, but I’ve found a way to do it.
“But we’re talking 95% of advisers out there either have a negative view of general advice or don’t even know that it’s an option.”
Smilevski pointed to another real-life example of a struggling adviser who had found success with this the changeover.
“A real-life example, there’s a 64-year-old adviser, who hasn’t been doing much risk lately because of the compliance requirements with the SoA [statement of advice] and everything else,” Smilevski said.
“We put in front of him the option to do it as general advice, so obviously not providing an opinion but still preparing quotes for people.
“And he’s been writing more business than he has in the last four or five years as a full-advice adviser.”
Despite all the changes that were meant to help general consumers, Smilevski said it only priced out people.
“Advisers are turning clients away that aren’t ready to get advice or don’t want advice or their premiums on their insurance is really low,” Smilevski said.
“Every adviser knows this; it’s just priced out anyone below a certain threshold. Advisers are becoming far and few between, especially the holistic ones.”