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Defining the differences in life

For the life of me, pardon the pun, I can’t understand why the powers-that-be appear hellbent on insisting that life insurance advisers study the same curriculum and sit for the same exams as financial planners. 

Life insurance advisers do not create holistic financial plans. They do not advise on savings and investments. They do not prepare wealth accumulation strategies, pre-retirement strategies, transition-to-retirement strategies, living-in-retirement strategies or aged care strategies. 

Life insurance advisers analyse the financial risks facing their clients should tragedy strike and find appropriate products to protect them against those risks. They also monitor and review their client’s situation to make sure that the protection put in place continues to meet their client’s changing needs. It is as simple and as difficult as that.  

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What are the consequences of forcing life insurance advisers to meet the same education standards as financial planners? The first is the most obvious. Most Australian life insurance advisers are currently of a mature age. They have been risk advisers for a very long time and have a wealth of experience. They also have considerable skills and great product knowledge. Most don’t have formal university qualifications. 

Let’s consider for a moment who these advisers are, as people. Who amongst them, given their age, would or even could devote another three or more years to studying for a degree? Despite perhaps wanting to work into their later years, despite the Government wanting them to work past traditional retirement age, so that they don’t burden the social security system, these people will be forced out of the industry. 

A rough estimate predicts 50 per cent of life insurance advisers will exit. Our estimates suggest 30 per cent of Synchron advisers will exit. All because the alternative is to study a curriculum and earn a degree that is largely irrelevant to the work they do. 

But there is another consequence. After finishing school, how many 18-year-olds wake up and say, “Hey, I think I will go to university and study a financial planning degree so that I can work as a life insurance adviser!?”

I admit I haven’t conducted a survey, but I would hazard a guess that it’s somewhere between few and none. In the current environment, I think the industry has a hard time exciting young people to consider a career in financial planning and an even harder time exciting them to become a life insurance adviser. How much harder will it be when in order to specialise in life insurance, you have to study to become a financial planner? 

Most young people are encouraged into a life insurance job after seeing an older family member or friend make a career out of it or have progressed from (as I did) working with a life insurer. But if, having not been able to meet the new education requirements, these advisers have exited stage left, there will be no-one around to provide this evidence. 

What all this boils down to is that if existing life advisers are exiting out and no new advisers are entering in, consumers will be left with two choices – to buy products direct, without advice (and we’ve all seen the consequences of that from the Royal Commission) or to accept the level of insurance available to them via their superannuation funds, if they have them, again without advice. Insurance in superannuation might not be enough and might not include the kinds of products to meet their needs. 

I have been criticised for my views on life adviser education and no doubt this article will provoke the same kind of criticism again. I have been accused of being a dinosaur, of having my head in the sand, of not wanting to move with the times. I am actually a firm believer in education, providing it is relevant and appropriate. I will never see the point of education for the sake of education. I will never see the point of subjecting advisers to an education regime that does not equip them to work with real clients who want life insurance advice and only life insurance advice. 

The only sensible solution to the financial services education debate is to separate financial planning from risk advice. They are two distinct disciplines. It can happen and in the interests of consumers, advisers, the industry and Australia, I believe it must happen. 

Don Trapnell is a director of Synchron.




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Comments

You're very right Don. There is a distinction between risk adviser and financial planner and they lost that when everyone wanted to be titled as a professional. There remains a huge opportunity for risk advisers to set themselves even further apart from holistic advice which they can pursue without any compliance, government interference, regulation or draconian education requirements. And in doing so, they will help consumers to a far greater degree than they do now whilst working with those who decide to remain in the industry to sell insurance.
Not that there's anything wrong with that!

Maybe the life insurers should have put the house in order many years ago.
Given what has come out in the Royal Commission, few outside the life insurance industry will cry over the forced retirement of life insurance sellers.

Except for Hannover of course they’re OK aren’t they?

Que?

Exactly. Thanks for confirming you are have no idea.

Sorry Hedware - I know you will pick up the Freudian typo.

Exactly. Thanks for confirming you have no idea.

Yes - those few would likely be the ones who were so happy that the insurance actually paid out when they needed it most!
They were the ones who understood WHY they needed to have insurance in place.
The problems the Royal Commission has uncovered is more to do with the organisations controlling it rather than the advisers selling it. The advisers are and have always been the blunt end of the stick when it comes to laying blame. Yet the RC has opened peoples eyes to the reality. Australians will be worse off for the expereinced advisers who have done the right thing by their clients when they are'forced' out through more stupid regulations.
Only someone who has no idea of the value of insurance would make such an uneducated comment!
Let's hope neither you nor any family member should ever the benefit that insurance provides which goes way beyond the money.
If you had ever been there to present a cheque to a widow or widower, or someone injured to prevent them from earning an income, or being diagnosed with something like cancer, then you would understand the work advisers do.
In the meantime remain ignorant of the benefits of the product but not the advisers .

You are correct in suggesting that only a few would be happy. Most insured who are not happy when having their claims knocked back because of obscure definitions, out-of-date definitions, arbitrary reasons, undisclosed changes to policies, incomparable terms and conditions, and the other tricks of the insurance industry.

How many of these 'experienced' advisers blew the whistle on the nefarious practices of their employers? Just about none. They were complicit in the insurance industry's unwillingness to reform. They didn't seem to care about the rip-offs.

No use arguing with an idiot! You both lose!

Like a monkey throwing excrement at every passer by in the zoo.

"obscure .., out-of-date .., arbitrary .., undisclosed .., incomparable .., and the other tricks" all words that can be used to describe any of your posts here.

"How many of these 'experienced' advisers blew the whistle on the nefarious practices of their employers? Just about none."

You paint a picture to suit your mudslinging. They're either self-employed greedy monsters chasing commissions or they're employed and recalcitrant amoral self-serving wage slaves. But you can't help but slip in some virtue signalling with "Just about none". It is just so pathetic.

And within all these you can't even cite basic figures to back up your ridiculously broad swipes.

But man do you wave a Red flag like no other comrade.

"Industry Super For All!"

Tell me about their claims payouts figures per dollar revenue received versus insurance sourced via advice.

Tell me about underwriting at claim versus underwriting at application.

Tell me about differences in claim handling in insurance sourced via advice versus group policy in say an Industry Fund.

No just throw ...... like a monkey in the zoo.

"In the victory of Communism's immortal ideal,
We see the future of our dear land.
And to her fluttering scarlet banner,
Selflessly true we always shall stand!"

That last line is you isn't it - you are just so selflessly true.

The Royal Commission has provided, and will provide, the evidence re the insurance industry's poor practices and performances.
I agree with you in that the insurers associated with the industry funds are probably not blame free either.

“Well I was bit concerned about my son’s tendency to over-react at times” said Mrs Bates when interviewed at the murder scene at the Bates’ Hotel.

No hedware you are not getting off that easy.

Tell me about their claims payouts figures per dollar revenue received versus insurance sourced via advice.

Tell me about underwriting at claim versus underwriting at application.

Tell me about differences in claim handling in insurance sourced via advice versus group policy in say an Industry Fund.

Not some begrudging limp pseudo acknowledgement of maybe could be some little bit of not so goodness on the “other” side that is actually a blatant union rort.

Well said 100%Cynic, MM why do you let Hedware sander our profession in your forum? Is it you wan the sensationalism and comments for validating to advertisers? There was meant to be a standard to uphold when commenting but it appears you are willing to let that slip for this agitator.

Singalong with me Hedware “United forever in friendship and labour,
Our mighty republics will ever endure.
The Great Soviet Union will live through the ages.
The dream of a people their fortress secure.” Tis a beautiful anthem. Is it your ring tone?

You seem to know this tune better than I do. Coming out of the closet are you?

Is that a homophobic slur coming from a Social Justice Warrior?

No - I was thinking more of the red closet.

Got nothing hey? How will you ever pay off that Humanities HELP debt? Doesn’t matter does it - it’s someone else’s money.

Loony left brigade with perhaps higher education but still clueless supposedly moral high ground comments.

The majority of planners and Aussies are sick of being told by the likes of you what to do, what we're allowed to say or think, and now how we're unfit to make a living. The puritanical in society have always been the odd weird vehement haters who unless people conform to their narrow bigoted view on life, should not exist.

Hedware, you have proven countless times on this forum, this description matches you perfectly, and I feel sorry not so much for you but anyone who is in your immediate family or social circle, because I am 100% certain these traits are manifest throughout your entire life.

If only they listened to me then they would not be in so much trouble, be disliked widely and not trusted at all. You should do the same.

Selflessly true you always stand

Don is living in the dark ages, loves conferences, wears the nice suits, thinks sales is what the industry is all about. Thing is the industry has changed, you cant just give insurance advice without taking into account all the other financial factors that come into play. Sorry Don, your old lifey mates need to either get educated or sell up. This is life in 2018. You guys have had a good run.

Agree totally if the education was relevant. Imposing this FASEA nonsense and a degree involving standard deviation/NAV assessment/Alpha/Top Down equity analysis etc which has little bearing in most qualified planners actual lives let alone a lifey is absurd.

Not every nurse or medic wishes to be a doctor let alone a surgeon. But I suppose having different qualifications and titles relevant to the field you advise in was simply just too logical for our over-politicized bureaucratically dictated society.

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