Could advisers move to general advice?

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.”

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You say the road ahead is much easier, however it is only much easier for individuals who try to live on the fringes and avoid any scrutiny by interpreting the law in a manner that is favourable to them. The road ahead is not much easier for people who choose to provide compliant personal advice and not live in the shadows

Well, I read the article and thought "that sounds pretty good" - maybe I could do that instead of leaving the risk industry in December after 35 years. I was actually buoyed and a bit excited for the first time in years.THEN I read the comments - each one of them, all pretty well thought through and made sense too. All I can say is I am totally confused and back to where I was . . . leaving the industry. The politicians, govt entities and special interest groups responsible for this absolute MESS into which our once great industry has devolved should have criminal charges levelled at them for client detriment - oh, adviser detriment too!

Don't let the 'legal experts' scare you away from exploring your options. They all have opinions but none of them have experience with GA, nor do they understand what they are saying with regard to it.
If you think GA may be an option for you, feel free to get in touch with me, happy to have a chat about it with you.

What I don't get is when you are providing GA how on earth are you able to set up a policy funded by super. How do you feel when a client takes cover you know is materially insufficient. How do you feel when a client rings for a claim and you tell them they are not covered for that condition because "you just took their order"?

General advice just needs to be scrapped. No disrespect to Tony, he's just operating within the current rules but the very existence of general advice confuses things for clients and Advisers. People should know when they are receiving advice and when they are receiving information, there shouldn't be anything in between.

At the very least you shouldn't be able to call yourself a Financial Adviser if you don't give advice, and general advice isn't advice.

Regardless of how ASIC view this arrangement, I'd be interested to see how this would play out in court. For example a client passes away and is deemed to be underinsured because they didn't receive advice when taking out personal insurance with Tony

tony liable. he is young. just wait till one of his client's widowed spouses sees an ad from Maurice Blackburn.

hopefully tony has no assets in his personal name or in his trading entity and they are all either siphoned away in super so he can just declare bankruptcy.

it's only 3 years to be discharged as a bankrupt these days anyway and may soon change to only 1 year.

there you go tony, some general advice for asset protection for you free of charge. thank me later.

Health Insurance is solely a general advice realm and they (providers) seem to be minting...

GA for personal insurance is straight out wrong!
I have brought this issue up with the FPA a number of times and it is something that is currently being pushed to ASIC to have stopped.
It is nearly impossible to not give personal advice once you take down a clients personal details required to do a quote/application.
GA is just a way to get around doing an SOA

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