Risk advice champion needed
Australia needs a “risk champion” to encourage younger people to enter the risk insurance industry, according to MetLife senior vice-president Joe Jordan.
“As in America, this industry needs young people to join as risk advisers get older and leave,” he said.
“We need to provide a reason for people wanting to sell risk [to enter the industry] and, therefore, we need champions from existing risk advisers to show how they have made a difference.”
Jordan said the champions have to come from within the industry and be supported with initiatives such as scholarships and mentoring.
The decline of risk advice began in the 1980s when life companies began to sell investment products. Jordan said they were seen as more attractive products for advisers to sell and were easier to handle in terms of administration.
“But these products do not make a difference to someone’s lifestyle if things go wrong,” he said.
“Stock markets go up and down and while there are short-term losses, it is different to someone losing a partner and there is no income for the family.”
Jordan cited his own personal circumstances where his father died nine months after cancelling a $US100,000 life policy as an example. The outcome was a sister who was forced to decline a college scholarship, as the family couldn’t afford their half of the fees. His mother was forced to work in bars in the Bronx after living in Washington.
“Selling risk insurance is a vocation rather than a job,” he said.
Speaking at the Association of Financial Advisers (AFA) conference on the merits of becoming a risk adviser, Jordan was asked whether he was talking to the converted. “We have got to think about the business differently and take positive actions like introducing scholarships, which MetLife plans to do,” he said.
“We have got to find out why people don’t want to get into the risk business.”
But the complexity of paperwork, Statements of Advice and persuading people to buy something they don’t want are challenges.
“It is about advocating the client do something they don’t want to do,” he said.
“The adviser has to get emotionally involved and it is about the intrinsic value the adviser brings not the size of the premium.”
Meanwhile, the AFA has announced the winner of 2005 Zurich/AFA Adviser of the Year Award. This year’s gong, which awards excellence in risk advice, was awarded to Sydney-based managing director of Taggart Nominees, Jim Taggart.
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