Clicky

FASEA could kill life insurance advice industry

The Financial Adviser Standards and Ethics Authority’s (FASEA’s) rigid approach to education risks killing the entire life insurance advice industry as mass retirement for advisers looms, Synchron director, Don Trapnell, has warned.

Trapnell said that mass retirement of life insurance advisers would occur on 31 December, 2023, as up to 75 per cent of advisers plan to exit the industry by this date because of “over-prescriptive” education requirements from FASEA.

Other organisations placed this figure much lower though. CoreData predicted that adviser exit rates due to new education requirements would be as low as 16.5 per cent, while Deakin University anticipated 21 to 34 per cent.

Related News:

Trapnell said that the Government was creating an environment where, instead of life insurance becoming more affordable and available for consumers, the public may be forced to buy life insurance direct from providers.

“We believe the Government is trying to force life advisers, who are engaged in helping people to make simple, yet life-changing decisions around protecting themselves and their families, to become full service financial planners,” Trapnell said.

According to Synchron, “the pendulum has swung too far the wrong way” resulting in over-education and over-regulation. Trapnell said that the life insurance advice industry is not bad enough to require such an extreme response.

“The industry is not that sick. I believe it is akin to a doctor overprescribing medication to patients and in the process killing them.”

Trapnell also said that it was inappropriate for risk advisers and financial planners to hold the same education qualifications, instead advocating the Government adopt streamlined education pathways for the differing financial advice disciplines.

 




Related Content

New RegTech to help advisers comply with CPD regulations

RegTech start-up, Think Caddie, has announced its mew continual professional development (CPD) platform could help advisers and Australian financial s...Read more

AccountantsIQ offer help with FASEA compliance

In an increasingly busy marketplace, AccountantsIQ and I Love SMSF have partnered to launch a program aimed at easing the burden of the Financial Advi...Read more

AMP signals advice is no longer a numbers game

AMP Limited has signalled key elements of the strategy for its financial advice network, revealing to investors that it is no longer a numbers game wh...Read more

Author

Comments

Comments

Perhaps Synchron is at risk of losing 75% of its advisers, (did someone say "old lifies"), but its difficult to see the broader adviser community continuing to swim against the tide like that. Surely Don should step up here and encourage his insurance advisers to rise above the limited skill set of the call centre only insurance businesses.

Don, I don't know why you're so worried about FASEA requirements in 2023/24 for risk writers.
According to current LIF legislation in 2020 when upfront risk commissions drop to 60.0% with a 2 year clawback, and thereafter to 20.0% level,... if that doesn't stop the 50 or so "churners" reportedly the catalyst for this legislation in the first place to change their ways,..... what makes you think any risk writer will be able to survive on 20.0% level commission in the future ?
I'm willing to bet that more than 80.0% of risk writers will have left the industry well before 2023.

Congratulations for highlighting some problems with FASEA. One would think FASEA is perfect given the silence we've had from other dealer groups and industry associations.

Add new comment