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.
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.