Life/risk advisers are already adjusting their business models in the face of the Life Insurance Framework (LIF), according to new data released by Investment Trends.
The research house noted that while the commencement date for the proposed LIF remained unclear, many planners had already begun adjusting their business models in anticipation of the reforms.
It found that the average planner had seen risk advice fall from 35 per cent of their total practice revenue in 2015 to just 28 per cent, the lowest since 2013.
Investment Trends noted that a number of planners had even stopped providing risk advice altogether, with 12 per cent not writing any new risk business in the last year, up from 10 per cent in the previous study.
Commenting on the outcome, Investment Trends senior analyst, King Loong Choi, said the LIF reforms were already testing the business models of financial planners across Australia.
"Not only are they already reporting a fall in risk business, more than two in five planners expect their practice's profitability to decline if the LIF reforms are implemented," he said.
Investment Trends said the research showed that if the LIF reforms were implemented, planners would look to provide insurance advice as part of a broader holistic package more often, charge more for holistic advice and focus more on higher balance clients.
"This shift is already underway, and planners intend to continue adjusting their business models in this way if the reforms are implemented," Choi said.
Comments
I've had quite a few clients recently who we've had to reduce insured amounts for, just because of budget restraints, all related to the recent significant premium rises. Not only are less Australians getting insurance, those that have it are having to reduce their cover. Its a perfect storm and not in Australia's interests.
"charge more for holistic advice and focus more on higher balance clients" -- The implications of LIF & FoFA are this. ASIC want advice to accessible to everyone, but the reality is that Planners can only concentrate on people who already have wealth due to the onerous compliance regime and cuts in revenue. The Trowbridge report made mention of the need to reduce the red tape, but as usual we have heard nothing from ASIC, except for the compliance people at licensees bombarding us with even more disclosures for SOA's... all so they can protect themselves (the licensee).
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