There is a future role for advisers specialising in risk products as many financial planners do not sell risk products, this creates opportunities for risk advisers to become a specialist within a dealer group according to Peter Bobbin of The Argyle Partnership.
Bobbin was speaking to delegates at this year’s Association of Financial Advisers (AFA) conference were last week and says, “it is rare for a financial planner with a CFP qualification to understand the life business, so advisers can be the life writer for another person’s business.”
He says risk advisers have a big advantage over financial planners in that they have learnt the skills of selling.
“Life insurance is sold, not bought and in the future, under the know-your-client rule, it is clear financial planners will have to deal with risk.”
Fellow speaker and industry commentator Tom Collins also agreed that financial planners are not good at selling.
“Financial planners aren’t sales people, they are technicians. Life people will come back as people fall into the wealth-creation market.”
The laws of negligence mean a financial planner will have to make sure their clients are protected against risk or the planner could be sued.
“All fact-finding by a financial planner requires them to ask about a family’s needs and their income but half of planners don’t know how to prepare the client against risk,” Bobbin says.
The returns on selling risk products are low, so many planners will not be interested in becoming involved in a time-consuming process, he says. This again opens up opportunities for the experienced risk advisers.
Bobbin also says that financial planners tend to focus on investment and not on the details of risk and realise risk also includes income protection and other key products for corporate clients.
“In my view, only half of financial planners understand this,” Bobbin says.
Collins believes financial planning and general insurance brokers will be chasing the same market in the future, a market that will have stockbrokers, superannuation funds and accountants also giving investment advice.
“I believe life agents should go on doing what they are doing now, selling risk. They should embrace technology and corporatise their businesses to survive in the future,” Collins says.
Bobbin’s only concern for the future of risk advisers is there are very few young people entering the industry.
“The life industry in Australia has been decimated and it is only the professional life writers that have stayed,” he says.
“The average age of people in the life industry is in their forties and there are no new people coming through. Nobody is breeding the life writer of the future and the AFA needs to build the life industry again.”
The AFA has about 800 members and the association plans to attract an additional 100 members by the end of the year, says national president Joe Nowak.
