The sole financial planning practitioner involved in the Trowbridge review of life insurance advice has given some insight into the process and what happens next.
Jeff Thurecht is a director of Evalesco Financial Services, a Centrepoint-licensed practice and also NSW and ACT state direct of the Association of Financial Advisers (AFA).
Particularly during the latter stages of the review, he says there was lots of talk around how Trowbridge was going to deliver the report and whether the AFA and Financial Services Council (FSC) were going to support it directly.
“It was pretty clear that we were going to have to reserve our judgement to consider the report in its totality…and the FSC was in the same position,” Thurecht says.
In an email to Centrepoint advisers, seen by Professional Planner, John de Zwart, Centrepoint Alliance chief executive, claimed the mandate changed a week before the report was released. De Zwart was also a member of the Life Insurance and Advice Working Group (LIAWG), jointly formed by the AFA and the FSC and chaired by John Trowbridge.
Thurecht says this shifting of views about whether consensus was required didn’t happen just a week out, but instead developed gradually throughout the LIAWG’s deliberations.
From concept to reality
“For all intents and purposes, the LIAWG was wound up at that point in time, and doesn’t really exist any more. But the intent is still there to come up with a unified response.
“I think there is disappointment from the many parties that worked on getting a unified response, and from an AFA perspective, we’re pretty hungry to do that,” Thurecht says.
He suggests a mutually acceptable solution is actually somewhat closer than much of the rhetoric generated in recent weeks would suggest. “We don’t agree with what Trowbridge came up with particularly in the remuneration side of things, but other parts of the report, we’re very supportive of,” he says, expressing disappointment the remuneration debate overshadowed the other recommendations.
Around 28 of the report’s 65 pages (not including the appendices) are devoted to remuneration topics. The remainder deal with suggestions around approved product lists, the advice process/statements of advice and an industry code of practice.
Does it highlight the AFA / FSC divide?
“It probably hasn’t highlighted it necessarily, but it’s pretty clear that the majority of our members are working in their own businesses, outside of large institutionally-owned businesses…and therefore have a different view to some of the insurers who own those large distribution networks,” Thurecht says.
Since Thurecht estimates that out of the 137 submissions received, “there was probably 120 of them who were advisers.” Insurance companies formed a significant number of the remainder. Since Trowbridge released the report, the AFA and individual advisers have been calling for insurers to make their submissions public.
“We discussed it pretty heavily at one of the meetings, about whether we make submissions public or not. Part of the issue was some of the insurers wanting to put some commercial in confidence information in there.
“They made a decision not to…and I’ve got quite a lot of respect for that. There’s also the fact we didn’t want it to be played out in the press. We wanted to come up with what we thought was a good and hopefully unified response, and then we could debate it.”
Government reaction
Thurecht believes both sides of politics are supportive of the need for the life insurance advice sector to change. “They acknowledge that, but I think they’re also mindful of the impacts on the industry.”
“We’ve always been clear that this was a significant opportunity for us to have some level of control over what’s going to happen in this space, and that if we didn’t get something done, then at some point the government is going to step in and do what they want to do.”
“I think both sides are pretty keen to come to a solution, and are happy to help us implement that, but they don’t want this to drag on forever and have to come back and make it their problem,” Thurecht says.
“We all acknowledge that we can’t keep doing what we’ve been doing. There’s still an underinsurance problem, there’s still a perception problem, and we need to make some changes. Everybody acknowledges that.”
