A new breed of “qualified advisers” is headed your way, but the jury is out as to whether it is likely to hinder or help practices providing risk advice.
Announced as part of the government’s final response to the Quality of Advice Review – dubbed the Delivering Better Financial Outcomes package – these advisers are expected to be mainly hired by super funds and insurers, and potentially the banks.
Qualified advisers, as they remain known in the meantime, will provide advice on behalf of licensed financial institutions and will be subject to minimum competency standards (likely a diploma). They will be able to provide personal advice on less complex matters but cannot personally charge a fee or receive a commission for this advice.
Anthony Campbell, a personal insurance and risk adviser at Business Risk Solutions in Newcastle, doesn’t expect qualified advisers to become competitors of advisers writing risk.
“I don’t believe insurers will want to be dealing with anyone other than simple, straightforward mums and dads that have a salary and SG [superannuation guarantee] contributions,” he tells Professional Planner.
“They might have a couple of super funds to consolidate and want some life cover. Potentially these are the type of people that previously wanted advice but couldn’t afford it.”
Financial Advice Association policy general manager Phil Anderson expects planners to continue to focus on the risk needs of high-net-worth individuals (HNWI) and in particular, high-income earning clients who are likely to have a greater need for insurance.
However, he sees a big opportunity for super funds to use qualified advisers in servicing younger members with limited insurance needs. This group, he says, has become financially unattractive clients for advisers because they don’t generate a premium high enough to cover the cost of providing the advice.
If it costs $3000 to provide advice, then you need to have clients who are paying premiums of at least $5000 to cover the cost, given the 60 per cent cap on commissions, he says.