One of the major reasons for the unacceptably high level of underinsurance in Australia lies in the communication skills of many advisers, according to Russell Collins, principal of Risk Insurance Communication Skills (RICS) and author of Skills that Succeed: A communication guide for risk-based financial advisers.
After launching his book in Sydney this week, Mr Collins, a former financial adviser who specialized in risk insurance for 40 years, said, “Advisers who can’t communicate in a way people can understand will struggle to succeed. It is only by building relationships with clients, that clients will see the value of life insurance advice and act on it.”
Mr Collins said the government is to be commended for all it has done since the 1990s to move financial services from a product driven industry to an advice driven industry. “Financial services reform was sorely needed and the work done by successive governments has been very commendable,” he said. “But it hasn’t been as successful as it could have been because in order to meet compliance obligations, many licensees have ignored the need for advisers to develop communication and relationship building skills.”
By way of example, Mr Collins said most templated fact finders start out like a bank loan application and quickly move onto questions about smoking habits and health. “What do those latter questions have to do with the development of the adviser/client relationship and advice? Nothing. What do they have to do with the sale of a product? Everything.”
Mr Collins said the number one purpose of a fact find should be to build a relationship, secondarily, to collect information. “People buy advice first and product last and there is daylight inbetween. Advisers ignore at their peril the fact that while they may work in the financial services industry, they are in the people business.”
Mr Collins also said it is ironic that in an effort to meet compliance obligations advisers are being taught more and more technical skills and developing greater product knowledge at the expense of relationship and communication skills.
“This approach appears to stem from an unnatural fear that communication skills are about selling and that selling is not professional. I do not believe that selling and professionalism are mutually exclusive and unless advisers improve their communication, relationship building and selling skills, our underinsurance problem will only worsen.”
Mr Collins also said he believes advisers who do not have great communication skills will struggle to meet their Best Interests Duty obligations.
“The questions clients want answered when meeting with an adviser for the first time are – do I like you, do I trust you, are you competent, are you the sort of person who will put my best interests before your own – and it’s this last question where our industry falls down and that’s where advisers can be on the front foot,” he said. “Only when advisers learn to build relationships with clients can they truly put client needs first. This is because when we build relationships with clients, we truly know and understand them. Knowing and understanding clients means advisers will be better placed to discover what clients really need in terms of life insurance and what they can afford.”
Mr Collins believes great communication skills will lead to better outcomes for consumers, for Australia and for advisers. “The ability to successfully communicate with a client will ultimately mean more people are protected, which will help solve Australia’s underinsurance problem and in the process help build successful businesses in the new world of advice.”
AFA National President, Deborah Kent, who was Master of Ceremonies at the book launch said Skills that Succeed could not come at a better time. “We know that advisers will have to do business differently in the future – that seems certain. Those who adapt and change the way they run their businesses are going to succeed.”
Ms Kent said Mr Collins’ book provides the practical information around communication that will help advisers succeed in the changing advice landscape. “Every new adviser should read it and every existing adviser should read it. It provides a legacy of knowledge for the future of the life industry in this country.”
Mr Collins said he hoped the book would be a useful guide for both new entrants and experienced advisers. “I hope the book will be a handbook that sits on advisers’ shelves and helps them find answers when they need them.”
Source: Risk Insurance Communication Skills (RICS)
