Australia: Lowest Adviser Numbers Since 2015

Research done in Australia shows that “2019 saw the industry shed a huge 4,378 advisers (15.6 percent) throughout the year.” Other key points the report highlighted are:

  • Three out of five advisers are now privately (meaning individually) licensed
  • ‘Micro-licensees’ (10 advisers or less) have grown to more than 21 percent of the market
  • 30 percent of the entire industry has been on the move (ceased or switched) in some form or another in 2019

It looks like Australia has come around to the idea of flexibility in licensing. Click here to read more. 


Australia: Financial Services Council suggests further amendments

In their submission to a Treasury consultation, the Australian FSC is urging the reconsideration of certain professionals from being experts in claims matters as they are independent of insurers and do not hold delegated authority to make claims decisions. In its submission, the FSC also argued against additional disclosure obligations being imposed. Fascinating for claims sector watchers here in New Zealand: imagine if a physiotherapist that provides a report on a claims case (as opposed to providing services directly to a claimant) had to hold a licence to do so - in much the same manner as a financial services provider has to? How many physios do you think would seek such a licence? What do you think it would do to the cost of getting a claim file reviewed? Click here to read more. I hope the Australian FSC is able to win this point. 


Research on lack of women in financial advice

Goodreturns has a piece covering research on why there are fewer women in financial advice. They quote the percentage of female advisers as 23.5% applies only to investment advice, and can be reasonably easily verified with reference to FMA information on AFAs. I am pleased to say the in the area of insurance advice, female participation is quite a bit higher - although no easy reference source exists, the audience at Quotemonster workshops is indicative. I was struck by this comment, however: 

"The study said the industry could help by normalising part-time work opportunities"

But many of the changes to the financial advice regime will make part-time work harder. In Australia advisers are telling me that the requirements of FASEA (much tougher than in New Zealand, and probably needlessly so) will make exactly the kind of part-time work the authors envisage impossible. 

 


Australia: the opportunity-cost of advisers furthering their education

Continuing education is designed to enhance, improve and further an adviser’s skills, but in order to do so an adviser must take time complete their qualifications. It is evident that complying with the new regime presents a high opportunity cost for advisers. Much higher in Australia than it is in New Zealand - Click here to read more.


Australia: advisers being urged to cut costs

It has been reported in an MLC Life-commissioned white paper that 67% of advisers reported a decline in profit since the commission reforms begun. It has been stated that advisers need to cut expenses by 20% - 25% to remain financially viable when upfront commission is reduced to 60% in 2020. Alternatively, advisers could start charging a fee for advice. Click here to read more. Of course, the problem is that at the same time as income is falling, costs are rising. These are not just cash costs, but the additional time required to meet compliance requirements. I have met with two AFAs in New Zealand who, over the past five years, have found the time required for each client's compliance requirements is squeezing margins and reducing the time available for marketing and client service.

There are solutions, but most require additional investment. New administrative systems are not so much costly, as most online tools are now very cheap, but time consuming to configure. You can avoid configuration costs by opting for standard systems, provided by someone else, but in that case you lose differentiation.

A conversation that begins as one about automation, usually ends up being about what you consider to be good advice - because we usually need to define advice process before we try to optimise delivery. 


Australia: Westpac penalised $9.15m for poor advice

Westpac in Australia has been fined $9.15 million after Sudhir Sinha, a former Westpac financial planner provided poor financial advice on multiple occasions. 

ASIC noted that the Court found Mr Sinha failed to act in the best interests of his clients, provided inappropriate financial advice, and failed to prioritise the interests of his clients, in four sample client files identified by the regulator.

Click here to read more. 

 


Australia: national digital health strategy

National Digital Health Strategy and Framework for Action was launched in 2018 and was developed act as a road map to high-quality digital healthcare. The strategy was intended to help deliver improved services including the distribution of digital books coordinating real time care for patients with chronic illnesses and eliminating the use of fax machines to communicate key clinical reports. Click here to read more

Sometimes when you scan the digital world for news you get surprised by how bad technology is in places. Especially wealthy places where you would think things could move faster. 


Australia: Insurers lose $3.4b because of disability income insurance

Collectively life insurance companies have lost close to $3.4 billion over the past five years as a result of the sale of disability income insurance to individuals. The Australian Prudential Regulation Authority is responding to ongoing losses of insurance companies by introducing capital charges, this will require life insurers to look into product design and pricing flaws. It will also require us to do the same, for although our IP experience is nothing like as bad as Australia's, that's no cause for complacency. People and policies are similar - and therefore have similar motivations and incentives.I would hate to see how our in-force IP book responds to an economic downturn. 

Click here to read more