{"id":112,"date":"2014-12-10T01:59:14","date_gmt":"2014-12-10T01:59:14","guid":{"rendered":"http:\/\/magazine.riskinfo.com.au\/18\/?p=112"},"modified":"2014-12-16T20:18:42","modified_gmt":"2014-12-16T20:18:42","slug":"2014-afa-adviser-conference-round-table-facing-up-to-asics-review-of-retail-life-insurance-advice","status":"publish","type":"post","link":"http:\/\/magazine.riskinfo.com.au\/18\/2014-afa-adviser-conference-round-table-facing-up-to-asics-review-of-retail-life-insurance-advice\/","title":{"rendered":"2014 AFA Adviser Conference Round Table \u2013 Facing Up to ASIC\u2019s Review of Retail Life Insurance Advice"},"content":{"rendered":"<div class=\"fw round\">\n<h3>Industry peers shared their views at this year\u2019s AFA Adviser Conference about the implications of <a href=\"http:\/\/riskinfo.com.au\/news\/2014\/10\/09\/asic-life-insurance-advice-review-unacceptable-level-of-failure\/\" target=\"_blank\">ASIC\u2019s Review of Retail Life Insurance Advice<\/a>, which was released only a few days before the Conference and our Round Table convened.<\/h3>\n<h3>In considering the various issues and themes that were raised in ASIC\u2019s Review, advisers, licensees and life company colleagues appeared to be mostly united with regard to what changes need to be made, and what solutions are required in order to better serve the interests of consumers, while maintaining a robust financial advice sector.<\/h3>\n<\/div>\n<p><div class=\"twocol-one\">\n<img decoding=\"async\" class=\"alignnone\" src=\"https:\/\/dl.dropboxusercontent.com\/u\/2128152\/riskinfo\/eMag\/18\/article\/round-table-00.jpg\" alt=\"\" \/><br \/>\n<\/div><br \/>\n<div class=\"twocol-one last\">\n<p>Our panellists (L-R):<\/p>\n<ul>\n<li>Richard Dunkerley \u2013 Head of Marketing, Life &amp; Investments, Zurich Financial Services Australia, Co-host<\/li>\n<li>PJ Byrne \u2013 Director, Mr Insurance, Grand Finalist \u2013 2014 AFA Adviser of the Year Award<\/li>\n<li>Peter Sobels &#8211; Managing Editor, riskinfo, Co-host<\/li>\n<li>Russell Collins \u2013 Principal, Risk Insurance Communication Skills<\/li>\n<li>Deborah Kent \u2013 National President, Association of Financial Advisers, Founder \u2013 Integra Financial Services<\/li>\n<li>Don Trapnell \u2013 Director, Synchron<\/li>\n<li>Michael Nowak \u2013 Past President, Association of Financial Advisers, Partner \u2013 Joe Nowak Financial Services Group<\/li>\n<\/ul>\n<\/div><div class=\"clear\"><\/div><br \/>\n<div class=\"woo-sc-hr\"><\/div><\/p>\n<p>While the entire discussion focused on issues stemming from <a href=\"http:\/\/riskinfo.com.au\/news\/2014\/10\/09\/asic-life-insurance-advice-review-unacceptable-level-of-failure\/\" target=\"_blank\">ASIC\u2019s Review of Retail Life Insurance Advice<\/a>, the panel still addressed most of the other topics that had been set down to discuss, including:<\/p>\n<ul>\n<li>The debate over future minimum education requirements for financial advisers<\/li>\n<li>Reputational issues for advisers and what can and\/or should be done to address this concern<\/li>\n<li>The lack of soft (selling) skills training for the new generation of financial advisers<\/li>\n<\/ul>\n<h3>Accepting the damning conclusion of ASIC\u2019s review<\/h3>\n<p>While the panel possessed the combined capacity to pick apart the methodology used by ASIC in determining the outcome of its Review, there was general acceptance that the outcome represented a realistic and stinging criticism of the quality of life insurance advice in Australia.<\/p>\n<p>Queensland adviser, PJ Byrne, a grand finalist in the 2014 AFA Adviser of the Year Award, agreed the case studies outlined in the ASIC Review that failed its quality test were damning examples. \u201cThose that failed the test should have failed. No doubt about that,\u201d said PJ.<\/p>\n<p>However, PJ also pointed out the Review reported that 64% of the cases ASIC examined were provided with good advice, \u201c\u2026 so there were that many people who were better off for having received life insurance advice.\u201d <\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<p>Commenting on the causes of high lapse rates, PJ referred to product manufacturers speaking at the AFA Conference about having to chase each other by taking on the \u2018premium fight\u2019 to win more business: \u201c\u2026 with more competitive pricing and improving features and benefits, the adviser has a duty to ensure their client has the best, most appropriate policy for their circumstances. So from the adviser perspective [when it comes to increasing lapse rates], you\u2019re damned if you do and you\u2019re damned if you don\u2019t.\u201d <\/p>\n<p>\u201cI do think the manufacturers and the industry as a whole have to deliver better long term solutions in terms of affordability \u2013 this means \u2018true\u2019 level premium product options. Because it\u2019s better for advisers to give long-term solutions to clients,\u201d noted PJ, whose own client lapse rate is consistently well beneath industry averages.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" src=\"https:\/\/dl.dropboxusercontent.com\/u\/2128152\/riskinfo\/eMag\/18\/article\/round-table-01.jpg\" alt=\"\" width=\"300\" height=\"300\" \/>Zurich\u2019s Richard Dunkerley agreed that there was little point trying to argue about the semantics of the report, even if some of its methodologies and assumptions could be questioned. \u201cThe PR battle has already moved on, and we need to be playing a different game altogether,\u201d he said. He supported PJ\u2019s point by agreeing that the continual cycle of product enhancements \u2013 if not supported by automatic upgrades &#8211; could place advisers in a position where they needed to constantly consider moving their clients\u2019 policies to the more improved version (better pricing and\/or features), and also be seen to do so by the client and by the regulator.<\/p>\n<p>Richard warned that regardless of whether or not the current lapse rate numbers were contributing to straining the sustainability of the sector, that perception had become reality in the eyes of the industry and the regulators.<\/p>\n<blockquote><p>We\u2019ve got to get rid of those providing bad advice by setting higher education standards and ensuring licensees properly monitor their advisers\u2019 compliance<\/p><\/blockquote>\n<p>Outgoing AFA President, Michael Nowak, urged all stakeholders involved in providing life insurance advice to be responsible in the conduct of their affairs \u2013 product manufacturers, licensees and advisers. He also urged all sectors to work together to resolve this issue \u2013 a call that Michael pointed out was also made by ASIC in its Review.<\/p>\n<p>Incoming AFA President, Deborah Kent, echoed Michael\u2019s sentiments about the need for a joint, unified approach to finding a solution. She likened the ASIC call for everyone to work together to address lapse rate and quality of life insurance advice issues to the broader FoFA debate, in which there have been, and remain, strong calls for all parties to come together to resolve the future direction and quality of financial advice.<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<p>Deborah: \u201cAt the end of the day, this is an issue that impacts the consumer. It\u2019s all about the consumer and getting the right outcomes\u2026 we can all sit around and think we\u2019re doing the right thing, but [the ASIC Review] is here; it\u2019s got to be addressed, and we\u2019ve got to get the right outcomes for everybody.\u201d<\/p>\n<h3>Commissions, culture and education<\/h3>\n<p>On the finding by ASIC of a correlation between high lapse rates and advisers opting to be remunerated by upfront commissions, the panel debated the extent to whether standardising all commissions and restricting commission options on replacement business would address this issue.<\/p>\n<p>Looking to the possibility of ASIC restricting remuneration on replacement business to, say, level commission only, highly-regarded former life insurance adviser and now a sought-after mentor, Russell Collins, said, \u201c\u2026 surely the regulator can\u2019t dictate to the industry how I am remunerated?\u201d Russell\u2019s point was that the nature of remuneration for few, if any, other occupations was subject to this level of scrutiny.<\/p>\n<p>PJ agreed with Russell, although pointed to areas other than adviser remuneration that should be addressed. He repeated the case studies highlighted in the ASIC Review represented poor advice and deserved to be regarded as \u2018fail\u2019. \u201cWe\u2019ve got to get rid of those providing bad advice by setting higher education standards and ensuring licensees properly monitor their advisers\u2019 compliance with appropriate service levels,\u201d he said.<\/p>\n<p>While the panel agreed there existed room for improvement within the sector to lift the standard of life insurance advice, Deborah pointed out that the ASIC Review was not able to identify the extent of the existing problem: \u201cWe know that we need to do something about advisers who are out there doing the wrong thing. Is it a significant problem across the industry? I don\u2019t know whether this report gives us enough data to know that.\u201d<\/p>\n<p>Michael called on all advisers to \u201cuse the ASIC Review as an opportunity to be pro-active to lift the standards of advice we give and to build trust.\u201d<\/p>\n<p>Synchron Director, and outspoken supporter for life insurance advice, Don Trapnell, commented that if the ASIC Review is indicative of the entire industry, \u201c\u2026 then I agree with PJ \u2013 it\u2019s an absolute disgrace. We can\u2019t sit back and say 63% were good \u2013 when it also says 37% were bad. It\u2019s disastrous,\u201d said Don.<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<p>But looking at education as a solution, Don commented: \u201cDoes that mean that if everyone goes out and gets a university degree that that will fix the problem? Clearly not, because a university education or qualification wouldn\u2019t have fixed the Storm Financial controversy, or Westpoint, or Timbercorp. University degrees don\u2019t solve the problem. Education comes from licensees and product providers to advisers.\u201d According to Don, \u2018targeted education\u2019, based on the scope of the advice provided by the adviser, is the answer, not formal qualifications.<\/p>\n<p>Michael related to the panel a comment made by a senior life industry adviser at the AFA Conference, that experienced advisers in the twilight of their career had a huge opportunity to pass on their wisdom and knowledge to younger advisers and the industry\u2019s new entrants, using Russell Collins as a prime example of the value this delivers.<\/p>\n<p>Russell responded that the culture surrounding the retention of life insurance business must also be addressed as a part of finding the solution to increasing lapse rates and poor standards of advice. \u201cWhen I started, you took pride in the preservation of the business,\u201d said Russell, relating that at conferences his extremely high persistency rate (98%) was publicly acknowledged. \u201cIt was a badge of pride,\u201d he said, \u201cbut culture seems to have changed. Who is training the new generation of advisers about the culture of persistency? You can\u2019t have people come into the industry \u2018ready-made\u2019. Qualifications mean nothing because values and morals can\u2019t be learned through a curriculum. Bad behaviour is bad behaviour. So, who is teaching these people to do that (ie: deliver bad advice)?<\/p>\n<p>\u201cThere\u2019s a saying in our business that every successful small business is the lengthened shadow of one person. And that person casts his or her values, integrity and ethics over the rest of the organisation,\u201d said Russell.<\/p>\n<blockquote><p>\u2018targeted education\u2019, based on the scope of the advice provided by the adviser, is the answer; not formal qualifications<\/p><\/blockquote>\n<p>Questioning whether his attitude was too na\u00efve in this day and age, Russell added: \u201cI think that saying still applies to both practice owners and dealer groups; that the person at the top should cast their shadow and demonstrate \u2018this is what we do\u2019 and have that culture cascade down to the rest of the organisation.\u201d<\/p>\n<p>PJ appreciated how Russell positioned his argument, pointing to his own pride in his practice\u2019s low lapse rates compared with industry averages. \u201cIt\u2019s difficult, because affordability continues to be difficult. But I\u2019m prepared to pick up the phone and have a conversation [with my clients] and say \u2018you still need to have this cover, or at least some of this cover\u2019\u201d. PJ reiterated his simple mantra that he would only move business if it was in the best interest of his client. But at the same time, he also told the panel that he doesn\u2019t perform simple \u2018like for like\u2019 comparisons \u201c\u2026 because there\u2019s more to it than that.\u201d<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright\" src=\"https:\/\/dl.dropboxusercontent.com\/u\/2128152\/riskinfo\/eMag\/18\/article\/round-table-02.jpg\" alt=\"\" width=\"300\" height=\"300\" \/>Continuing on the theory of preservation of business from lapsing and on long-term persistency ratios, Russell also queried the culture of advice brought to life insurance conversations by those advisers who predominantly work in the investment and superannuation\/retirement incomes area; those who also deliver life insurance advice, especially since the onset of the Global Financial Crisis, without having a depth of knowledge or experience in providing life insurance advice.<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<p>Adding some weight to the argument that relates to the need for better quality education and mentoring, rather than focusing simply on formal qualifications, PJ observed, and the panel agreed, that a lot of the poor advice case studies in the ASIC Review showed advisers weren\u2019t asking the questions they should have been, in order to establish the extent of the client\u2019s circumstances and exactly what the client\u2019s true needs were.<\/p>\n<p>Put another way, Russell suggested the culture of today, despite and because of, the focus on compliance and training, seems to have evolved into one of selling a policy, rather than developing the relationship.<\/p>\n<p>Continuing the debate on what \u2018education\u2019 was actually required, Deborah said: \u201c\u2026 we all agree that formal degrees don\u2019t necessarily stop poor advice from happening, but the problem you have is when these reports come out, we know that starts to create issues with consumers, similar to other recent reports. It then creates problems of confidence and sometimes it\u2019s not the question of whether a degree will stop poor advice from happening \u2013 it won\u2019t \u2013 but the public perception may be that that\u2019s the case. And that issue of perception then becomes the issue that we have to deal with.\u201d<\/p>\n<p>\u201cI also have an issue regarding the education of the consumer \u2013 our client,\u201d continued Deborah, \u201cand this comes back to addressing financial literacy, so that the consumer also understands more about financial and insurance issues. The more that we, as advisers and licensees and product providers, can educate the consumer about life insurance and when it will help them, the better the industry will be.&#8221;<\/p>\n<p>PJ pointed out that the ASIC Review had some good tips for the consumer to assist them with accessing and understanding good life insurance advice. He also referred to the <a href=\"https:\/\/www.moneysmart.gov.au\/insurance\/life-insurance\" target=\"_blank\">SmartMoney<\/a> public website, saying the Government was trying to address financial literacy, but more needed to be done by everyone.<\/p>\n<p>Deborah emphasised the AFA has taken on financial literacy as one of its major programs and that it must encompass all sectors of the industry and cover all financial advice \u2013 investment, superannuation, income streams and insurance.<\/p>\n<p>The panel agreed, as with previous panels, that education is the answer to so many financial literacy and advice issues, if it can be achieved. But PJ also echoed Russell\u2019s point about training culture and behaviour from the top down. \u201cSo it\u2019s education, but it\u2019s also learning appropriate behaviours and culture,\u201d said PJ, who also supports the AFA approach to not just helping its members, but also trying to help educate the broader community.<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<p>\u201cTo me, it\u2019s not education as such, but rather an industry-wide problem about behaviour and setting an example for others to follow,\u201d he said.<\/p>\n<h3>First mover problems and standardisation<\/h3>\n<p>The panel touched on the \u2018first mover\u2019 issue in relation to the possibility of one life company deciding unilaterally to reduce and cap its maximum available upfront commission, particularly on replacement business. Called the \u2018first mover\u2019 problem because if only one company moved the others would take advantage of being in a more competitive market position, Richard commented: \u201cI can\u2019t think of any other industry where they would talk about standardising pricing at both ends [commissions and premiums]. And that doesn\u2019t even address the issue. Standardising upfront commissions is not going to solve the problem that it is intended to do,\u201d he said, arguing that if upfront commission is standardised across the industry, this still wouldn\u2019t stop the incentive for advisers to move business.<\/p>\n<blockquote><p>sometimes it\u2019s not the question of whether a degree will stop poor advice from happening \u2013 it won\u2019t \u2013 but the public perception may be that that\u2019s the case<\/p><\/blockquote>\n<p>Don Trapnell then weighed in on the suggestion that level premium policies are more sustainable over time, observing that even though level premium contracts may be more sustainable, this doesn\u2019t take into account the greater affordability issue at commencement, due to higher premiums in the early years of the policy. \u201cHow many Australians are going to be uninsured because they can\u2019t afford the premiums if the push is made towards level premiums?\u201d asked Don.<\/p>\n<p>Russell strongly suggested the regulators should not be interfering in whether premiums should be level or stepped. \u201cIt\u2019s a personal decision for the client, based on their individual circumstances,\u201d he said.<\/p>\n<p>And commenting on the elephant in the room, Don observed that if there is an attempt by product manufacturers to try to standardise life insurance commissions, \u201c\u2026 there\u2019s this thing called \u2018price-fixing\u2019, which is illegal in this country&#8221;.<\/p>\n<p>Richard also made a solid point about cost structures within businesses and the extent to which they are reflected in pricing advantages. \u201cRegardless of the industry, standardising the remuneration a manufacturer can give to a retailer can reduce the incentives for that manufacturer to be more efficient and innovative. Quelling normal market forces ultimately drives poorer consumer outcomes,\u201d he said.<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<h3>Commissions in the real world<\/h3>\n<p>Notwithstanding the public\u2019s, and possibly the regulator\u2019s, perception of \u2018greedy\u2019 advisers, Don said that in reality, most advisers don\u2019t know what level of upfront commission applies to a product before they come to document it in their SoA. <\/p>\n<p>\u201cAt our PD days, there are often notes from BDMs about the latest pricing and commission offers. We invariably find that our advisers really don\u2019t care, as long as the outcome is fair and reasonable. <\/p>\n<p>\u201cThey don\u2019t look for the biggest available commission,\u201d continued Don. \u201cIf that was the case, one insurer would take all the business.\u201d He said the reality amongst advisers is that the actual amount of commission isn\u2019t their primary concern, as long as they are fairly remunerated.<\/p>\n<p>The panel generally agreed that, from their own perspective (adviser, licensee, representative association and life company), the provider that offers the highest commission package does not receive additional business as a result.<\/p>\n<p>[<em>Editor\u2019s Note<\/em>: However, the issue for consumers and politicians remains the few advisers who do focus on the highest commissions available and churning policies only for monetary gain, rather than acting in their clients\u2019 best interests \u2013 the few bad apples.]<\/p>\n<p>Notwithstanding the arguments against standardising commissions, PJ supports the notion, because he told the panel it would make his job more comfortable if all insurers paid the same remuneration. \u201cBut I also think choice of the type of remuneration [fees or commissions] is also very important between the client and the adviser,\u201d he added.<\/p>\n<p>We put the panel \u2018on the spot\u2019 and asked a hypothetical question: If upfront commissions were standardised and capped, what should be the maximum amount? The answer (and we did push the panel to try to arrive at a consensus) was 100%.<\/p>\n<p>If upfront commissions were standardised in the future, PJ stressed that it must be at a level at which new and emerging advisers could survive and build their business. He also added that the commission model allows the opportunity for many Australians to implement life insurance cover, who would otherwise not have done so because they would not have been prepared to pay a fee for the advice.<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<h3>Recommendations<\/h3>\n<p>Asked about one of the recommendations to life companies made by ASIC in its Review (to address the issue of misaligned incentives), Richard noted Zurich was in a good position, with retention rates among the best in the industry. He added: \u201cWe\u2019re not loss leading, we don\u2019t believe in one price for existing clients and a different price for new clients, and we offer guaranteed upgrades for all clients. So we believe we\u2019re behaving in a responsible and sustainable way. We believe there are legitimate reasons for life insurance policies to be replaced and we back our judgement to single out the small number of individual advisers replacing policies inappropriately. We believe that\u2019s better than a \u2018one size fits all\u2019 broad policy approach to remuneration which may have unintended consequences.\u201d<\/p>\n<p>Switching back to the issue of education, Richard warned that life company sustainability issues are almost secondary because of the PR battle currently being waged on the quality of advice. \u201cNo, having a degree won\u2019t magically fix everything but the perception is that it will position all advisers in a more positive light. It\u2019s a powerful symbol that the public demand,\u201d commented Richard.<\/p>\n<p>From the licensee point of view, where ASIC is asking them to ensure that remuneration structures support good-quality advice that prioritises the needs of the client, Don remarked that he believes ASIC is looking for the industry to move away from upfront commissions.<\/p>\n<p>\u201cI believe that ASIC does want to see a move away from upfront commission \u2026 but if we do, I agree with PJ that we will not get new entrants into our industry because we will have difficulty funding the service model that is demanded of us, especially under best interests duties.\u201d<\/p>\n<p>Don said there was no denying the ASIC Review was a very damning report on the quality of life insurance advice, \u201c\u2026 but maybe something we should acknowledge is being grateful an organisation such as ASIC exists so that these issues can be investigated and revealed. This may not be what a lot of people may be thinking at the moment, but if ASIC doesn\u2019t ask these questions of the industry, who will?\u201d <\/p>\n<blockquote><p>we back our judgement to single out the small number of individual advisers replacing policies inappropriately<\/p><\/blockquote>\n<p>Re-visiting his earlier comment about adviser education, Don observed that \u201cadviser education is a key priority for many licensees&#8221;,  but he strongly advocated the critical importance, in his view, of targeting education levels appropriate to the advice that is being given. Illustrating his point, he shared the example of a passionate NSW adviser whose clients go to her children\u2019s play groups and mothers clubs, who has no formal qualifications but is providing valued, relevant, appropriate life insurance advice within this circle of contacts \u2013 but only advice which she is qualified to deliver. \u201cShe provides life insurance advice to the wives of husbands who empty coins from parking meters or drive trucks or fill the ditches \u2013 everyday, working class people who still need life insurance \u2013 the people who often \u2018slip under the radar\u2019 and only ever hold insufficient default levels of cover via their industry super funds,\u201d he said. \u201cShe has a year 10 high school education and couldn\u2019t get a degree if her life depended on it. But she is doing fantastic work serving people who benefit from her advice under circumstances that are entirely in their best interests.\u201d<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<p>Don asked: \u201cWould a degree-qualified financial adviser be prepared to serve those clients who may deliver say, $250 to $500 commission income? I suspect the answer is probably \u2018no\u2019.&#8221; He said this adviser would not survive in an industry that required her to have tertiary level qualifications. If that happens, \u201c\u2026 that means a whole sector of the Australian community will not be serviced by advisers such as her. It doesn\u2019t mean we shouldn\u2019t review minimum education standards, but it does mean that adviser education standards should be appropriate to the type and scale of advice being given.\u201d<\/p>\n<p>Looking to the apparent lack of soft skills learning experienced by today\u2019s new advisers, Don held a very specific view: \u201cThe reality is that since the Financial Services Reform Act came into effect in 2004, we have bred an entire generation of advisers who seem to believe it\u2019s appropriate to bludgeon their clients into submission with facts and figures, as opposed to looking at the true soft skills required.\u201d<\/p>\n<p>\u201cI agree with the need to provide more soft skills education to advisers,\u201d continued Deborah. \u201cThere\u2019s just not enough of those \u2018client intimacy\u2019 skills being taught to the new generation of advisers who need those skills. I\u2019ve been in business for 26 years and I know that when a client walks through my door there is a rapport that already exists. From an Association point of view, we have a code of conduct and we also need to recognise there needs to be a minimum level of education that is acceptable to consumers.\u201d<\/p>\n<p>Flowing from Don\u2019s earlier point, Michael suggested that while there will be an increase to minimum education standards for advisers, perhaps there may be an opportunity to tailor those standards to specific specialisations. \u201cThe ASIC-led working group stemming from its Review is ongoing, but I believe consideration is warranted to increasing education standards and then tailoring those standards to specialisations within the advice sector. That way, the adviser can tailor the education required for their area of specialisation and the consumer will get the best outcome. And the adviser won\u2019t be investing in education that\u2019s not relevant to their area of specialisation,\u201d added Michael.<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<h3>Final comments<\/h3>\n<p>When it came to final comments, most panellists wanted to talk about education, for both advisers and consumers\u2026<\/p>\n<p><strong>Russell Collins<\/strong>: \u201cAt the time of entering our industry, I don\u2019t believe a 23 year-old out of university, who has been at school since they were five, has the communication skills to cope with the question: \u2018What do you say after you say hello?\u2019 That\u2019s where it starts. What you say after you say hello depends on all the planning that\u2019s been done before you even commence the meeting. And I don\u2019t think there is any training in that area at all. On graduation, people with university degrees are obviously intelligent, and what that tells me is that they can study and do assignments. They can sit for exams and they can pass. But now they emerge into the real world and you can\u2019t expect to start at the top.<\/p>\n<p>\u201cI\u2019m all for education. I strongly believe that we all enter the workforce with a basic education designed to help us to start off earning a basic income, but everything we earn after that in most cases is a result of \u2018self- education\u2019. And this is where I believe the \u2018real\u2019 education factor comes in. It\u2019s not all about product. It\u2019s not all about technical and it\u2019s not all about compliance. That just screws them up, in my opinion, because advisers are not being educated on how to develop personal relationships. The latter begins with asking questions, and without proper training these new advisers don&#8217;t know how to frame and introduce the necessary questions they should really be asking their prospects and clients.&#8221;<\/p>\n<p><strong>Don Trapnell<\/strong>: \u201cOnce upon a time an aspiring life insurance adviser would have gone to his sales manager and said, \u2018I want to start in the life insurance industry\u2019, and the sales manager would have said, &#8216;I\u2019ll teach you how to sell, son\u2026&#8217;<\/p>\n<p>\u201cAt the same time they were learning how to sell, they were also learning the technical areas of life insurance and learning about satisfying needs. A lot of the skills we learned were not \u2018book read\u2019, but were from mentors. Education is extremely important, as long as it\u2019s appropriate to the level of advice.\u201d<\/p>\n<p><strong>Richard Dunkerley<\/strong>: \u201cI think the education piece is very important for advisers but I think that it\u2019s even more important for the consumer. The financial literacy of the community at large is very poor, and this is in no small way a driver of some of the problems we now face. It\u2019s bigger than some one-off advertising campaign or social media campaign. It\u2019s beyond that. It needs a big idea, a huge one. But like everyone else at the moment, I don\u2019t know exactly what this is.<\/p>\n<p>\u201cIt would be tragic if the mainstream media effectively drove a wedge between consumers and advisers, which is why it is so important to also address the public relations side of the industry\u2019s quest for reform.\u201d<\/p>\n<div class=\"fw ad\"><!-- Error, Ad is not available at this time due to schedule\/geolocation restrictions! --><\/div>\n<p><strong>PJ Byrne<\/strong>: \u201cIn 14 years of advising, no-one\u2019s ever asked me about my educational qualifications. It\u2019s a very simple business we\u2019re in, as long as we ask the right questions. If we\u2019re taught to ask the right questions \u2013 and they can be hard questions \u2013 then we can give great advice. So, it\u2019s about having difficult conversations that people don\u2019t always want to have.\u201d<\/p>\n<p><strong>Michael Nowak<\/strong>: \u201cThere\u2019s the issue of how new advisers gain experience. It\u2019s something that\u2019s really important and needs to be a part of the increasing minimum standards and potentially having a one-to-two year minimum experience requirement for new entrants, overseen by an experienced adviser, for all new authorised representatives.<\/p>\n<p>\u201cIn terms of ASIC\u2019s Review, the AFA is fully committed to working with the industry bodies on that and advisers must appreciate a process needs to be gone through before we can arrive at any agreed recommendations about future minimum education requirements.\u201d<\/p>\n<p><strong>Deborah Kent<\/strong> supported Michael\u2019s closing comments about getting the right solution for consumers: \u201cThe ASIC Review will certainly cause some concern and it\u2019s likely the mainstream press will continue to take a negative view of the industry, which will have the effect of turning people away from the advice sector at a time when there exists such a high level of underinsurance. Again, I come back to what I said before \u2013 to get the right outcome for consumers we need to work together \u2013 the adviser associations, the FSC, the product providers and the regulators \u2013 in order to actually get the right outcome for everyone. And we also need to continue the AFA\u2019s focus on improving financial literacy and education of the consumer.<\/p>\n<p>Deborah concluded by noting that, whatever the outcome of the ASIC Review, &#8220;&#8230; one thing we know is that advisers are resilient in the face of adversity. We have the ability to adapt to change and continue to deliver great advice for more Australians.\u201d<\/p>\n<script type=\"text\/javascript\">if (typeof(addthis_share) == \"undefined\"){ addthis_share = {\"passthrough\":{\"twitter\":{\"via\":\"riskinfonews\"}}};}\n\nvar addthis_config = {\"data_track_clickback\":false,\"data_track_addressbar\":true,\"data_track_textcopy\":true,\"ui_atversion\":\"300\"};\nvar addthis_product = 'wpp-3.5.9';\n<\/script><script type=\"text\/javascript\" src=\"\/\/s7.addthis.com\/js\/300\/addthis_widget.js#pubid=ra-53a3668b19172d69\"><\/script>","protected":false},"excerpt":{"rendered":"<p>Industry peers shared their views at this year\u2019s AFA Conference about the implications of ASIC\u2019s Review of Retail Life Insurance Advice, which was released only a few days before our [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":204,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-112","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-feature"],"_links":{"self":[{"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/posts\/112","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/comments?post=112"}],"version-history":[{"count":0,"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/posts\/112\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/media\/204"}],"wp:attachment":[{"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/media?parent=112"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/categories?post=112"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/18\/wp-json\/wp\/v2\/tags?post=112"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}