{"id":85,"date":"2016-09-16T06:54:18","date_gmt":"2016-09-15T20:54:18","guid":{"rendered":"http:\/\/magazine.riskinfo.com.au\/28\/?p=85"},"modified":"2017-10-02T10:33:34","modified_gmt":"2017-10-02T00:33:34","slug":"2016-afa-industry-round-table-discussion","status":"publish","type":"post","link":"http:\/\/magazine.riskinfo.com.au\/28\/2016-afa-industry-round-table-discussion\/","title":{"rendered":"2016 AFA Round Table"},"content":{"rendered":"<div class=\"fw feature1\">\n<h3>Riskinfo joined forces with the AFA and Zurich to conduct an industry Round Table event in Canberra on the eve of the 2016 AFA National Adviser Conference.<\/h3>\n<\/div>\n<p><iframe loading=\"lazy\" width=\"745\" height=\"419\" src=\"https:\/\/www.youtube.com\/embed\/-sKaXtE96Ys?rel=0&#038;amp&#038;autoplay=1;showinfo=0\" frameborder=\"0\" allowfullscreen><\/iframe><\/p>\n<p>While our talking points addressed critical issues of the day, such as adviser trust and the lack of consumer financial literacy, our discussion became one in which these and other topics revolved mostly around the 80% of Australians who don\u2019t seek financial advice.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full\" src=\"http:\/\/magazine.riskinfo.com.au\/28\/wp-content\/uploads\/sites\/17\/2016\/09\/features-01-01.jpg\" alt=\"\" width=\"1800\" height=\"836\" \/><\/p>\n<p><b>Panelists (L &#8211; R)<\/b><\/p>\n<ul>\n<li><strong>Peter Sobels<\/strong>: Publisher, riskinfo<\/li>\n<li><strong>Samantha Clarke:\u00a0<\/strong>AFA General Manager Policy &amp; Professionalism<\/li>\n<li><strong>Marc Bineham:\u00a0<\/strong>Incoming AFA President, Noall &amp; Co<\/li>\n<li><strong>Kristine Brooks: <\/strong>Head of Distribution \u2013 Retail Life &amp; Investments, Zurich Australia<\/li>\n<li><strong>Craig Banning:\u00a0<\/strong>Principal<strong>,\u00a0<\/strong>Navwealth<\/li>\n<li><strong>Ravi Agarwal: <\/strong>Principal, MEDIQ Financial Services<\/li>\n<li><strong>Jason Spits<\/strong>: Senior Journalist, riskinfo<\/li>\n<li><strong>Tony Davison: <\/strong>General Manager, Senior Adviser, Henderson Maxwell (inset)<\/li>\n<\/ul>\n<hr \/>\n<p><strong id=\"#top\">Table of contents\u00a0<\/strong>(Click these links to move directly to those topics)<\/p>\n<ol>\n<li><a href=\"#01\"> The broader responsibility of the life insurance industry to the community it serves <\/a><\/li>\n<li><a href=\"#02\"> The four in five <\/a><\/li>\n<li><a href=\"#03\"> Understanding the consumer <\/a><\/li>\n<li><a href=\"#04\"> Specialisation <\/a><\/li>\n<li><a href=\"#05\"> Removing complexity <\/a><\/li>\n<li><a href=\"#06\"> Trust? <\/a><\/li>\n<li><a href=\"#07\"> Engagement <\/a><\/li>\n<li><a href=\"#08\"> Apathy <\/a><\/li>\n<li><a href=\"#09\"> Trust and public perception <\/a><\/li>\n<li><a href=\"#10\"> Consumer education and financial literacy <\/a><\/li>\n<li><a href=\"#11\"> Final Comments <\/a><\/li>\n<\/ol>\n<hr \/>\n<h3 id=\"01\">The broader responsibility of the life insurance industry to the community it serves <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>Panelists were initially asked to consider whether there should exist a greater social responsibility on the part of life companies and advisers towards the community which they serve.<\/p>\n<p><b>Kristine Brooks<\/b>, Zurich Australia\u2019s Head of Distribution \u2013 Retail Life &amp; Investments, got the ball rolling on this question, referring to any organisation, large or small, where \u201c\u2026we\u2019re always at risk of focusing on our own businesses, whether that is manufacturing or advice. And being so focused in our efforts to make that a success, sometimes we don\u2019t stop to look outwards to understand the environment in which we\u2019re operating.\u201d<\/p>\n<p>Kristine believes consumer behaviour over recent times is helping to drive change: \u201c\u2026over many years life insurers have gone about their business delivering products in a way that consumers can access; and it\u2019s a product or service that the manufacturer believes to be the best. But I think we\u2019ve done very little to genuinely understand what solutions will best serve the consumer,\u201d she said.<\/p>\n<p>Kristine referred to recent research findings into what people really understand about life insurance and the products that they own. She said Zurich\u2019s focus is more on \u2018misinsurance\u2019 than \u2018underinsurance\u2019 because they have found that quite often people hold products they don\u2019t properly understand and which don&#8217;t fulfill their intended purpose . \u201cThey don\u2019t understand the benefits that they would receive or when they can call on those products for assistance in their time of need.\u201d Kris continued, \u201cWe hear stories from advisers all the time about clients who contact them to let them know something has happened, but who had no idea that this was an event on which they could make a policy claim.\u201d<\/p>\n<div class=\"fw ad\"><!-- Either there are no banners, they are disabled or none qualified for this location! --><\/div>\n<p>Kris also noted this lack of understanding extends to consumers confusing health and life cover, with Zurich research finding 10% of people surveyed thought their life insurance covered dental and optical expenses.<\/p>\n<p>\u201cThe way the industry has [traditionally] gone about serving the consumer is by creating complexity in the guise of innovation. But if we flipped that on its head and understood what\u2019s truly important to the consumer, simplify the products so that they truly met their needs, I believe the consumer would be more engaged and motivated to access the product &#8211; and for that reason would actively seek advice.<\/p>\n<blockquote><p>our responsibility is not only to our adviser members but also to the clients they serve<\/p><\/blockquote>\n<p>\u201cHistorically life insurance and financial advice has been one in which the client has delegated the authority to act on their behalf to the adviser. But now we seem to be moving into an era of more informed consent, in which the adviser seeks the client\u2019s genuine understanding of the information being provided and their informed agreement with the recommendations made by the adviser.\u201d<\/p>\n<p>Kristine noted there may be a greater cost associated with accessing this deeper understanding of, and engagement with, consumers. But she believes the benefits of doing so would far outweigh the costs associated with that deeper engagement, which would lead to more tailored products and better ongoing engagement.<\/p>\n<p>From the association perspective, the AFA\u2019s General Manager, Policy &amp; Professionalism, <b>Samantha Clarke<\/b>, told the panel that \u201c\u2026broader engagement with the consumer is a pivotal part of our role. As a professional association, our responsibility is not only to our adviser members but also to the clients they serve \u2013 and the broader community and consumers. That commitment is embedded in what our role is as an association,\u201d she said.<\/p>\n<p>\u201cIn the industry at the moment, issues such as trust and confidence are the driving force behind a lot of the reforms &#8211; and the rise in professionalism across the sector is impacting not only the associations but also the manufacturers &#8211; but in a positive way,\u201d noted Samantha. \u201cSo, change always creates interesting discussions, but at the end of the day it\u2019s all about working towards building trust and confidence in the sector.\u201d<\/p>\n<p>Samantha mentioned the consumer-facing \u2018<a href=\"https:\/\/www.yourbestinterests.com.au\/\" target=\"_blank\">Your Best Interests<\/a>\u2019 campaign as an example of the AFA\u2019s commitment in this area \u2013 about improving the understanding and literacy of consumers around the quality and value of advice: \u201cReal stories; real consumers,\u201d said Samantha.<\/p>\n<h3 id=\"02\">The four in five <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>Continuing on how she sees the AFA\u2019s broader responsibilities, Samantha mentioned the four in five Australians who do not seek financial advice: \u201cOne of our responsibilities as an association is to encourage great advice for more Australians. The Your Best Interests campaign is one initiative; research papers is another avenue. If more Australians get access to advice then their overall wellbeing will improve.\u201d<\/p>\n<div class=\"fw ad\"><!-- Either there are no banners, they are disabled or none qualified for this location! --><\/div>\n<p>Speaking to the panel both as incoming AFA President and as an advice practice principal, <b>Marc Bineham<\/b> told his peers he has seen a seismic shift in the advice sector since the GFC and its fallout: \u201cThe consumer is looking at our industry in a negative way and we have to work hard to overcome that perception. So when we\u2019re talking about delivering great advice, we\u2019re not talking about great transactional advice. We\u2019re moving away from a transactional adviser system to a values based advice system and that is the seismic change taking place.\u201d<\/p>\n<p>Marc told the panel he also sees evidence of this shift in the actions being taken by life companies, which he characterised as proactive rather than reactive initiatives. He cited new underwriting initiatives as an example: \u201c\u2026if the insured is taking proactive steps with regard to their health, then insurers and underwriters are recognising that \u2013 and so you can see that shift developing.\u201d<\/p>\n<p>Marc said he can also see a similar shift within the claims areas of insurers, where there is far more pro-active engagement in areas such as occupational therapy, physiotherapy assistance and finding other proactive solutions that will enable the claimant to return to work quicker.<\/p>\n<p>Marc also painted a link between better consumer engagement by the industry and the economy. He pointed to the significant cost to taxpayers for the Government to fund areas including disability services, social services and pensions: \u201c\u2026the more advisers and insurers can ease the public burden the better will be all consumers and the economy,\u201d he said.<\/p>\n<blockquote><p>I don\u2019t think there\u2019s a single professional industry in the world that\u2019s got a grip as yet on the change to consumer power<\/p><\/blockquote>\n<h3 id=\"0\">Understanding the consumer <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p><a href=\"http:\/\/navwealth.com.au\/\" target=\"_blank\">Navwealth<\/a> Principal, <b>Craig Banning<\/b>, pointed to the issues associated with growing consumer power: \u201cI don\u2019t think there\u2019s a single professional industry in the world that\u2019s got a grip as yet on the change to consumer power,\u201d said Craig, as he asked his colleagues to consider all the industries that serve consumers and access big data, yet are still \u201c\u2026miles away from really understanding what the consumer wants.\u201d<\/p>\n<p>He says consumers are ahead of where professional industries are positioned \u201c\u2026and we need to catch up with them.\u201d He says this is very different to recent history, where businesses developed products and said \u2018this is what consumers need\u2019. Now, \u201c\u2026the consumer is reversing that process in saying \u2018That\u2019s not what we need, but this is what we want.\u2019\u201d Craig sees this as a massive power shift. \u201cAnd even the really big organisations don\u2019t really understand,\u201d he said.<\/p>\n<p>Giving a slightly different perspective, <b>Ravi Agarwal<\/b>, founder of specialist Melbourne advice firm, <a href=\"http:\/\/www.mediqfinancial.com.au\/\" target=\"_blank\">MEDIQ<\/a>, believes that in relation to the broader consumer shift there are many professions that are making inroads to becoming a lot more consumer-centric. He strongly agreed with Marc\u2019s comments about different stakeholders in the industry (ie advisers and institutions) becoming more consumer-centric: \u201cTraditionally there\u2019s a corporation who delivers a product or service, governed by its shareholders, and that\u2019s the essence of business (where the entity must deliver a return for its owners).\u201d Ravi says technology advancements have enabled the rapid commoditisation of products and suggested to his peers that quality is now quite homogenous across high-end products. His question, then, which was effectively a challenge to his own advice business and those of his fellow panelists, was how to compete in that environment.<\/p>\n<p>Ravi\u2019s answer to his own question was that \u201cYou compete through brand and the value your brand stands for. And if you can align that brand with a consumer segment then you\u2019re going to have good interaction [engagement] and great market penetration, and you\u2019re going to be able to deliver something that\u2019s really quite special.\u201d<\/p>\n<blockquote><p>It\u2019s every adviser\u2019s job to come up with that proposition that resonates for the consumer in our relevant areas of specialisation<\/p><\/blockquote>\n<h3 id=\"04\">Specialisation <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>Ravi agreed that this approach underpins his own business proposition, but added that he believes this approach underlines every business proposition in the world. \u201cHow else are you to compete?\u201d asked Ravi, in today\u2019s modern world, when consumers are now so highly informed and have access to so much information at the flick of a switch. It\u2019s every adviser\u2019s job to come up with that proposition that resonates for the consumer in our relevant areas of specialisation \u2013 to create that interaction and create motion. And if we create motion we create value,\u201d he said.<\/p>\n<div class=\"fw ad\"><!-- Either there are no banners, they are disabled or none qualified for this location! --><\/div>\n<p>Ravi told his peers specialisation doesn\u2019t necessarily have to relate to a particular industry group. Rather, \u201cI think the best way to specialise is on value.\u201d He referenced the current wave of social change, positioning it as a new stage, as was the industrial revolution, the environmental revolution \u201c\u2026and now there\u2019s this huge societal revolution where we want social change and we want to do good. It\u2019s no longer ok just to make money. You\u2019ve got to make money and share,\u201d said Ravi, whose comment also circled back to an earlier observation by Kristine in relation to the broader responsibilities of businesses within the market or environment in which they operate.<\/p>\n<p>\u201cYou can see the change that\u2019s occurring in even the most highly commoditised products such as water,\u201d continued Ravi, \u201c\u2026where the label of \u2018share\u2019 will deliver value.\u201d He says the consumer attitude is that they\u2019re going to buy the product anyway (eg water). \u201cSo they think \u2018Why don\u2019t I buy the brand that\u2019s going to help do some good?\u2019\u201d In doing so, Ravi says the consumer is making a statement about their own values.<\/p>\n<p>Kristine reinforced this by pointing out that JK Rowling was the first billionaire to drop out of the Forbes Rich List by virtue of the volume of charitable donations she made. Ravi also referred to the Bill and Melinda Gates Foundation as a similar example.<\/p>\n<p>Ravi saw this as an emerging trend, telling the panel he believes people are realising more and more that money of itself was not the solution to their problems.<\/p>\n<p><b>Tony Davison<\/b>, senior financial adviser and GM at 2016 AFA Practice of the Year, <a href=\"http:\/\/www.hendersonmaxwell.com.au\/\" target=\"_blank\">Henderson Maxwell<\/a>, turned the conversation back to focusing on the \u2018four in five\u2019 in terms of how the industry should be navigating its future. Tony said Henderson Maxwell Principal, Sam Henderson and their colleagues focus on the 80% who do not seek financial advice. \u201cWe think about the four in five in our business,\u201d he said. \u201cOne of the key things for us is not so much the power of the consumer, but we really think information doesn\u2019t equal understanding. And that\u2019s a big issue,\u201d said Tony.<\/p>\n<p>\u201cWhether it\u2019s people seeking financial advice or others trying to self-diagnose using Dr Google, there is really an opportunity for our industry to continue to try to convince the four in five who don\u2019t seek financial advice that not only is there value in it, but implicitly that it\u2019s very important that they seek advice. The biggest issue, though is that the four in five, and in fact many of the other one in five who do seek advice, are cynical about the value of the advice process.<\/p>\n<blockquote><p>think the complexity in our industry has led to a significant amount of disengagement by consumers<\/p><\/blockquote>\n<h3 id=\"05\">Removing complexity <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>\u201cSo for us, what it\u2019s really all about is ensuring people understand that information &#8211; and being able to access information doesn\u2019t equal understanding. And at the second level is helping them really understand and see some value in essentially what is a very high involvement decision making process, which is what giving financial advice involves. Those are the things we strive to do, and we try to do it in a friendly and efficient manner,\u201d he said.<\/p>\n<p>Tony continued, \u201cWe think the complexity in our industry has led to a significant amount of disengagement by consumers. Complexity is partly driven by compliance, which is absolutely necessary. But it does drive massive amounts of complexity. It also drives a very \u2018island-like\u2019 response from participants in the industry as well, where they\u2019re protecting their own nest rather than looking at the process from a consumer stand point.<\/p>\n<p>\u201cSo if we stand back, what we see is an opportunity to try and engage with people \u2013 to cut through the details to get to a point at which they recognise that they need advice, and then get to a further point where they feel that they can trust an adviser and to actually go and seek that advice.\u201d<\/p>\n<div class=\"fw ad\"><!-- Either there are no banners, they are disabled or none qualified for this location! --><\/div>\n<h3 id=\"06\">Trust? <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>In the context of the four in five who don\u2019t seek financial advice, a question was put to the panel: Does the four in five trust you (advisers and industry)? If they don\u2019t, what can be done about it?<\/p>\n<p>Craig: \u201cI think the four in five are so confused about what we do, so the trust issue doesn\u2019t come into it yet as they really don\u2019t know what an adviser does. (Craig\u2019s comment drew broad agreement from the rest of the panel.)<\/p>\n<p>\u201cWhen I have a brief conversation with a public group, it\u2019s always a quick tip. But that\u2019s so removed from what a good adviser actually does. There\u2019s such a gap between what the four in five know what we do and what we actually do. And we don\u2019t seem to be doing a great collective job to bring that together. It\u2019s a slow, practice by practice, client by client conversation,\u201d concluded Craig.<\/p>\n<p>Craig said he believes the average consumer thinks they don\u2019t need financial advice: \u201cI\u2019m always surprised about how many clients come to us as a referral and they actually say, \u2018I don\u2019t know why I\u2019m here.\u2019 So they\u2019re actually very negative even before we start a dialogue. But by the end of the meeting I ask them what they think now and they say they hadn\u2019t really understood what advisers do.\u201d<\/p>\n<p>Another issue Craig experiences is that \u201c\u2026a lot of people don\u2019t seek advice because they think they need to be wealthy. One client recently said they had $5 million but didn\u2019t think they were wealthy enough to get financial advice!\u201d<\/p>\n<p>Tony agreed with Craig and said the trust issue comes down to making sure the industry is first communicating the framework that it\u2019s working in and some of that framework has yet to be implemented, let alone finalised. \u201cI also agree that in the broader community, they don\u2019t know what we do. I think that most people in the community are skeptical about most other people until they understand them. If you think about how our industry works, most clients come on the back of referrals because others have trusted us. And it\u2019s those people who ask in that initial appointment \u2018Why am I here,\u2019 and after an hour or so the light finally comes on.\u201d<\/p>\n<blockquote><p>the simple fact is that most consumers are disengaged about issues like insurance and super until they really need it<\/p><\/blockquote>\n<h3 id=\"07\">Engagement <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>Searching for an answer as to how to get the message to reach the four in five, Tony said \u201cIt\u2019s really \u2018hand-to-hand combat\u2019 in a lot of ways because it\u2019s not until you can speak with those four in five that you\u2019re really going to convince them about the merits and value if advice.<\/p>\n<p>\u201cA huge amount of effort is put in by many people in the industry to communicating better and to engaging audiences, but the simple fact is that most consumers are disengaged about issues like insurance and super until they really need it.<\/p>\n<p>\u201cWhat we\u2019re already doing goes a fair way towards gaining that trust over time. I don\u2019t think we can do a huge amount more (than taking one client at a time). Over the longer term, a lot of the answer lies in gradually educating the general public about the merits of advice and bringing them on the journey and making sure they\u2019re aware of the tools that are available to them. But again we need to make sure that we help the client cut through the complexity of the process so they can understand its value \u2013 that it\u2019s not just a homogenous process but is a very individualistic approach.\u201d<\/p>\n<p>Ravi compared institutional trust by consumers in the US compared to the rest of the world. \u201cThere is this belief in the US that corporations will do the right thing by you, but especially in Australia we\u2019re so cynical about it.\u201d Ravi says that, even despite the GFC fallout and Enron-style debacles, there is still an underlying trust by the American consumer in their institutions that doesn\u2019t exist in the typically cynical Australian psyche. Partly, according to Ravi, this is due to how the media portrays corporates in Australia.<\/p>\n<p>Ravi agrees that what needs to be addressed (changed) is that the consumer doesn\u2019t understand what financial advice means, or its value. \u201cThe only way to change that is through education and professional standards,\u201d said Ravi, who also agreed this was a very slow process that will take \u201c\u2026maybe even a generation.\u201d He asked his peers how many of their parents had financial advisers, and suggested the children of those who did are much more likely to seek their own financial adviser today.<\/p>\n<div class=\"fw ad\"><!-- Either there are no banners, they are disabled or none qualified for this location! --><\/div>\n<p>Considering the role of the adviser association in working to engender trust in the community, Samantha reflected that in taking one step back this was a \u2018higher-purpose\u2019, not just of the industry associations but this responsibility extended to the rest of the sector, including product manufacturers, licensees and advisers.<\/p>\n<p>Samantha referenced the work being conducted by the AFA in association with the Beddoes Institute, where they are studying consumer attitudes via a research initiative called the Consumer Choice Benchmark Study. The focus of the study, said Samantha, is understanding from the consumer perspective who it is they rate and who is doing well in their eyes. She sees this as an important initiative to raise trust and confidence in product providers.<\/p>\n<p>She added that engagement by all insurers in this research will be a good measure of the effectiveness of this initiative, and from which stems a raising of the bar for service standards and customer engagement across the sector. \u201cAnd we\u2019ll find out who it is that is raising that bar,\u201d added Samantha.<\/p>\n<h3 id=\"08\">Apathy <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>Marc Bineham agreed that trust isn\u2019t really the issue. For Marc, it\u2019s the apathetic four in five who need to be reached, because research has consistently shown that the engaged one in five hold solid levels of trust in their adviser and in advice.<\/p>\n<p>In Marc\u2019s advice business (<a href=\"http:\/\/www.noallco.com.au\/\" target=\"_blank\">Noall &amp; Co<\/a>), he told the panel that the 80\/20 rule always applies, where his firm may run a corporate super session for employees, where only one in five will ever take up the opportunity for personal advice, leaving four in five who don\u2019t care or who are not sufficiently motivated. Put another way, according to Marc, the four in five lead complicated lives and there never seems to be time to seek help and get their affairs sorted out. \u201cThey just haven\u2019t got time (or don\u2019t make it). They don\u2019t appreciate that the adviser can say \u2018We can take that away from you\u2019,\u201d &#8211; effectively outsourcing that important but time consuming part of their lives.<\/p>\n<p>\u201cSo, as an association, we have to find a way to send messages that will help to overcome that apathy. But as advisers, we can only do that one-on-one.\u201d<\/p>\n<p>Marc says there are so many great advice stories out there. \u201cThat\u2019s never been the problem. But as an industry, we\u2019ve never been good at marketing that.\u201d He mentioned the industry funds successful marketing campaign: \u201cBut with the life insurance sector, each institution does its own thing,\u201d observed Marc, who was effectively noting a relative lack of unity of message from the life insurance industry compared with industry super funds.<\/p>\n<p>Samantha added that raising professional standards will also enhance the trust factor, but Marc gave an example where trust was not necessarily the issue. He told the panel of a careers night at a local school where one of the top advisers in the country attracted only five students to her session, compared with what appeared to be a reasonably non-descript accountant, who had around 60 students attend his presentation. \u201cThat\u2019s our challenge,\u201d reflected Marc.<\/p>\n<blockquote><p>at times I believe we ask for that trust before we\u2019ve earned it<\/p><\/blockquote>\n<p>Kristine seeing things through a different lens in terms of the journey a consumer takes on their path to receiving financial advice: \u201cThe people who need our advice the most are financially challenged and therefore have a lot of uncertainty and fear associated with their current circumstances.\u201d<\/p>\n<p>Kristine said everyone wants to feel safe and financial security is a big part of that. She said when a person has that much fear and is brave enough to seek advice this can sometimes be a confronting journey, especially when they may need to share their sometimes very personal circumstances:<\/p>\n<p>\u201cI think that sometimes we expect trust far too soon in the process,\u201d said Kristine. \u201cTrust needs to be earned and we have to challenge ourselves because at times I believe we ask for that trust before we\u2019ve earned it<b> <\/b>\u2013 we ask for it a bit too soon.\u201d<\/p>\n<p>Tony strongly agreed. He thinks Kristine\u2019s comments were \u2018spot on\u2019 regarding the need to earn the trust of the consumer or client prospect. He says it\u2019s not something that\u2019s achieved by ad campaigns, but is something that is a gradual accretion over time. \u201cIt takes ages to get people to really trust you and to think that they know you,\u201d was how Tony put it. This comment was met with broad general agreement by the panel.<\/p>\n<p>Craig reminded his peers of so many powerful (but sometimes, sad) stories about the good the industry does at claim time, but he lamented that \u201c\u2026no-one seems to be prepared to talk about it to the public.\u201d Samantha raised the Your Best Interests campaign as an example, though, of what can be done.<\/p>\n<div class=\"fw ad\"><!-- Either there are no banners, they are disabled or none qualified for this location! --><\/div>\n<h3 id=\"09\">Trust and public perception <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>On the topic of these powerful claims stories, Marc said \u201c\u2026the number one question clients ask us is \u2018Are you confident this policy claim would be paid if we go with this insurer?\u2019\u201d. Marc said he has to point out each time that it\u2019s only the fraudulent and non-disclosure claims that get declined. \u201cWe have to tell them that every legitimate claim gets paid. In thirty years I\u2019ve only ever had one client who wasn\u2019t paid and that was because of fraud.\u201d<\/p>\n<blockquote><p>The financial advice process needs to be a relationship, where the financial adviser can take you on the journey over time<\/p><\/blockquote>\n<h3 id=\"10\">Consumer education and financial literacy <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>Senior Riskinfo journalist, <b>Jason Spits<\/b>, challenged the panel to apportion responsibility as to whose job it is to generate greater financial literacy amongst the public. He raised the Zurich survey.<\/p>\n<p>Tony said advisers first need to engage with the four out of five. \u201cIt starts with a question and you follow on from that with the fact that they need advice \u2013 it\u2019s so complex that it can\u2019t be solved all in one go. That\u2019s the start of the process,\u201d said Tony. \u201cYou need to engage the four out of five with one piece of the puzzle first of all and that\u2019s what we endeavour to do. That\u2019s what advisers need to be doing. They need to be out there engaging the general public and talking to them in general terms and try to get them to embark on that advice journey because they\u2019re not going to do it any other way.\u201d<\/p>\n<p>Ravi cautioned care needs to be taken to ensure the consumer doesn\u2019t think that financial advice is a transactional process, where a consumer can make a call with a particular query and get a particular response and think that is the end of the journey. \u201cThe financial advice process needs to be a relationship, where the financial adviser can take you on the journey over time \u2013 over a twenty or thirty year path where there will be different aspects of your financial life that will require advice. And that is what we need to be promoting that much more.\u201d<\/p>\n<p>Ravi noted \u201cValue is not the word I would use in terms of distilling knowledge. The key is numeracy,\u201d he said. \u201cPart of the reason the consumer doesn\u2019t understand the complexity of the process is because the level of numeracy across the entire nation is not what it could be. We need people to understand the level of complexity in their own mind. You\u2019re never going to see value [in financial advice] unless you have decent numeracy &#8211; basic applied numeracy \u2013 how you understand the core numerical values you need as you go through life.\u201d<\/p>\n<p>Craig: \u201cWe don\u2019t give enough compelling reasons why people need financial advice. This issue needs to be addressed right back at the school years. I agree with Ravi. I quiz my teenage children and there\u2019s nothing that happens at school about financial literacy. There\u2019s nothing about setting financial goals and life styles. Advice is not around a Q&amp;A style of process,\u201d continued Craig. \u201cPeople need help with where they\u2019re going in their life\u2019s journey. Twenty-five years ago when I started as an adviser it really was a product-driven process. Now, what we do is just so removed from that. Now, it\u2019s all about lifestyle and family and issues to work through. Today, I have men crying in my meeting rooms because they feel they are not financially successful. That didn\u2019t happen 20-25 years ago. They didn\u2019t cry then. The one in five know this, but the four in five don\u2019t and they need more compelling reasons to seek out financial advice.\u201d<\/p>\n<p>Marc was conscious of wearing two hats with this response to this question of responsibility for consumer financial literacy. He referred to a survey that found most employers thought employees wanted services such as childcare at work, but the survey found what they really wanted and expected from their employer was some form of financial education.<\/p>\n<blockquote><p>You can Google all the information you want, but it doesn\u2019t solve your financial stress<\/p><\/blockquote>\n<p>\u201cSo, financial wellness and financial literacy is starting to come into the workplace,\u201d said Marc. He also related financial stress was the number one issue that led to marriage break-ups and was also the number one issue for twenty-something employees when commencing their working careers.<\/p>\n<p>Marc effectively agreed with earlier comments that information did not lead to understanding: \u201cYou can Google all the information you want, but it doesn\u2019t solve your financial stress.\u201d<\/p>\n<p>\u201cFrom and AFA point of view, we\u2019ve definitely seen through advisers past and present the emergence of genuine informed consent, where clients are encouraged to take notes during the meeting in order to help them navigate their way through the sometimes complex world of financial advice. \u201c Marc referenced the post GFC environment in which advisers could not rely on double digit returns to add value.<\/p>\n<p>Kristine raised the issue of \u2018industry speak\u2019 as an additional impediment to consumer financial understanding. She said that in addition to the average consumer not being exposed to financial literacy or education at school or in the workplace, they also have to deal with significant levels of jargon that exist within the sector. Not consumer-friendly. To that end, Kristine told the panel Zurich was seeking to change its consumer information and client statements into plain English.<\/p>\n<div class=\"fw ad\"><!-- Either there are no banners, they are disabled or none qualified for this location! --><\/div>\n<p>Jason asked the panel whether the one in five consumers seeking financial advice is as good as it\u2019s going to get. Tony said he believes the industry can reach 50%. \u201cThere\u2019s every opportunity and the industry should be focused on achieving this target. I believe there is a huge amount of latency out there, with unanswered questions. And again, questions turn into conversations and conversations turn into life-long relationships. That\u2019s the way good advisers look at it.\u201d<\/p>\n<p>Marc referred to the BHAAG (Big Hairy and Audacious Goals) concept, in which the industry should strive for 100% of consumers seeking financial advice: \u201cOf course we should be trying to break that 20% glass ceiling,\u201d he said. \u201cI do think we should keep doing what we\u2019re doing in moving from a transactional to values based advice process. But to get to anywhere near 100% engagement we need Government support.\u201d<\/p>\n<p>Samantha added there also needs to be a greater focus on delivering advice to women, who are underrepresented as advice clients. She sees this as a key opportunity for the whole advice sector.<\/p>\n<blockquote><p>the barriers to people being able to access advice are lowering<\/p><\/blockquote>\n<h3 id=\"11\">Final Comments <span style=\"font-size: 12pt\"> &#8211; <a href=\"#top\">Back to top<\/a><\/span><\/h3>\n<p>Each member of this panel is a high-achieving thought leader in the financial services sector. In a 90-minute conversation that that could have lasted for many hours, final comments and observations from the panel included:<\/p>\n<p><b>Craig Banning:<\/b> \u201cI think we\u2019re all becoming better at collaborating. I think associations are better today than they have never been in my twenty-five years in the industry.\u201d And in what we\u2019ve come to expect from the top advisers in the industry, Craig added, \u201cIt\u2019s a great time to be an adviser now, versus any other time in history. I see us all wanting to go down the right path.\u201d<\/p>\n<div class=\"fw ad\"><!-- Either there are no banners, they are disabled or none qualified for this location! --><\/div>\n<p><b>Ravi Agarwal<\/b>: (Again, typical of the top echelon of successful advisers): \u201cI see the future as incredibly bright. Looking at how we reach the four out of five, we really need to be more pragmatic and look at what we call advice. What is the definition of \u2018advice\u2019?. \u201cIs it someone who calls an industry funds hotline? To be honest, that is advice. The member has taken a step to try to obtain some initial information, similar to someone visiting ASICs <a href=\"https:\/\/www.moneysmart.gov.au\/\" target=\"_blank\">MoneySmart<\/a> website. That is also seeking advice and I\u2019d like to see that definition broadened. And with the advancements in technology, the barriers to people being able to access advice are lowering, which is fantastic, as it will improve numeracy and financial literacy and will give the consumer the ability to make much better decisions.\u201d<\/p>\n<p><b>Tony Davison<\/b>: \u201cAs a professional community there\u2019s a fantastic membership base who is very engaged for all the right reasons. And while there\u2019s currently a diversity of opinion, we all want a better outcome for the industry, but especially for the consumer.\u201d<\/p>\n<p><b>Marc Bineham<\/b>: \u201cThere will always be noise in our industry. But as we address each of the challenges in our industry, we can\u2019t forget all the great stories that our members are involved in every day \u2013 all the good news stories that we need to get out there and for the public to learn about &#8211; and from the AFA\u2019s perspective, showcasing these three advisers (Ravi, Craig and Tony) which informs our members about the quality and the great stories these guys provide to their clients.\u201d<\/p>\n<blockquote><p>is transactional advice necessarily wrong, if that\u2019s what a consumer needs?<\/p><\/blockquote>\n<p><b>Samantha Clarke<\/b>: \u201cBased on my twenty-five years in the industry, I think that we\u2019re emerging into a positive space. The professionalism of advisers has never been higher, nor has their commitment to client-centricity. There\u2019s also the commitment being shown by product manufacturers to develop products that extend beyond transaction outcomes to health and wellbeing outcomes. This is really exciting, and so it\u2019s an exciting time to be in this industry.\u201d<\/p>\n<p><b>Kristine Brooks<\/b>: \u201cI\u2019d like to leave the panel with a challenge\u2026We\u2019ve had a lot of conversation today about moving from transactional advice to more relationship and values-based advice engagement with the customer. To get to the four in five, I think we do need to remove barriers and potentially we need to think more about how the customer wants to engage in the advice process (picking up on Ravi\u2019s final comments about what constitutes advice). For example, is transactional advice necessarily wrong, if that\u2019s what a consumer needs? And if someone has a wonderful experience at the point at which they engage with you (even if it\u2019s a transactional experience), I bet they\u2019ll come back at the right time. So I think we need to potentially think more flexibly and to be more adaptive around how we provide advice.\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>Riskinfo joined forces with the AFA and Zurich to conduct an industry Round Table event in Canberra on the eve of the 2016 AFA National Adviser Conference. While our talking [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":266,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-85","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-feature"],"_links":{"self":[{"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/posts\/85","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/comments?post=85"}],"version-history":[{"count":0,"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/posts\/85\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/media\/266"}],"wp:attachment":[{"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/media?parent=85"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/categories?post=85"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/magazine.riskinfo.com.au\/28\/wp-json\/wp\/v2\/tags?post=85"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}