It’s no secret that, for many of those working in the financial advice and insurance industries, the past few years have required some adapting to. Going back to 2018, the Life Insurance Framework (LIF) introduced the first caps on commissions, and just over a year later, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry created a paradigm shift in the regulation and oversight of financial services businesses.
With advisers grappling with increased education and compliance requirements and the removal of grandfathered commissions, at the same time as all Australians contemplate the implications of Coronavirus on their health and livelihood, the need to communicate the value of financial advice is now more important than ever.
Similar sentiments were shared in a recent address by Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume, which recognised the invaluable role that advisers continue to play during periods of uncertainty:
“To those in the advice sector…we know that affordable, reliable, professional financial advice can be critical at many of life’s great milestones and never more so than right now. Now there is a real chance for the professional advice industry to demonstrate its true value”.
Unpacking perceptions of financial advice
Given the nature of media coverage coming out of the Royal Commission in the past 18 months, it would be reasonable to expect a shift in public attitudes towards the financial advice and insurance sectors.
However, recent consumer research from AIA Australia found that 75 per cent of respondents were satisfied with the advice they receive and 71 per cent feel they achieve better outcomes as a result of receiving advice. Furthermore, the perceived value of life insurance amongst policy owners continues to grow, with one in three now considering it the most important insurance they hold.
The role of advisers in navigating complexity
For many Australians, life insurance is a complex product that is difficult to understand, let alone to make informed decisions about. Nonetheless, the value of life insurance as an affordable safety net for millions of Australians is undeniable, with AIA Australia research indicating that most households would feel the pinch within six months if the main income earner could no longer work .
The opportunity for advisers is clear, with one in two policy owners admitting they found understanding life insurance complex, and one in 10 non-owners saying that while they’re interested in purchasing life insurance, they are turned off by not knowing enough about it.
Advisers apply knowledge and experience to help their clients unpack the complexities of life insurance and better understand their protection needs. These findings present a strong case for advisers to engage and educate existing and prospective policy owners about their insurance needs and the protection that life insurance policies can provide.
The future of financial advice
In contrast to how they consider their relationship with their insurance broker, which is seen as very transactional, most respondents in the AIA Australia study see the relationship they have with their adviser as longer-term, involving regular contact and informed advice across a range of subjects including investing, managing money and achieving financial goals.
In these uncertain times, businesses are being forced to reconsider how they can continue offering value to their customers and clients. For financial advisers, enhancing engagement with clients during this time is critical and should involve understanding any changes in circumstances to ensure their cover is fit for purpose.
Many people are currently facing an uncertain financial future, and their financial adviser has an important role to play in helping them navigate any options available to them to address financial hardship. Research has shown that consumers see the value in seeking financial advice from trusted sources. Maintaining an open dialogue with one’s clients – whether by email, over the phone or through video conference – will work to enhance client loyalty and generate referrals.
Consider the kinds of technology you could explore, as well as the more traditional forms of referral you could encourage, that could help expand your business. Supporting your clients should in turn serve to support your business. After all, often the greatest points of referral are happy clients.
For more information visit aia.com.au or speak to your CDM.