SYDNEY: 3 August 2017 – Customer take up of life insurance advice could be adversely effected if Statements of Advice (SoA) for life insurance do not take a more balanced approach to the information they communicate.
This is the feedback YTML General Manager Advice Delivery, Terri Ho submitted to the Australian Securities and Investments Commission (ASIC) on the example SOA provided in Consultation Paper CP 284, which YTML say does not prioritise the information consumers are most looking for, the advice.
“We believe the disclosure of commissions is over played in its current position in the SOA. This represents too much focus on remuneration.”
Further: “One of our key suggested improvements is to change the positioning of the commission disclosure and to have the document lead with the advice, as opposed to leading with payments.”
YTML argues the Life Insurance Framework and Best Interests obligations are designed to provide greater transparency and disclosure, to help the customers assess the value and cost of the advice.
It states these reforms are designed to improve the perceptions of the financial planning industry as a trusted profession.
“That is why it is important to prioritise the message of value of advice followed by remuneration,” the submission states. “So, as an industry we focus on the difference advice makes and not price the service in the SoA before the value is communicated.”
YTML has suggested focus groups with quality financial advisers would have shown ASIC the importance of communicating the value of advice followed by remuneration. It advocates the payment disclosure is moved from page one to page three under Summary of Recommendations.
“This would still ensure disclosure is sufficiently prominent but is also provided with context to the value this cost brings to the customer.”
Established in 2010, YTML (Your Technology Made Lite) helps financial services businesses be better. It uses technology to create bespoke solutions to business challenges and to break through business blockages and barriers. These include compliance hurdles, business change requirements and technical challenges, assisting a range of businesses in turn to extract business efficiencies and to deliver more financial advice to more Australians.