The Government’s approach to adviser education has the potential to kill life insurance advice, according to Synchron Director, Don Trapnell.
“A mass retirement date for life insurance advisers is looming and that date is 31 December 2023,? Mr Trapnell said. “Recent indications are that up to 75 per cent of advisers plan to exit the industry by this date, proving that the mandatory education requirements announced by FASEA are over-prescriptive.”
While CoreData research puts the adviser exit rate in response to the new education requirements as low as 16.5 per cent, Deakin University academic Adrian Raftery?last year estimated between 21 and 34 per cent would leave the industry and a recent ifa magazine poll of more than 3,500 respondents revealed around 75 per cent of advisers were planning to exit.
“We believe the Government is trying to force life advisers, who are engaged in helping people to make simple, yet life-changing decisions around protecting themselves and their families, to become full service financial planners. That’s over-education and over-regulation.”
Mr Trapnell said that instead of making life insurance advice more affordable and more available to consumers, the education reforms may mean no life insurance advisers remain in the industry and consumers will have no choice but to buy life insurance direct from life insurance providers.
“The pendulum has swung too far the wrong way,” he says. “A Government which goes headlong in pursuit of regulation to the extent that it kills off an entire sector of an industry does the community a grave disservice. The industry is not that sick. I believe it is akin to a doctor overprescribing medication to patients and in the process killing them.”
Mr Trapnell said it is inappropriate for risk advisers to hold the same education qualifications as financial planners. “Risk advisers need qualifications in life insurance. Their job is to arrange insurance so that their clients are financially protected should the main income earners die or become unable to earn an income. They can’t replace these people emotionally but they can put insurance in place that protects them financially.
To do this job, they do not need to understand transition to retirement strategies, the intricacies of managed funds, or the latest superannuation caps legislation. That kind of education is not appropriate.”
In the interests of advisers and their clients, Synchron is urging Government to allow streamlined education pathways for the differing financial advice disciplines.