Zurich Risk Adviser Sentiment Index shows adviser optimism

The latest measurement of the Zurich Risk Adviser Sentiment Index has shown an overall uptick in sentiment amongst financial advisers active in the Australian life risk market. 

The third round of the sentiment tracking research, conducted in December 2012, found an increase in the index, driven largely by improved adviser sentiment towards the current regulatory environment and increased optimism about the long term viability of their practice.

The movement in the index is consistent with further findings from the same survey that approximately one third of advisers are ‘extremely’ or ‘very’ positive about their readiness for FOFA implementation on July 1st and only 15% indicated any negative sentiment.  

Philip Kewin, General Manager Retail for Zurich’s Life and Investments business, said the index findings are likely to reflect a number of factors at play.

“These results show adviser sentiment to be at highest level since we started the survey, despite challenging economic conditions.”

“I think we are seeing evidence that the FOFA readiness programs initiated by dealer groups and licensees are hitting the mark and that the mindset of advisers has shifted from one of ‘how do I comply with this?’, to one of ‘how can I use this as an opportunity to improve my business?’” said Mr Kewin.

“We are probably also starting to see the shoots of recovery in investment markets and this is helping make advisers feel more positive overall.”

When asked how long the positive trend in the index was likely to continue, Mr Kewin noted that local economic conditions could have a bigger short term impact on advisers than other factors such as regulatory changes or the looming federal election.

“Ironically while the tide seems to be turning overseas, locally we are getting mixed signals about consumer spending and so there’s no doubt that the resilience for which advisers are famed will be put to the test. But this isn’t new news, so for them to be feeling up-beat against this backdrop shows they are up for the challenge,” said Mr Kewin.

Conducted by Beaton Research & Consulting, the survey questioned more than 200 advisers actively writing life risk insurance. Respondents were asked to indicate their sentiment across five key areas, using a seven-point scale ranging from ‘extremely negative’ to ‘extremely positive’.

The overall sentiment score for December 2012 was calculated as 4.89 out of seven, up from 4.40 in June 2012.  Other findings included:

• Consumer demand for advised life insurance: 4.78 (5% improvement from June)
• Advisers’ current sales volume: 4.98 (11% improvement)
• Current regulatory environment 3.56 (17% improvement)
• Likely sales volume for next quarter; 5.21 (8.7% improvement)
• The long term viability of their practice 5.90 (14% improvement)

John Morrow, from Beaton Research + Consulting, noted that whilst two factors in particular drove the quantum of the improvement, it was pleasing to observe a positive movement across all criteria measured, suggesting advisers are feeling better about the immediate environment as well as the longer term.