LIF pulse check research: advisers already ‘future proofing’

Kristine Brooks

Almost two thirds of advisers consider themselves prepared for the next year’s Life Insurance Framework (LIF) changes, with most of their efforts to this point focused around efficiency opportunities and understanding business cost structures.

These are the headline findings of a new LIF pulse check survey of 202 advisers, commissioned by Zurich as part of its ongoing engagement with advisers around the changes. Conducted by Lewers Research, the survey – the first to be published since the recently announced LIF transition delay – is intended to shine a light on the activities undertaken by advisers in the lead up to the introduction of the Framework in July 2016.

In addition to asking advisers to self-assess their level of preparation for the reforms, the survey also examined advice charging intentions post transition, the activities advisers have undertaken as part of their preparation and the main sources of support they have received.

Overall, 61.4 percent of respondents rated themselves as ‘prepared’ or ‘totally prepared’ for the LIF reforms, with only 12.4 percent rating themselves ‘unprepared’.

Unsurprisingly, efficiency and business cost structures have been the main areas of focus for advisers seeking to position themselves for the new framework, as indicated by 38.1 percent and 35.6 percent of advisers respectively. 27 percent of respondents said they had explored new service offerings and 17.4 percent said they had re-engineered their processes.
30 percent of respondents indicated they had done nothing to prepare.

When asked about charging intentions, more than one third of advisers said they would supplement risk commissions with fees, with approximately half of those expecting to implement such an approach once the proposed 60/20 commission cap became effective.

Head of Retail Distribution for Zurich’s Life and Investments business, Ms. Kristine Brooks, said insurers needed to support advisers, with products that are sustainably designed and priced, with services that allow advisers to operate more efficiently, and with resources that allow a more contemporary style of customer engagement.

Licensees and life insurers were rated highest for the LIF support they had provided advisers, with 43 percent rating their licensee support as good or excellent and 40 percent saying the same of their main insurer.

Following extensive consultation with financial advisers, Zurich recently unveiled its own support for advisers would be channeled into five key pillars:

• Product innovation
• Efficiency
• Business management and marketing
• Customer care and advocacy
• Best practice sharing

“Advisers are putting every aspect of their business under the microscope, questioning everything from their cost structures, their target clients and their broader value proposition,” said Ms. Brooks.

“This process will not only help advisers ‘future proof’ their practices, it will ultimately allow them to deliver better outcomes for their clients, as they turn to technology to not only drive more efficiency but to also deliver a customer experience which is more engaging, more consistent and more interactive.

“The more customers understand and interact with the advice they have been given, the more likely they are to be advocates for that advice; that will ultimately be the most exciting outcome of the steps advisers are now taking,” she said.