Key findings of the Investment Trends 2016 Planner Risk Report
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King Loong Cho
Proposed LIF reforms hit planners’ revenue from risk advice
- Insurers must solidify planner relationships: Half stopped using an insurer in the last year
- BT Life achieved the highest user satisfaction among insurers
The Investment Trends 2016 Planner Risk Report is an in-depth study of Australian financial planners’ use of life insurance. The study is based on a survey of 620 financial planners concluded in June 2016. This study highlights a number of interesting trends:
Proposed LIF reforms hit planners’ revenue from risk advice
While the commencement date for the proposed Life Insurance Framework (LIF) remains unclear, many planners have already begun adjusting their business models in anticipation of the reforms. The average planner has seen risk advice fall from 35% of their total practice revenue in 2015 to just 28%, the lowest since 2013. A number of planners have even stopped providing risk advice altogether, with 12% not writing any new risk business in the last year, up from 10% in the previous study.
“The LIF reforms are already testing the business models of financial planners across Australia,” said Investment Trends Senior Analyst King Loong Choi. “Not only are they already reporting a fall in risk business, more than two in five planners expect their practice’s profitability to decline if the LIF reforms are implemented.”
The research shows that if the LIF reforms are implemented, planners will look to provide insurance advice as part of a broader holistic package more often, charge more for holistic advice and focus more on higher balance clients.
“This shift is already underway, and planners intend to continue adjusting their business models in this way if the reforms are implemented,” said Choi.
Insurers must solidify planner relationships: Half stopped using an insurer in the last year
Retention is growing in importance with half of planners saying they stopped writing new insurance business with at least one insurer in the last year.
Insurers need to actively promote the competitiveness of their offerings as the top reason planners switch insurers is because they found a better deal elsewhere for their clients.
“The recent media scrutiny has triggered planners to demonstrate they are picking the best insurers for their clients,” said Choi. “In addition, insurers need to grow their brand awareness among consumers because it is easier for planner to recommend an insurer if the client has already heard of them.”
Insurers can improve retention and reduce attrition by being responsive to planners’ needs and keeping them satisfied. Some of the opportunities for differentiation include addressing any inefficiencies in the application process, providing planners with great support and improving their brand image among consumers.
“There are great opportunities for insurers to benefit from switching activity, but they also need to be careful to not lose out from this.”
BT Life achieved the highest user satisfaction among insurers
OnePath continues to lead the life insurance market by share of planner relationships. AIA Australia, BT Life and TAL saw increases in primary market share over the last year by delivering on the areas that are growing in importance to planners when selecting an insurer.
BT Life received the Investment Trends 2016 Overall Satisfaction – Insurer Award, having achieved the highest user satisfaction score in this year’s study. The top three life insurers by user satisfaction are:
- BT Life
- AIA Australia
- TAL