Tim Bailey

The nature of work continues to evolve, with technology creating more opportunities for self employment and ‘gig work’, and movement between jobs, industries and locations becoming more commonplace.

However, this increase in flexibility has come at a cost, with workers prone to more gaps when it comes to job and income security. At the same time, mechanisms that have previously provided safety nets and financial protection have failed to evolve at the same rate, leaving employers, insurers and governments with significant challenges if they are to adapt to the new world.

A landmark global study by Zurich Insurance Group (Zurich) and the Smith School of Enterprise and Environment at the University of Oxford has identified the groups most vulnerable to this changing work environment, examining their concerns across a range of related topics, including the perceived impact of technology on their jobs, their financial anxieties, and their knowledge and understanding of insurance protections.

The headline findings of the research, conducted across 17,000 respondents in 15 economies including Australia, include the extent to which inadequate retirement savings is a global concern (even amongst millennials), and the vulnerability of women to the changing nature of work due to their (self reported) lower mobility and flexibility.

The Australian component of the research saw more than 1,000 working age Australians surveyed, and revealed some key differences from the global results:

• Australians are amongst the least concerned that they will lose their jobs to technology
• They are amongst the most likely to become a freelance or self-employed worker in the near future
• They are relatively better savers; and
• Australian blue collar workers are more likely to have life insurance protection in place.

Commenting on the release of the survey findings, Mr. Tim Bailey, CEO of Zurich’s Australian Life & Investments business, said that the findings showed financial conservatism is common even amongst younger age groups.

“People of all ages are clearly worried about how to maintain their living standards when they retire”, he said.

“Whether you are 20 or 50, getting your retirement savings right is paramount; Coming at a time when the way we work is rapidly changing, the study is a valuable contribution to the broader debate about jobs and financial security and the policies that can help us respond effectively”, said Bailey.

The results also provide a timely reminder of the role of life insurance in optimizing retirement savings, a point often lost during the ongoing discussions about group life and member best interests.

“The policy basis for life insurance being such an important part of the superannuation system is the role it plays in mitigating any interruption to a person’ income stream – and ability to save – because of illness or injury”, said Mr. Bailey.

“That basis is as relevant today as it was in 1992 when the superannuation system was created.”

Global findings

• Having too little saved for a comfortable retirement is the top financial worry. Across most countries and even age groups, almost half nominated this as their main concern, ahead of paying monthly bills;
• Women are more vulnerable to changes in the working environment. They were significantly less likely to supervise others, they were less positive about the impact of technology on their job and future prospects and they showed less willingness/ability to change jobs and locations. They were also less knowledgeable about insurance protection options;
• Millennials show strong financial conservatism. Around two thirds of them reported saving income. And around a third nominated retirement savings as their main financial concern (roughly the same as those nominating monthly bills as the priority);
• Job instability is as likely to be voluntary as involuntary. One fifth of respondents think they are likely to lose their job in the next year. An even greater proportion (27%) said they planned to leave their job voluntarily within the same period of time.

The study is part of a major three-year research program with Zurich and University of Oxford (launched in November 2018) exploring ways to ensure more workers are provided with flexible protection and financial support in an increasingly fragmented labour market.

Read the full report, including the Australian results.

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Most Aussies underinsured: Zurich.

Us Aussies are an optimistic bunch, however there’s a big difference between having a relaxed outlook and leaving the important things to chance. Unfortunately this overconfident, ‘bulletproof’ Australian mentality – according to Zurich’s latest research report – is leaving too many of us underinsured.

The Income Protection Gap, conducted in conjunction with Oxford University, uncovers the ways different markets around the world view income protection insurance, the potential risks they believe they face, and how and why they choose (or choose not to) protect their income.

The research has shown that, relative to their global peers, Australians demonstrate limited appetite for income protection, partly due to expectations of government support, such as Centrelink or the NDIS, and partly thanks to an overly-optimistic belief that they were unlikely to need it.

Some of the concerning findings include:

• Only 27 percent own insurance to protect income against liability/disability.
• One third believe the government will pay monthly benefit in case of lost income for 1-5 years.
• Almost one third (29%) have savings that will support then for less than one month in case of income loss; and
• While 44 percent of Australians have experienced some degree of income loss due to sickness or accident, only 27 percent had protected their income, and just 19 percent had a meaningful knowledge of income protection insurance.

It can be argued that Australians’ self-perception as the “the lucky country” should shoulder some of the blame. We boast a high standard of living, a strong sense of social justice and a robust welfare system compared to our neighbours – in fact, about half of all the taxes collected in Australia are directed to social spending[i] .

Reassuringly, the true value of income protection insurance is not completely lost on Australians either, with 57 percent of respondents saying that despite believing they would be eligible for government support, they would prefer to purchase protection from an insurer. However the wide-ranging fallacy remains a concern, particularly for higher income earners who would be unlikely to benefit from any government support due to means testing restrictions.

The good news is that Zurich’s research shows the needle may be shifting, with younger respondents more likely to buy income protection insurance. This may be due in part, to the tightening of government provisions in recent years however there is still a long way to go. This is a problem that that Zurich hopes ‘The Income Protection Gap’, in conjunction with the proactivity of advisers, can help improve.

[i] http://insidestory.org.au/how-fair-is-australias-welfare-state

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Prepared by Zurich Australia Limited ABN 92 000 010 195 AFSLN 232510. This publication is dated 14 April 2016 and is of general nature and does not take into account any personal objectives, situations or needs. This information is a summary for financial advisers only and there are relevant exclusions and conditions that you should consider before making a decision or recommendation about the product. You should refer to the current Zurich Wealth Protection Product Disclosure Statement (PDS). CLYH-011655-2016.

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Paul Kearney

The hunt is on again for the AFA Adviser and Practice of the Year. Now in its fourteenth year, we’re looking to raise the bar even higher, looking for those exceptional advisers whose innovative thinking, customer-centricity, leadership and commitment to higher purpose help take the professionalism of our industry to new heights.

So, as the world gets ready for Rio, it seemed fitting to speak directly to last year’s winning Adviser of the Year, David Reed and Practice of the Year owner, Paul Kearney, to find out exactly what it means to participate in what is becoming regarded as the ‘Olympics of advice’.

First of all, congratulations on your AFA Adviser and Practice of the Year award wins last year. The hunt is now on again for the 2016 finalists, so for any advisers thinking about nominating this year, what advice can you give about the benefits of taking part in the process?

David Reed: The most significant benefit was the process itself. From the beginning, our team was provided the opportunity to reflect upon what our business stood for, what we were doing well, and areas needing improvement.

Taking the time to assess each facet of the client experience, understanding through the Beddoes Institute survey (part of the judging process) how the client viewed our service offering, and then receiving direct feedback from the judging panel on how our results were benchmarked against other practices, were all exceptionally valuable insights we would not have otherwise had the opportunity to get.

Paul Kearney: The AFA Awards process is extremely rigorous and it has been an incredible experience; we’ve learned so much about our clients, our advisers and the way we do business. Whilst it was terrific to ultimately take home the award, the process itself was first-class and we got so much from the experience as a business.

It was clear that the judging panel actually wanted to look deeply at our practice and truly understand how it operates, from all angles – client service, internal process, culture/people management, business lines/structure, financials, risk and governance, our strategic advantage/CVP… the list goes on.

We really commend the AFA and Zurich for investing, both their time and money, in making these awards so rigorous and for creating value for those who go through the process. This investment, particularly in the last three phases of the awards process (the Client Experience Survey, site visits and the Finalist Showcase) was extremely powerful, and in our opinion, lends a great deal of credibility to the award.

Did you pick up any advice, tips or different ways of working from the other finalists during your time together?

DR: Yes, we all certainly had different client value propositions, and different business models. However the common denominator was that each adviser was focused upon continued learning and built their business in a client-centric structure.

PK: Absolutely. There’s always a lot to learn from others. I was particularly intrigued by the way David Reed thinks about the psychological aspect of retirement. He’s clearly thought very deeply about this and has a lot to offer.

One of the nicest surprises about this process was developing friendships and connections with a whole community of new people across the industry, including those at the AFA and Zurich, Adviser of the Year winner David Reed, and of course, with all our fellow finalists.

Will you make (or have you made) changes to your business as a result of the Award process?

DR: We have made incremental changes to the business during this process that resulted in more technology in our business, such as video recording of meetings.

The Client Experience Survey, held during the judging process, showed us that more education offerings were needed, so we have commenced a “Retirement Series” that we will incorporate in our yearly calendar. Ideally, we would like one day to use this education component as a benchmark for clients to attend prior to being accepted as a client. This will ensure that our clients understand clearly our value proposition and how we can assist their retirement aspirations.

Were there any benefits to your staff?

PK: From a business perspective, there’s no doubt that these awards have currency with employees – both current and prospective.  The team is really excited and proud to be recognised because they understand awards like these are truly a team effort.  They see their individual effort echoed in the AFA Practice of the Year award and that’s a very powerful thing.

From a personal perspective, the opportunity to attend the South by Southwest Festival (SXSW) with one of the key members of our practice was incredible. Offering the study tour to SXSW as the prize was a really unique idea – the experience was far more valuable than any cash award.

Finally, from a recruitment perspective, awards like this also assist with brand recognition and credibility as an employer. It’s hard to quantify but anecdotally, such awards certainly play a part in attracting top talent.

How do you believe you can use your newfound role as an advocate for the advice profession for the benefit of other advisers?

DR: Since the awards last year, I’ve had the pleasure of meeting some fantastic advisers across Australia.  There have been 40-year veterans of the profession that I’ve discussed client engagement techniques over a cold beer, to the mentoring of new, entrepreneurial advisers looking at how to build an advice business with an eye towards the future of technology.

I’ve also been fortunate to be in a position to promote the value of advice through a variety of broadcast mediums, including print and radio. Hopefully a consistent, clear message that encourages people to seek financial advice to better their future lifestyle will assist in boosting the profile of our profession.

PK: At Kearney Group, we’re deadly serious about advocacy. We’ve felt for some time, that for financial services to totally “professionalise”, it’s going to require the work of leading practices and leading practitioners.  We love that our role has morphed into one of advocacy for and within our Profession.

Ours is a profession that is built on trust and integrity. Many firms around Australia already live and breathe a client-centric approach to financial advice, their people deeply respect their fiduciary duty, they’re on the front lines and “Imagineering” the future of advice as we speak.

These next few years are going to be crucial. And, whilst we’ve got lots to learn, it’s enormously exciting to be able to help shape what our profession will look like into the future.

Can you describe the Award experience in 3 words?

DR: Exhaustive.  Informative.  Enriching.

PK: It’s hard to pick three, but our top two would be: Rigorous and Rewarding. And then we’d say:

• Best of Breed
• Relationship-focus
• Refreshing
• Elite (but not elitist)
• Exciting
• Insightful
• Thought-provoking
• Year-Defining (without doubt!)

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Prepared by Zurich Australia Limited ABN 92 000 010 195 AFSLN 232510. This article was originally published, 22 June 2016 and is of general nature and does not take into account any personal objectives, situations or needs. This information is a summary for financial advisers only and there are relevant exclusions and conditions that you should consider before making a decision or recommendation about the product. You should refer to the current Zurich Wealth Protection Product Disclosure Statement (PDS). CLYH-011495-2016

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David Reed

Now in its thirteenth year, the AFA Adviser of the Year (and more recently, the Practice of the Year) award is about recognising the best of the best. The award shines a light on those advisers and businesses that are leading the industry through their support for new and innovative ideas, their drive for customer-centricity and commitment to professional excellence.

This year the bar was raised even higher – and the judging process became even tougher – with each and every one of the grand finalists well and truly at the top of their game.

Ultimately, there could only be one winner in each category and, as a proud long-term partner of the AFA Adviser of the Year and Practice of the Year award, Zurich was pleased to announce David Reed and the team from the Kearney Group as the award’s outstanding recipients for 2015.

You may be wondering, in such a tight race, what were their formulas for success? According to Zurich’s judges, Head of Distribution, Kristine Brooks and Head of Sales Research and Strategy, Andy Marshall, the core component of education, experience and contribution were only the tip of the iceberg when it came to this year’s rigorous judging process.

The panel also looked closely at advisers’ use of technology and innovative processes (from initial client contact and throughout the advice relationship), the quality of client engagement materials and techniques, as well as their segmentation philosophies and client feedback processes.

However, as Andy Marshall explains, “A homogenous business structure was not something we were looking for, or even particularly wanted to see, throughout the Adviser and Practice of the Year judging process. In fact, the moment I ever feel like the business model of advisers has moved to a ‘Do you want fries with that?’ conformity, I will certainly hand over my judge’s clipboard.”

“Ultimately, advisers need to remember that the Adviser and Practice of the Year award is not just about rewarding greatness – it’s also about celebrating diversity.”

Head of Distribution, Kristine Brooks agrees, saying “The underlying elements within each of this year’s finalist’s business were all unique in their own way, however for advisers aspiring to follow in the footsteps of David Reed and the team at the Kearney Group and potentially take out the AFA Adviser or Practice of the Year award in 2016, there were four simple areas that this year’s winners not only shared, but made a primary focus within their businesses.”

1. Vision

Having a defined vision is a way of articulating your business’s goals, ambitions, beliefs and values – not just for yourself but also for your clients. An example of a defined vision from one of this year’s winners provides “…individually tailored client-centred care that enriches the business ventures and personal lives of our clients by appropriately positioning and protecting what they have today, planning for what they want in their future and preparing the path by which they’ll reach their goals.”

In one statement they have defined what they do for clients and how they do it well. This is so important because, without a defined vision, it’s difficult to align your business goals with your clients’ life goals. Articulating your direction and convictions in a clear vision establishes a fixed point to aim towards – especially in more challenging times. Think of your vision as a “beacon” that guides you and your business forward.

2. Customers

By understanding who their customers are, Australia’s leading advisers and advice businesses set in place the foundation stones for client loyalty. Having this level of understanding of what makes a client tick is no accident. It is delivered by advisers through regular, meticulous questioning of clients that goes well beyond the standard fact find.

Examples from the 2015 AFA Adviser and Practice of the Year award winners include:

• Providing value-adds to enhance the client journey. This could be an iPad mini as a gift to a client at the 90-day post-implementation meeting, or a compendium to help get clients organised.
• Making a client feel at home. This includes all staff knowing the client’s name and back story, having images and other client stories that are relatable so the client can picture themselves in a similarly successful situation, and using new technologies such as live chat, skype, client portals to make the process as easy as possible for their client.
• Creating ‘fan bases’ on social media such as Facebook groups, to strengthen their brand as well as provide their clients with an additional layer of trust and assurance that comes from being ‘peer-reviewed’.
• Creating opportunities for clients to share and learn from each other. This may be at community events or learning seminars.

3. Process

Mandatory processes around internal workflows are par for the course but a measured and well-designed client-engagement process drives satisfaction, which in turn drives loyalty and advocacy.

Considerable time and effort has been put in by this year’s winning advisers to create effective processes around how they will deliver client-engagement and develop their advice strategy. For example, each client has been allocated a scorecard, individual diagnostics, benchmarks, ‘what if’ scenarios, and transparent rules of engagement (portfolio decisions on top-ups, documented redraws, defined sum insured levels).

The key ingredient is that any process is developed by putting customer understanding and efficiency in delivering customer-focused advice outcomes at the heart of everything they do.

A scorecard for a client that was developed by one of this year’s finalists on aspects of wealth included everything from income needed, legacy wishes, recreational reserves, to satisfaction with life. What this shows is that the adviser recognises the relationship goes far beyond money, and in doing so, can guide a client into a wealth of different (and often deeper) conversations about their approach to retirement. Without this process, the “how” of a client’s feelings can be neglected and ultimately lead to poor financial decisions.

4. Learning

Education and self-improvement is very much front and centre for advisers, especially in the wake of the recent debate about adviser training standards. That’s why our winning advisers have also created scorecards for their advisers and staff.

While this method varies from adviser to adviser and practice to practice, the common denominator was that they all this year’s finalists (including the winners) have adviser and staff development plans in place and they are diligently enacted. This method not only puts the quality and consistency of staff education front and centre, it also helps practice owners recognise their own value and their impact on the business as a whole.

Development plans for the 2015 AFA Adviser and Practice of the Year were all designed with the defined vision of their business in mind – a vision which was in turn, designed with the customer in mind. Quite simply, the development plans were all about delivering better client experiences and deeper client engagement.

For the everyday adviser, this could be achieved through technical expertise development, systems training, client psychology courses, social media training, public speaking opportunities, or even coffee making (because there’s no point having a coffee machine in the office if no one can use it). In fact, one practice finalist delivered barista training to all staff – no chance of a bad coffee in this business!

These are all simple, practical focus areas any advice business can enact to take their business from zero to hero. They each deliver satisfaction, trust, loyalty and advocacy, with net promoter scores above 80 and adviser trust scores in the 90s. How do we know? We’ve measured it!

Since 2012, Zurich has also produced four whitepapers in conjunction with the AFA and the Beddoes Institute. Our first whitepaper, Pathways to Excellence highlights how Australia’s leading advisers are building successful and sustainable businesses, the second, The Trusted Adviser explores how they are building long lasting and trusted relationships with their clients, and more recently our Connecting with Clients and Connected Convenience whitepapers dig deep into the client service proposition, looking at different communication needs across generations – including some surprising insights on social media and mobile device usage.

The range of whitepapers are a must-read for advisers serious about building an award-winning business, and are available exclusively from Zurich on 1800 252 650.

Important Information: The content of this publication are the opinions of the writer and is intended as general information only which does not take into account the personal investment objectives, financial situation or needs of any person. It is dated October 2015, is given in good faith and is derived from sources believed to be accurate as at this date, which may be subject to change. It should not be considered to be a comprehensive statement on any matter and should not be relied on as such. Neither Zurich Australia Limited ABN 92 000 010 195 AFSL 232510, nor Zurich Investment Management Limited ABN 56 063 278 400 AFSL 232511 of 5 Blue Street North Sydney NSW 2060, nor any of its related entities, employees or directors (Zurich) give any warranty of reliability or accuracy nor accept any responsibility arising in any way including by reason of negligence for errors and omissions. Zurich recommends investors seek advice from appropriately qualified financial advisers. Zurich and its related entities receive remuneration such as fees, charges and premiums for the financial products which they issue. Details of these payments can be found in the relevant fund Product Disclosure Statement. No part of this document may be reproduced without prior written permission from Zurich. CLYH-010705-2015

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