Planners are focusing more on life insurance and expect this to continue over the short term

Recep Peker

The proportion of planners advising on risk has remained steady at 90% over the last 12 months, and those who do are sourcing a greater proportion of their practice revenue from providing risk advice (29%, up from 27% in 2013). Looking forward, planners expect this trend to continue with risk advice accounting for 31% of their practice revenue by 2017.

“Risk continues to be a key component of many planners’ businesses,” said Investment Trends Senior Analyst Recep Peker.  “Providers can help facilitate planners’ intention to grow their risk business by addressing some of planners’ key challenges, chiefly high premiums, administration issues and inefficient processes.”

Planners are expanding the range of insurers they use, but switching remains high

After four years of planners consolidating the number of insurers they use, planners have started to expand the number of insurers they use. The typical planner now uses 3.7 insurers each, up from 3.4 in 2013.

However, levels of insurer switching remains high with 40% of planners saying they stopped using at least one insurer in the last 12 months, up from 35% last year.

“Insurer relationships are in a state of flux,” said Peker. “Planners are aggressively expanding the number of insurers they use, while cutting those who aren’t exceptional. There are great opportunities and risks for insurers to either benefit or lose out from this switching.”

Despite insurer relationships changing rapidly over the last 12 months, it is still crucial to be a planner’s most-used insurance provider. Planners currently write 59% of premiums through their most-used insurance provider.

BT Life, OnePath and AIA Australia posted strong gains in terms of primary market share. The top five insurance providers by number of primary planner relationships are now:

1. OnePath
2. AMP
3. AIA Australia
4. BT Life
5. TAL

“Whilst planners are using a wider range of insurers, the market is also becoming more concentrated,” said Peker. “The top five insurance providers now account for 66% of primary planner relationships, up from 62% last year.”

Zurich and AIA Australia has the highest satisfaction amongst its users

“Satisfaction is crucial in the insurance space, as business is not very sticky and planners can easily stop writing new business with an insurance provider,” said Peker. “That’s why there is a very strong relationship between satisfaction and switching behaviour.”

Planners’ overall satisfaction with their most-used insurance provider remained steady at a high level. The top three insurance providers by overall planner satisfaction in 2014 are:

1. Zurich
2. AIA Australia
3. Asteron Life

Underwriting is a key area in which insurers can differentiate their offerings

Following the tightening of underwriting standards over the last year, we’re seeing the average number of days planners say it takes providers to process underwriting submissions increase from last year’s levels. This has resulted in planners’ satisfaction with underwriting falling slightly at an industry level over the last 12 months.

“The underwriting process is the strongest driver of overall satisfaction with insurers,” said Peker. “So, any falls in satisfaction with the underwriting process is noteworthy.”

“Underwriting is very important for both acquisition and retention, and will be a key battleground for insurance providers over the next year,” said Peker.

45% of planners said insurance providers should focus on improving underwriting speeds to help them with their advice on risk.

Users of XPLAN’s risk modules have the highest levels of overall satisfaction

89% of planners who advise on risk use risk software. XPLAN continues to dominate the risk software space with over half (53%) of planners using XPLAN’s risk modules as their most-used risk software. This is followed by Rubik/COIN (18%) and Midwinter (8%).

At an industry level, planners’ satisfaction with their most-used risk software remained steady at the eleven-year average.

Among risk software providers, XPLAN achieved the highest average overall satisfaction rating from its users and ranked highest across all nine of the other service elements measured.

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The acquisition of Visor, which has a leading position in the independent financial adviser (IFA) financial planning software market, marks an expansion of Rubik’s presence in wealth management.
 
Visor has an established customer base of over 300 independent financial advisors who use its suite of tools and software solutions as part of their financial planning systems.
 
Wayne Wilson, Managing Director Wealth with Rubik, said the acquisition of Visor expands on Rubik’s current advice offering, allowing Rubik to service boutique clients that Macquarie retained in the COIN acquisition in 2012.
 
COIN is an industry leader in financial planning software for financial institutions in Australia due to its client base, breadth of product, dedication to support and innovation.
 
“This acquisition means Rubik will now service the boutique clients that Macquarie retained in the COIN acquisition,” said “Going forward, Rubik will be the sole provider of COIN based solution in the market.
 
“The acquisition adds to Rubik’s strong annuity revenue base, and will result in the generation of more than $3.5m in recurring revenues,” he said.
 
The Visor service is predominantly provided via a hosted offering, which will be transitioned to Rubik, following completion. A transition process has been agreed with Macquarie that will provide service continuity for Visor’s customers.
 
Wayne Wilson, Managing Director Wealth at Rubik, said: “This is a strategic and financially sound acquisition that extends Rubik’s customer base in the growing wealth market. We are looking forward to working with Visor’s staff and customers.”

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Visor is a comprehensive suite of financial planning tools and software solutions for independent or boutique advisers, and is based on Rubik’s COIN financial planning software system that Rubik purchased from Macquarie in 2012.
 
COIN is a respected technology service provider in the Australian financial planning software market with an established client base and leading position in the institutional segment of this market. 
 
As part of the 2012 COIN acquisition agreement, Macquarie continued to service the majority of COIN’s boutique (independent financial advice) clients, under a licence from COIN, with the renamed software Visor.
 
Wayne Wilson, Managing Director Wealth with Rubik Financial said this agreement means Rubik will now service the boutique independent financial advice clients that were retained by Macquarie as part of the COIN Transaction. 
 
This is the third acquisition for Rubik in the wealth management space.
 
“The acquisition of COIN in 2012 expanded Rubik’s wealth offering to the financial institution market and created significant scale across the group,” Mr Wilson said.
 
“The acquisition of market leading scaled and online advice provider, Provisio, announced earlier this year, will place Rubik as a leader in the provision of scaled wealth advice software in the superannuation fund market. This will complement its existing leadership position in the institutional market for comprehensive wealth advice software.
 
“The acquisition of Visor broadens Rubik’s presence into the IFA market, complements the recently announced acquisition of Provisio and means that Rubik is the sole provider of COIN based solutions in the market,” Mr. Wilson said.
 
The transition from Macquarie to Rubik is expected to be seamless with Rubik already providing a hosted service to its institutional customer base and offering roles to Macquarie customer facing staff.
Craig Coleman, Chairman of Rubik, said, “Rubik is a dedicated financial software company, and COIN and Provisio are industry leaders in their respective markets. The acquisition brings to Rubik a strong annuity revenue base and recurrent earnings and provides Rubik with greater scale.
 
“Our initial focus will be on delivering already committed product development programs and preparing our products for changes that flow from the Future of Financial Advice (FoFA) reforms. Beyond this, we will review technology opportunities based on customer feedback and market opportunity, whilst ensuring ongoing support to clients,” Mr. Coleman said.

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