Catherine Robson

A survey by Australia’s largest life insurer TAL has found that women rate a good job as the key to feeling financially secure.

The survey asked what made women feel financially secure and a ‘good and secure job’ came in at number one for 52% of women. Despite Australian’s love affair with the property market, less than one third of female respondents (32%) said owning a home was most important. This was ahead of a savings plan at 7%, having superannuation of at least $100,000 at 3% and financial protection via the various forms of life insurance at 2%. Five per cent did not know what was important.

TAL Life CEO Brett Clark said: “It is concerning, but perhaps not surprising that financial protection came in so low.  There are many broader studies pointing to low consumer awareness of insurance and financial protection.  It is also well recognised that the ability to earn an ongoing income is often an individual’s single largest asset. If your income stops through injury or illness and you don’t have any financial protection, then that can be catastrophic for individuals and families.?”

He said it is important for all Australians, women and men, to focus on all aspects of their financial situation as part of working towards feeling financially secure. “It is comforting to know women see their ability to earn an income as their most important asset but protecting that asset is the vital next step.”

Mr Clark also said there was quite a long way to go to ensure greater awareness and greater access to advice for women and address the challenges experienced by women when it comes to seeking financial advice. That is why both TAL and the Association of Financial Advisers (AFA) initiated the Female Excellence in Advice Award, which is currently seeking nominations.

Catherine Robson, winner of the AFA 2013 Female Excellence in Advice Award and founder of financial advisory firm Affinity Private, urged women to protect what they themselves see as one of their biggest assets. “The research shows that women have rightly identified employment income as an essential prerequisite to financial independence,” she said. “Most women I meet also recognise the importance of their income for their loved ones and carry a level of anxiety about what would happen if they were unable to work. I am proud that the financial advice industry, through the AFA Female Excellence in Advice Award and other initiatives, is encouraging talented advisers to help women turn that lingering anxiety into positive actions to preserve their independence and protect the ones they love.”

The AFA Female Excellence in Advice Award draws attention to the achievements of women in the financial advice profession and the valuable work they do in the community to deliver better financial outcomes for more women.

“The AFA Female Excellence in Advice Award contributes to the diversity debate by recognising the contributions of female financial advisers to the profession, community and the lives of consumers,” he said. “TAL believes that greater representation by women in financial advice is critical to ensure the advice profession properly mirrors community diversity and to help empower women to take more control of their financial future.

Nominations for the 2014 winner of the AFA Female Excellence in Advice Award close 8 August and the winner will be announced at the AFA National Conference on 14 October. Macquarie Graduate School of Management is offering this year’s AFA Female Excellence in Advice Award winner a full scholarship (valued at $12,000) to complete either a Postgraduate Certificate in Management or an Executive Education Leadership Development Program. All semi-finalists will have the opportunity to participate in a Leadership Master Class as part of the Award Program.

Most important in feeling financially secure – females

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Penny Coates

Australia’s largest life insurer TAL has become a signatory to the Australasian Consensus Statement on the Health Benefits of Work.

TAL Chief Customer Service and Operations Officer Penny Coates said: “TAL believes very strongly in supporting customers to return to health so they can get back on their feet and get on with their lives.

“Our own experience shows that when people return to work sooner rather than later that it promotes recovery and helps restore self-esteem and a sense of worth after being struck down by injury or illness.”

The Australasian Faculty of Occupational and Environmental Medicine of The Royal Australasian College of Physicians (RACP) released the Consensus Statement on the Health Benefits of Work to bring together a wide range of stakeholders to affirm the importance of work as being good for health and wellbeing.

Ms Coates said: “TAL is here for our customers and their families in times of illness and injury. We understand we can also make a difference in the wider community by supporting programs that help people live healthier and better lives.

“At those times when our customers have to claim, our priority is to work with them and assist them to return to health and work where we can. In some cases we organise rehabilitation programs for customers and even help in workplace retraining.”

Ms Coates said life insurers like TAL are working much closer with the medical profession and, in many cases, a customer’s place of employment, when managing a claim to help the recovery process and pave the way for a return to work and a normal life.

The Health Benefits of Work Statement was launched in March 2011.  It followed some work done by the Faculty which looked at the relationship between health, wellbeing and work both in Australia and internationally including the impacts of being out of work.

The Faculty found that being out of work for a period of time can in itself become one of the major barriers to returning to a normal life. If a person is off work for:

• 20 days, the chance of ever getting back to work is 70%
• 45 days, the chance of ever getting back to work is 50%
• 70 days, the chance of ever getting back to work is 35%.

The Statement says: “Realising the health benefits of work for all Australians requires a paradigm shift in thinking and practice. It necessitates cooperation between many stakeholders, including government, employers, unions, insurance companies, legal practitioners, advocacy groups, and the medical, nursing and allied health professions.”

Background on the benefits of return to health and work and role TAL is playing to help its customers get back on their feet can be found on TAL’s A Voice for Life consumer information portal. Below are three case studies in relation to TAL’s return to health and work program:

Case study 1

Mr H, 54 years old, was a General Practitioner Doctor and had been on income protection claim for many months having suffered from diabetic-related symptoms on his leg. TAL arranged and paid for rehabilitation over an extended period, supporting both Mr H and the rehab provider during this time. He returned to work full-time as a result.

Case study 2

Mr G, a courier driver, had been on income claim for an extended period due to Hodgkin lymphoma. He underwent chemotherapy and while it was accepted he would be on claim long term, he revealed he was determined to get better and return to work one day. TAL actively supported Mr G during this time with a rehabilitation program which included participating in a job seeking service. Mr G returned to work full time.

Case study 3

A 28 year old office worker was suffering from chronic pain due to a broken wrist and nerve damage. She was unable to carry out her job due to the inability to type for long periods of time. TAL arranged rehabilitation services and a graduated return to work plan. TAL purchased voice activated software to assist and the customer eventually returned to full employment.

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Experienced non-executive director and former insurance executive Duncan Boyle and long-standing Dai-ichi Life group senior executive Norimitsu Kawahara yesterday formally became TAL Board directors.

Dai-ichi Life senior executive Tatsusaburo Yamamoto has stepped down as a director to take up a new role in Tokyo within the Dai-ichi Life group.

Mr Thomas said: “I welcome both Mr Boyle and Mr Kawahara to the board of Australia’s largest life insurance company, and would like to thank Mr Yamamoto for his valuable service since 2012.

“As TAL has continued to grow its business in Australia, the new appointments help us renew the skillset on the Board as TAL works hard to provide financial protection to even more Australians as the nation’s largest life insurer.”

Mr Boyle served as the CEO of the UK operations of Royal and Sun Alliance Insurance (RSA) from 2002 to 2006 following over 30 years’ experience in the insurance industry in Australia, New Zealand and the UK.

He has been an independent non‑executive director of QBE since 2006 and is a director of Clayton Utz lawyers and Stockland Trust Group.

Mr Kawahara has worked for over 28 years in the Dai-ichi Life group, one of the world’s largest life insurance and wealth management businesses with operations and interests on all continents.

He is currently responsible for Dai-ichi Life’s business in the Asia Pacific region as the Managing Director of Dai-ichi Life International (Asia Pacific), and has been Deputy CEO and CFO of the Star Union Dai-ichi Life Insurance Company in India before.

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The average age a person discontinues one or more of three types of living insurance policies – cover for disability, critical illness/trauma and income protection – is 45 years yet the average age for a claim is 46.5 years.

This analysis for the 12 months to September 2013 for advised policies of living insurance* does not include traditional life insurance where a lump sum is paid upon death.

TAL Group CEO Jim Minto said the figures were disturbing because they demonstrated how these customers who stopped their policies were statistically doing so at the time when they were most likely to need financial protection.

“We know that cost of living pressures are continuing to force people to rethink their domestic budgets but it is very unfortunate that those people who stop their policies for this reason do not see financial protection as essential for themselves and their families,” Mr Minto said.

“Basically, those people are betting that statistical averages will not apply to them so they can use the saved money for some other part of the household budget.

“A family’s future income is their most important asset. If that income stops due to accident or ill-health it can be devastating for a family both financially and emotionally in terms of lifestyle changes that may have to be made.”

The average age a person takes up living insurance is 37.5 years, which means that the average lapse or discontinuance is 7.5 years later at 45 years of age and the average claim is made nine years later at 46.5 years of age.

Additional analysis of income protection only shows that half of all current claims for that category are made within 24 months of the policy being taken out (1 in 2), compared to a claim rate of 40% two years ago (2 in 5).

And, incredibly, the time between taking out income protection and making a claim is now 1.25 years shorter than it was just two years ago, reducing from almost 6 years to 4.7 years.

Mr Minto said this new analysis underlines the industry trend for people to increasingly claim on their life insurance products, with TAL’s own total claim payout figure rising 45% last year to $843 million.

“The increasing rate of life insurance payouts being made is really good news because it demonstrates the value and need of life insurance in protecting customers and their families when they most need it but I do worry about those who stop their policies when they are most likely to need it,” Mr Minto said.

“Life insurance provides peace of mind, helping people sleep better at night, but there is a tangible benefit with claim payments helping people not only protect the life they have created but the one they have dreamed of for the future.”

* Advised policies of living insurance make up the following types of insurance sold through the financial adviser channel: disability – lump sum upon permanent and total disability; critical illness/trauma – lump sum upon medical event such as heart attack; and income protection – regular income payment upon defined illness/disability.

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Jim Minto

Consumer research into the financial behaviour of Australians has found that an equivalent of 300,000 married and de facto couples admit having secret bank accounts without the knowledge of their partner.

The research conducted by TAL Life Insurance found that while 66% of couples have joint bank accounts, a large percentage also have their own independent finances with many having secret stashes.

A total of 45% of married/de facto people have a bank account to which their partner has no access (36% married but 71% of de facto couples) and 3% have accounts that their partners are not even aware of.

While the average amount held in these secret accounts is $30,000 – $37,700 for males and $22,300 for females – 11% have more than $100,000, 13% contain between $50,000 and $99,999, one in four have $50,000, and for 39% the amount is less than $5000.

TAL Group CEO Jim Minto said he was surprised so many people had secret accounts, with one out of five people saying they maintained these covert accounts as a safety-net in case something happened.

“While we may not know the precise motivation behind all these secret bank accounts, such accounts are no substitute for proper financial protection in the event one’s income suddenly stopped for good or for an extended period as a result of illness,” Mr Minto said.

“We know that people have their own financial goals, or that their attitudes to money might not always be compatible with their partner, so there can be some very good reasons for keeping money and life insurance protection separate.

“But for life insurance planning a shared approach can make a lot of sense when there are joint debts such as mortgages and other shared responsibilities such as children. Ensuring the family has the right amount of cover is very important, and a financial adviser is a great place to start.”

Other key findings:

Table 1: Types of bank accounts couples have

Table 2: Reasons for secret bank account or partner does not have access

• Baby boomers (those aged over 50 years) are more likely to be keeping their secret stash in case something happens – 30% report this as being the main reason compared to 15% of other age groups.
• While the average balance of a secret account is $30,000, Aussies are stashing $18,400 in accounts their partners do not have access to but know about.   Men averaged a balance of $21,100 in these accounts versus $16,600 for women.
• Of the separate but known accounts, 8% or the equivalent of 303,000 people have more than $100,000.

Mr Minto concluded: “We really encourage people to research and consider their risks and protection needs. For example a professional financial adviser can help a couple come to an agreed view about how they can best plan financially for the unexpected.”

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Money origami 1.

Housed in the TAL building at 363 George Street, Sydney, an origami display, made out of Australian currency, has been put together by Australia’s specialist life insurer, TAL, as part of MoneySmart Week to illustrate that it’s not how much money we have, it’s what we do with it that matters.

The origami display was a great way to engage staff and others about the importance of being money smart.

As a Money Smart Week sponsor, we wanted to do something to help raise awareness of financial literacy as well as awareness of what we are passionate about, financial protection.

Money origami 2.

With the tagline “It’s not what you’ve got , it’s what you do with it” we thought the origami with paper money was a nice tie-in to the overall theme.

TAL’s own Dai-ichi Life Liaison Executive Toru Nagashima dusted off the origami cob-webs and joined our origami artist in doing some paper folding. He produced an exquisite crane (bird). There were many onlookers and the CEO of TAL Direct John Hoyle also joined in the fun.

Click here to read more about the display.

Toru Nagashima

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‘Armchair’ views on the economy.

Australia’s army of armchair economists will need reassurance from the incoming Government as new research released today finds only 25% of Aussies feel optimistic about their household finances when considering the state of Australia’s economy.

The research, commissioned by Australia’s leading specialist life insurer TAL for financial literacy campaign MoneySmart Week, found 28% of people are pessimistic about the state of their finances based on their knowledge of the economy.

The vast majority of all Australians (87%) admit to having taken serious steps to take better control of their money, with a surprising 32% having reduced their spending on food and groceries (40% for lower income families), 21% setting a firm budget for groceries and 51% cutting back spending on incidentals and luxuries.

TAL Group CEO Jim Minto said: “The results show people have been examining their financial products and services to ensure their current needs are being met as well as reducing their debt levels. Financial security concerns are actually resulting in people being more engaged with their financials needs, which is a habit we hope will stick.”

The TAL-sponsored MoneySmart Week survey found that 29% of people have shopped around for better and less expensive financial products, 28% have completely paid off their credit cards and 21% have paid down some of their mortgage. Women seem to be more affected than men, cutting back much more on spending across most categories and just “making do”.

“People are looking to secure their financial wellbeing. Saving and cutting back on spending are natural in times of uncertainty, but most Australians do not have adequate financial protection in case they couldn’t work again and their income stopped,” Mr Minto said.

“Life insurance is one of the least understood financial products yet it is also one of the most important. MoneySmart Week is about equipping Australians with the knowledge to make better decisions about building and protecting their financial wellbeing. There is a long way to go in educating people about being money smart because Australia has a staggering $10.6 trillion underinsurance gap.

The TAL research also examined financial concerns over the next 12 months and found that 50% were concerned about the rising cost of living, almost four in ten Australians (39%) were concerned about their ability to increase their savings or secure their future, and 36% were worried about their ability to pay their everyday household bills.  The latter figure rises to 55% amongst low income households earning under $40k per year. And women report a higher level of concern across key categories.

“This does make for worrying news but the fact that so many people have taken stock of their financial situation over the last two years will no doubt mean they are better prepared to face the next 12 months,” Mr Minto said. “That women report higher levels of cut-backs and concerns than men probably indicates the key role they play in family units.”

Other key findings from the research:

Economic confidence

• Higher income households are more optimistic about their household finances based on their knowledge of the economy (36% compared to 25% overall).
• Lower income households and South Australians are less likely to be optimistic (20% and 14% respectively).

Steps taken to take control of finances

• Baby boomers are most likely to have paid off their credit card debt (35%) versus 22% of Gen Y.
• Gen X is most likely to have reviewed their financial products and looked for less expensive products (33%).

Top concerns for the next 12 months

• Gen Y is most likely to be concerned with saving for a holiday (33%) – compared to 21% of baby boomers.
• 31% of full time workers say they are concerned about keeping their job.

Mr Minto concluded: “Financial literacy initiatives like MoneySmart Week are essential for helping people to understand that education empowers people to take greater control of their money and this is the key to financial freedom.  Life insurance products like income protection, for example, are possibly one of the least understand products but one of the most beneficial for protecting people’s financial wellbeing.”

Table 1: STEPS TAKEN OVER THE LAST TWO YEARS TO TAKE CONTROL (BY GENDER)

Table 2: TOP CONCERNS FOR THE NEXT 12 MONTHS (BY GENDER)

———-

This survey was undertaken online by Galaxy Research with 1,260 Australians, from the ages of 18–69 years old. Age, gender and region quotas were applied to the same and the dataset was weighted to national proportions.

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2012 AFA’s FEIA award winner, Christine Hornery.

The Association of Financial Advisers (AFA), in conjunction with TAL Life Insurance, is calling for nominations for the 2013 AFA Female Excellence in Advice (FEIA) Award.

With nominations closing 31 July to the profession’s leading award for female financial advisers, there are now less than four weeks remaining for those wanting to nominate a colleague or themselves via the FEIA website.

The aim of the annual award, a joint initiative by the AFA and TAL, is to acknowledge outstanding achievement by female financial planners/advisers, support the provision of financial advice to women in the community, and encourage more women to enter the financial advice profession.

TAL Life CEO Brett Clark said that he was again impressed by the calibre of the nominees received so far and encourages female advisers and their colleagues to seek the recognition and benefits that the award provides.

“Recent studies show that over 90% of women believe they need to be more involved in financial planning, but only 38% are currently using a financial planner. It’s crucial we take steps to bridge the gender gap in our industry,” he said.

“It is critical we create more diversity in corporate Australia and in the broader adviser community. In that way we can reach more Australians on their terms and help people from all sorts of diverse backgrounds secure their financial future. We hope that this award will go some way towards identifying standout advisers and create role models for advisers of the future.”

AFA CEO Brad Fox said that while gender imbalance improvements have been made, greater female participation in the financial advice sector is still needed.

“Financial services would benefit from more women holding leadership positions, and more females taking up financial advice as a career. That’s why the AFA with the support of TAL launched this award in 2011 – it was to be a catalyst; to shine a light on the amazing female adviser talent in Australia; to showcase excellence; to focus attention on how females participate in financial advice and ultimately attract a greater participation level. It has gone a long way already to creating this groundswell of awareness and change.”

Last year’s winner, Christine Hornery, said that the Award had really helped highlight the achievements of female financial planners and given them the confidence to speak out and share their stories.  Potential nominees who would like to hear Christine’s story are encouraged to view it here.

“More women should be encouraged to enter our profession,” Christine said. “It provides excellent opportunities and flexibility, but more importantly it provides rewards in terms of helping others achieve financial security.”

The 2013 winner of the AFA Female Excellence in Advice Award will be announced at the AFA National Conference on 15 October 2013, and will receive a hand crafted trophy, a special certificate and a full scholarship to complete an executive leadership course at the Macquarie School of Management (MGSM) in Sydney.

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