Simple advice is ‘basic customer service’: CALI

The proposed introduction of a new class of advisers has been widely discussed, with varying levels of acceptance and anger from across the advice profession since Financial Services Minister Stephen Jones announced it in December last year as part of the Delivering Better Financial Outcomes (DBFO) reforms.

Although advisers are still waiting on a draft of the tranche two reforms, institutions appear eager to take advantage of this change that will allow them to provide members with simple, personal advice, although this has also been met with some disdain from advisers.

Independent research, commissioned by the Council of Australian Life Insurers (CALI), found that more than 40 per cent of Australians want personalised advice to help them make better financial decisions regarding product purchases.

“Under proposed reforms, this is the kind of advice life insurers would be able to give their customers when they ask for it, at no extra cost to them,” CALI said.

To this end, CALI chief executive Christine Cupitt told ifa that insurers want to utilise the new class of advisers to help bridge the advice gap for Australians that advisers cannot.

“The role life insurers want to play in providing simple advice is very different to the important work of financial advisers in this country. We don’t want to get in their way, we just want to help fill the advice gap for Australians who have simple needs,” Cupitt said.

“This is about providing basic customer service. Australia’s life insurers want to be able to give people simple advice about their own products, at no extra cost to the customer.”

The issue of how the cost of the new class of advisers is covered has become a hot button issue, with reports of clashes between industry stakeholders over the issue.

According to CALI’s research, less than a quarter of Australians report wanting only basic information, highlighting the enduring value of professional financial advisers as well as the role institutions could play in the advice ecosystem.

Cupitt argued that insurers understand the importance of professional advisers, but that institutions still have a part to play in meeting their members’ unmet needs.

“We understand that life insurers can’t provide the level of advice that financial advisers do, and that’s not what we’re asking for. What we want is to give Australians more choice when they have simple questions and can’t afford or don’t want a comprehensive financial plan,” she said.

“Of course, for people whose needs are more complex, life insurers will continue to put them in contact with their own adviser if they have one, or a financial planner who can give them more holistic advice.”

Cupitt has consistently been in support of the new class of advisers, arguing that, with so few risk advisers, institutions can play a key role in bridging the underinsurance gap.

“We want to see legislation introduced that allows life insurers to provide simple advice on their own products, when customers ask them to,” Cupitt said in June.

“Of course, this should only happen with appropriate limitations and strong consumer protections.”

She added: “People need someone to talk to. Making these decisions is hard, and they should not have to do it alone.”