Planners are from Mars, riskies are from Venus

I know an experienced financial planner, with a masters in financial planning, including CFP training, who employs the services of another financial planner for his own financial advice.

“What a fool!” you might think. Well, that fool would be me. You see, I am a risk adviser whose sole professional focus has been risk advice.

The terms MDA, CSHC and TTR are familiar to me but don’t ask me to explain them (let alone advise on them). IP, TPD and BE on the other hand is what I live and breathe. Not just the general product categories, but the policy intricacies, structural options and ultimate claim-ability.

As a ‘riskie’, I am obsessed with the underwriting process. Does a tubular adenoma always result in a bowel cancer exclusion? Can someone working 19 hours a week get income protection? Can my 61-year-old client get trauma cover?

Claims management is another obsession. Does a degenerative illness like MS allow for a total disability claim without the client having been totally disabled throughout the waiting period? Should my client receive a terminal illness benefit today or allow his estate to receive the proceeds of a death benefit?

Just like riskies who dabble in a bit of super, how good will the advice outcomes generally be for planners' clients whose advisers dabble in risk?

Of course, the planner that my wife and I engage is licensed to give risk advice, even if that is not her area of expertise. If I wasn't in the privileged position of being able to self-advise in this area, I would engage a risk insurance specialist. It’s not only that I have Type 1 diabetes (which presents a range of underwriting issues itself); it’s about the comfort of having someone with ‘risk influence’ in my corner if and when called upon – particularly at the time of claim.

So why do I pay for financial advice? I recognise that the required skills and expertise are beyond my current abilities. I trust that my adviser really knows what she is doing and is with my family and me for the long-haul.

It is time to challenge the assumption that being a financial planner qualifies you to be expert enough to give risk advice. If Corporations Law required all advisers to give general insurance advice, would another unit of DFP really ensure that we were up to the task?

How many planners currently scope out risk or do it with moderate enthusiasm? And when tackling risk, how many find they become frustrated and bogged down in a never-ending quagmire, determining the most appropriate product, the most appropriate insurer and ownership structure – not to mention processing applications, underwriting issues, revised terms, repositioning recommendations and loadings or the disappointment of being declined?

The relationships risk specialists have with underwriters are so vitally important in securing the most beneficial outcomes for clients.

This presents a strong case for financial planners and risk specialists to work together. This is an opinion shared by financial planning doyen, John Hewison: “I can see significant client benefits in professionals working together. Rather than trying to be everything to everyone, we use external risk specialists to better meet our clients' needs."

To put this in medical terms, a GP will consult with patients in need of specialist services on a daily basis. Does she refer them on or do it herself?

Our duty of care obliges us to recognise the limits of our expertise and ensure our clients are ably assisted by professionals in their respective fields.

Financial planners and risk advisers manage distinctly different risks using distinctly different skill sets.

Aaron Zelman is a risk adviser and principal of MediBroker