Call to help life/risk advisers pass exam amid “unmitigated disaster” of LIF
The financial adviser exam should be revamped to better accommodate life/risk advisers and those who have failed the existing exam should be allowed another shot at passing, according to the Association of Independently Owned Financial Professionals (AIOFP).
In a wide-ranging message to the Assistant Treasurer and Minister for Financial Services, Stephen Jones the AIOFP has also called for Government legislative intervention to address the damage to the life insurance industry generated by the Life Insurance Framework (LIF).
“LIF is an unmitigated disaster of mammoth proportions,” AIOFP executive director, Peter Johnston said in the message.
“Risk commission not only needs to be maintained but increased to at least 80/20% and the compliance regime mitigated,” the AIOFP message said.
“In addition, risk advisers who left the industry and those who do not qualify under the current bizarre FASEA exam rules should be given an amnesty period to pass a revamped risk orientated Exam format without the nasty ambiguous ‘kill adviser’ theme attached to it.”
“The Government, tax-payers and consumers badly need Risk Advisers back into the market with a profitable business model.”
Referencing the FASEA exam, Johnston said that several members who had recently sat the exam had been totally frustrated by the failure of the ACER IT process making an already stressful process worse.
“Even though ASIC inherited this woeful piece of legislation, they cannot be held responsible for the process, that lies squarely at the feet of the Morrison Government. Former Minister Hume ‘hard wired’ the FASEA legislation making it very difficult for Minister Jones to simply tweak the regulations to avoid the Exam ‘cliff’ deadline, unfortunately it must be passed by both Houses of Parliament.”
Johnston said that high on the AIOFP’s list of issues to be raised with Assistant Treasurer at the organisation’s upcoming Gold Coast conference would be the “removal of the irrelevant and ambiguous questions in the FASEA exam and further Government policy assistance”.
“The risk industry is on its financial knees thanks to a significant drop in retail premiums and consumers now paying substantially more for cover, the exact opposite of what former Minister O’Dywer and her supporters declared would happen,” he said.
“Government policy intervention is the only solution to save the industry and the nation’s future welfare payments.”
“The annual Welfare bill now exceeds $230 billion [excluding NDIS] up from $158 billion in 2016/17, $191.8 billion in 2019/20 and $227.5 billion in 2020/21 [source Government website]. The nation’s growing underinsurance status of over $2 trillion directly impacts welfare payments, it should be noted that LIF commenced in 2015.”
The shortcomings of LIF should not be used as justification to give dimwit former advisers even more extensions and exceptions for the exam.
Just as the broader decline in adviser numbers due to bad regulation, should not be used as justification for product companies to give “advice” that is not in the customer’s best interest.
Fix the problems at source, by fixing LIF and all the other bad regulation that is a deterrent to professional advice. Don’t leave bad regulation in place, and then try to “solve” the problem it causes by giving carve outs to people who shouldn’t be providing advice.
Funny (sort of), isnt it. Common consensus is that ASIC’s (initially well-intentioned) interference with an industry – we called it the Life insurance Industry – has resulted in a vast shortage of Insurance Advisers, and an even vaster under-insured public. And, in consequence, a shrunken insurance industry that now struggles to keep its head above water. Now we are asking how we make the selling of Life and Disability Insurance a viable occupation for a specialist adviser. Yet, we question the earning of commissions! Yet we set academic requirements that grossly exceed the necessary qualifications to advise on what is essentially a pristinely simple concept: “If you die, or cant work, we pay your family some money.”
Maybe the ‘forgotten industry’ of insurance companies employing sales agents needs to be re-visited. It worked!
There is no shortage of life & disability insurance advisers. There are plenty of people who are authorised, trained and experienced in insurance advice, who passed the FASEA exam with ease. But many of them have simply chosen not to provide insurance advice any more. The costs, risks, and income restrictions associated with bad regulation have made insurance advice unviable. There is no need to attract more people into the industry, or to bring back former advisers who don’t have sufficient intellectual capability to pass a simple exam, in spite of multiple attempts over many years. There is a need to fix the bad regulation, so that giving insurance advice becomes viable again for existing insurance advisers.
Firstly the FASEA exam is a croc. Not even allowed to know where you have erred according to them.
Has ended a lot of careers unnecessarily.
Secondly the method by the cartel via the Trowbridge report to cut commissions enabled them to shoot themselves in the foot.
Did the insurers having saved on commissions pass that saving onto the consumer? Of course not.
Some of the Life Companies today are now ANTI ADVISER looking to handle their sales internally.
Many life advisers think that sales in the smaller premium area is unprofitable, so will ignore.
What a mess and nobody seems to have the integrity to alleviate the problem.