Only 185 pure risk advisers left

There are currently less than 600 financial advisers who focus on life insurance in their business, with just 185 pure risk advisers currently operating in Australia, according to the Council of Australian Life Insurers (CALI).

The data on the degree to which life insurance advice has declined from the levels of a decade and a half ago have been revealed in a new report issued by CALI this week and which it has used to underscore its support for the introduction of a new class of financial adviser.

The report analysis said the limited supply of financial advisers “underscores the urgent need for reform to make it easier for advisers to support their clients, and to allow product issuers to provide limited advice to their customers.

“As formal advice becomes harder to access due to accessibility and affordability barriers, working Australians are increasingly turning to informal sources,” it said.

It then listed financial advisers being accessed 47% of the time for advice, followed by family and friends (34%), direct life insurer contact (32%) and superannuation funds (26%)

“While these channels offer convenience, they carry the risk of misinformation and misunderstanding, potentially resulting in underinsurance, or inappropriate cover,” it said.

“The Delivering Better Financial Outcomes reforms are a critical step toward closing Australia’s persistent advice gap. These reforms will make it easier for life insurers to provide simple, personal advice directly to customers about their own products and create a clear pathway for new talent to join our industry.”

The report said its findings had highlighted “a persistent and growing advice gap in life insurance” with many Australians wanting advice about life insurance but not getting it.

“Although more than three in ten working Australians have considered seeking advice about life insurance, less than one in ten have received any advice,” it said. “This puts people at risk of making misinformed decisions and having inadequate coverage, or no coverage at all.”

“People value expert guidance when determining the life insurance they need — financial advisers remain the leading and most trusted source of advice for those who do manage to obtain it. But in the absence of this professional guidance, working Australians are increasingly turning to informal channels including friends and family, social media, and their own online research to fill the advice gap.”