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The lost advisers

No, they're not hiding, but they have been left out of much of the general discussion on the regulation changes coming.

Monday, September 10th 2018, 8:00AM 1 Comment

by Jon-Paul Hale

Jon-Paul Hale

The life industry is front and centre with the mortgage brokers a close second. The AFA’s are out to the side rolling their eyes’s going ’we’re probably ok, but more change and regulation we have to contend with.’

And the general insurance broker is pretty much unheard from. Well up until recently, I’ve had a few discussions with general brokers more recently. Also, they are concerned about the impact that's coming.

In the last round of changes, fortunately, I was out of the country and skipped the tail end of it. However, from that it seems the general insurance industry is split into two camps:

  • Those that are still trading how they were in 2010 and
  • The minority that are trading more like the life and mortgage advisers, closer to the AFA mark. However, they're also few and far between.

This seems to be for a number of reasons, some of which has been the lack of industry association push that the life and mortgage advisers have benefited from. So it means for many general insurance brokers the gap between their current practice and the new expectation coming is quite large.

Though looking at what I have seen and what is working well, it is not necessarily going to be as tough as people think to lift the bar on the general side. The advantage is the advice driver here is customer driven and event-based not necessarily cold call sales. Your client limits the advice in the first 30 seconds most of the time.

Which makes for a more limited advice structure than what a life or mortgage adviser is likely to encounter.

I’ve talked six-step process for everyone and had a bit of flack about it.

What I'm talking about is the basic process, not the prescribed over-bloated financial planning 50 page SOA taking into account the possible impact of great aunty Flow’s bequest that may or may not help you pay for young Johnnys private schooling.

I'm talking the basics of ensuring your advice and product selection fits the client need.

For example, a typical client inquiry might be "I’ve brought a new car and need car insurance." (specific scope)

  1. Establish the relationship. Define scope, are we just looking at your car or do you want to review other covers while we are here? Just the car thanks.
  2. Gather data. So who am I speaking to? What's your DOB, gender, where do you live, how do I contact you, and what's the car going to be used for? Any sideline businesses, is it garaged, what sort of kms do you expect to do?
  3. Analyse and evaluate. You know your products, you have an idea on what's going to suit best. Only outlier situations are going to require you to do in-depth research and need a callback.
  4. Recommendation and presentation. For your situation of X, Y, and Z, this product is going to suit you best, and these are the reasons why. These are the things that may not suit you or maybe a problem if you do M, N, and I. And send them what you've told them, email, paper, whatever meets the need for documenting what's going on and why
  5. Implementation. Go do what you said you would do. Also, follow up with the client, ie. Communicate!
  6. Monitor and review. Check in with them, communicate relevant information that they need, and do your annual reviews when the policy renews.

This is my view from the outside of the general broking industry, though I have had some time with these products inside and out with this part of the industry. This isn't too far from what happens in the majority of transactions, except the documentation.

Yup, it's the admin that is the major hole most general brokers have. And no I'm not talking the crappy 1970 style computer printouts that are the typical general renewal schedule, man they're horrible.

As a side note, if you're reading this and you have input into how these are laid out and printed, please do something with them. It's half the reason people struggle with the renewal schedule; it is horrible to read.

I'm talking about the advice piece that sits around this. The SOA, which doesn't need to be onerous, but it needs to be better than a bland schedule that is full of jargon.

Frankly, these last two paragraphs are why clients call me; they haven't got any sense out of their broker or the documentation provided. So want someone to translate and look after them.

So while the general brokers have generally been absent from the conversation, there have been some engaged with the various consultation processes, and it does not sound doom and gloom entirely. In fact, for the smart broker with a dollar or two, there's significant opportunity in the new regime coming.

What can you do right now?

  • Do what's been suggested for the rest, review how your business and advice look for the consumer?
  • Does it tell the full story they need and expect?
  • What holes have you got?
  • How can you do this better?
  • And go do it better.

We have a good 2 1/2 years to be fully licensed, and the interim transitional license is expected to be relatively straightforward.

So you do have time to look at best practice, add it to what you do, training your staff, qualify yourself, and meet the expectations.

So for the rest who are RFA’s, if this is achievable for the general bod’s, it should be an easy one for you too.

Tags: Jon-Paul Hale

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Comments from our readers

On 10 September 2018 at 5:59 pm gavin austin adviser business compliance said:
Hi Jon-Paul
Great comments and your description of the process is right up there. Not a great deal for advisers to do other than do a bit more formal, easy to understand documentation supported by a few file notes and emails. I'm surprised that IBANZ is not communicating these issues. They were quite on the ball with QFE options when I was at FMA.

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ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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