How are you treating your 18-21-year-olds?
This may come across as a little esoteric and doing obscene things to spiders, but stick with me.
Monday, January 23rd 2023, 11:51AM 
2 Comments
by Jon-Paul Hale
My question to you is; how are you managing the advice you give to your 18 to 21-year-olds and older "dependants" in many cases?
The ones still living at home and their parents are paying for them. If you're like most of the industry, that answer will be something like "as long as their parents call the shots, they're dependants, so whatever the parents want."
And that's certainly how we have handled it historically, where dependant kids on medical policies were to 18, then 21, and now 24/25 on an adult premium from age 21, and some the kids never have to come off.
With trauma covers, we've been working with to-age-18 on coverage and changes. Generally, the advice is with the parents to continue this for the kids, now adults.
And by now, I'm guessing you're figuring out where I'm going with this.
What we have always done is not how we should always do it. And I'm also with you here when you say, "what does an 18-year-old know about this stuff, let alone want to spend money on it?"
Yup, I heard you there!
Where did this come from? One of my team, new to the industry, asked, "how do we manage the kids when they are no longer kids? How does that work, and what's the process?"
And frankly, my initial answer was; it depends… Which is not a suitable answer for my team to work with.
So, where do we start with this?
We know that people over the age of 16 must sign application forms themselves but are generally still under their parents in terms of guardianship. Over 18, they're adults and may be no better functioning than at age 16, but they can also drink, smoke and vote.
This raises the question; is deferring to their parents still the right thing to do? And as a parent myself, yes, this is what I would want with my advisers working with my kids. The old guidance and support thing while they start to make decisions for themselves in the adult world.
But that's not the whole answer either. Looking at our most recent legislation, FSLAA, we have an obligation to manage those over 18 similarly. We don't have an age determination on where this starts and stops; other than being over 18, you are an adult.
Does this feed into vulnerable client identification and management? It certainly does. Those with limited understanding of what we do fall to us being challenged with code standard 4; the client understands our advice.
More the point, when you are talking about financial services products for 18-year-olds and you are talking about acquiring, holding, or disposing of a financial services product, you need to be giving specific, scoped, needs-based advice to that 18-year-old, even though you have prepared it in context with their parents.
In other words, not only do you need the parents to sign off on everything, but you need their of-age children too. You still need to explain the scope of service, how you get paid, manage complaints, what your license is, establish how you will look after ongoing, and all of that guff.
Now some will look at this and go, what a pain in the arse! That's an understandable first reaction. However, this is an interesting opportunity we haven't had before and where the rules help us because their parents will likely push back too.
Those 18-year-olds that have yet to learn about what we do are our future client base growth, what they need and do now isn't massive in value, but it is significant in opportunity for our futures.
By looking at this and treating it as any other client interaction, you get to explain what you do, how you can help, and how all of this works at a time when older adults showing respect to emerging young adults isn't a regular thing.
Most of what they're dealing with is either hazing from peers or coworkers…
If done well, they will respect you for showing respect in being a professional, and that will often result in more engagement, not less.
More importantly, this is yet another aspect of our business we all need to look at to ensure we're tackling it the way it is now expected to be.
The bad old days of she'll be right are behind us, and little things like this are what will trip us up. It's not so much the stuff we know and manage from experience; it's the stuff we don't know and didn't know would kick our arses.
So you could look at this as doing obscene things to spiders, or you can face the reality that it is something that needs doing and future opportunity abounds from it.
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However, consider this, that "kid" can become an owner and payer through the succession of cover, life, trauma and medical, where that understanding, particularly for medical disclosure requirements, is needed while they are under their parent's policy.
We all understand, and expect, that the parents will clip them around the ear and tell them to get on with it; at the same time, that doesn't necessarily remove us from the liability equation either.
Especially when down the track, as the owner and payer, they come up against understanding or disclosure issues and then turn around and complain...
Is this a significant risk? Probably not. But me knowing what I know and have seen if it can happen, it will probably happen, so plan for it...
My comments on the nominated beneficiary forms in 2019, which were largely ignored, have resulted in exactly that situation landing on my desk with a new (to me) client previously advised by a VIO...
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But for FSLAA, my "client" is the policy owner and premium payer, which is the parents. I defer to the client, until that kid owns and pays, and becomes someone whose "understanding" I have to ensure.