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Let's talk about trust

My comments in my article on insurers not trusting advisers seem to have hit a chord. Not so much in comments but contact from providers.

Monday, September 25th 2023, 6:42AM

by Jon-Paul Hale

Interestingly, those who reached out aren't the ones who have supplied fuel for the article I tapped out on trust.

I talked about the egregious situation of the claim manager not accepting the underwriter's review of the client because the information came from me. It's not the only recent example of issues around trust.

Those who have worked inside insurers know there is a level of frustration that the operational teams experience, from advisers asking stupidly dumb questions to things that are borderline fraud. It all passes through the provider's operations teams.

While there is a reasonable turnover of people in the operations areas, plenty move up and into management over time. This historical experience of their operations days creates the weariness of adviser's attitudes that we see and hear. Not to mention the behaviour of advisers along that journey requesting shady shite.

Maybe I'm sensitive to it, having been inside and seen this stuff myself, probably.

The harsh reality of the past is insurers had a double-edged sword with advisers, particularly the big-hitting ones. These big hitters' premium income is often tainted with shortcuts and client disclosure issues.

It's not in the insurer's interests not to work with these people. At the same time, the insurers tend to manage their risk by implementing painful processes that the rest of us have to contend with.

Many of these raise questions with clients about trust when they don't have the context of the bigger picture. Their experience with advisers is with their adviser, the one they are talking to right now and probably have been for years!

From historic surveys on trust, insurance advisers have struggled on the scale, better than politicians and car sales, but not by much!

Every painful process from an insurer that suggests a trust issue, particularly around new business, probably came from past bad behaviour by an adviser(s).

Hardly fair when the vast majority do the right thing and try damn hard to get it right for their clients. That's the bit that's missing here. Recognizing the advisers that do the hard yards, don't create issues, and generally have excellent outcomes for clients in really shite situations.

But that's the job, too.

This is reflected in several recent events, with several well-known advisers retiring and another passing away. None of the insurers they have worked with reached out to wish them well or attended the funeral. They were the ones that just got on with the job, didn't ask for recognition, but haven't got it either.

Instead, high-performing new business advisers are celebrated, and their problems (when they have them) get papered over. Don't misunderstand me; not all advisers. There are excellent advisers hitting large numbers and doing it professionally. They aren't the ones creating the issues for the rest of us.

I'm repeating this, the recent AIA example of new advisers joining a FAP can open an agency under the FAP principal without the FAP signing it off. Justified on the basis that the "new" adviser will get it right and get all the paperwork in order.

Ahuh, how's that really going? When long-time advisers often struggle with just navigating the FSPR for their annual return!

In contrast, when you come across a client needing to have their Airpoints number added to their AIA policy, we're not trusted to do that without either a signed form or an email with the client copied in.

It is probably because an adviser somewhere decided that adding their own number to policies was an easy way to pick up points. The response from clients is, "Seriously, I could have just emailed them directly!"

It's this dichotomy of rewarding bad behaviour while making it painful for the rest. Likely there is a FAP with shocking processes, probably more than one, and AIA has gone; the advisers coming in do better, so we'll change the process.

No! Don't do business with poor operators, especially if they are a FAP. FAPs are expected to get it right, not be babysat because they are large producers!

When I say insurers don't trust us, they use examples of poor behaviour by the select few to justify tarring all of us with the brush of "they may do".

I've said for years, deal with those misbehaving and make life easier for the rest of us. It's pretty tough on the single adviser business with what's been happening here and the new rules applied on top.

One adviser emailed me this week, "In 30 years, the rubbish from providers has never been so bad!"

This also speaks to service levels. Every additional process adds admin time and resource to manage it. And when advisers and providers don't get their bit done correctly, it adds even more work to the pile.

No wonder service levels are rubbish!

If we are to have a productive and vibrant cottage industry advice market, the providers need to find ways to make it easier, not harder. Otherwise it's going to only go in one direction.

That is to larger advice businesses with restrictive advice processes and limited provider choice. This is the very opposite of the advice industry we have had and where most advisers want to go.

I commented about senior management stepping out and looking in from the street. This goes for the current processes in the business that have morphed and changed but are not reviewed for the stuff that can come out and is no longer relevant.

One insurer sends us an email when a client lodges a claim (not nib); that email used to contain some detail so we could assess if we needed to follow up or if it was routine stuff.

Now that email contains the policy number and name, nothing else. This means we now have a trigger to follow up and figure out what's going on. Mostly, it's routine, but we can't afford to miss the stuff that's not.

My initial answer to these emails? An auto-responder back to the insurer that says, "Thanks for the notice on this claim. Can you please send us more details?" Pain begets pain… I don't have time to type a response to every one, so let's start with the easy ones that they will tell us about.

The problem here? This just creates more noise they have to deal with because they created a communication that has no value other than to generate more questions asked.

Incomplete communication is just a small part of the challenges we face; at the same time, the core driver for most of them is a lack of trust.

We have new rules, licensing, education, and processing requirements. Let's start again at the beginning, clean slate and build from there.

Because building on the crap of the past isn't the environment we have today.

Advisers have been asked to do better, and for the most part, they have. It is time for the providers to do the same, starting with How can we help? Not how can we protect ourselves?

When it comes to bad behaviours, deal with them; don't make it harder on the rest of us!

Tags: Jon-Paul Hale

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BNZ - Mortgage One 8.69 - - -
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China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
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Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
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Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
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Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
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Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 ▼7.65 ▼7.25 -
Pepper Money Advantage 10.49 - - -
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Resimac - LVR < 80% 8.84 8.09 7.59 7.29
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Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
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SBS Unwind reverse equity 9.95 - - -
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TSB Bank 9.44 7.79 7.55 7.45
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TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 ▼7.84 7.35 ▼6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼7.24 6.75 ▼6.39
Median 8.64 7.19 7.27 6.65

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