AFA Financial Adviser Magazine | Vol 25. Issue 3. by AFA Magazine

Official magazine for members of the AFA

Vol 25 | Issue Three | December 2021

AFA returns to the Royal Pines in 2022

ADVICE STRATEGY It’s time to cut through the noise on IDII

ADVICE STRATEGY Key insights to progress through the advice business life cycle

BUSINESS GROWTH ‘Tour d’Advice’: What’s your post-pandemic productivity strategy?

Key dates for 2022 We’re excited to be returning to face-to-face events in the New Year. Make sure you pencil in the below dates and keep an eye out for more information coming soon!

AFA Roadshow

AFA Conference

We’re delighted to be kick starting 2022 with our National Roadshow. We hope you can join us.

What better way to return to our face-to-face Conference after two years than at the Royal Pines, some may say, the home of the AFA.

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The Financial Adviser | December 2021

Contents

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Professionalism

Advice Strategy

AFA President’s report

AFA CEO’s report

The importance of private health insurance through and beyond COVID-19

Policy and Advocacy

It’s time to cut through the noise on IDII

Making Income Protection sustainable again

‘Tour d’Advice’: Key insights to progress through the advice business life cycle

General Manager Marketing

Dear Members, Yes, we are all so over the 2020s right now – COVID, and reform after reform to the Advice profession. But there is also good news - entries Tdo dto oOBs MyWKO zBoMp K`OBo`| oO OKsOM the great work that advisers do every day for their clients – congratulations to all the winners and bB`Wpsp BodtbM sVO Kdtbso|¿ 9O l`Bb sd lodadsO these stories in the coming months far and wide. In September, we were pleased to present a strong virtual Conference program for our members and partners. One of my favourite sessions was dbb| B`KVOo Toda @toWKVÜp 3 d KOp MWpKtppWbU customer experience. In particular, I enjoyed her insight into Lego’s journey to becoming the iconic brand it is today. Lego being an abbreviation for ‘Play well’ in Danish – is also a great mantra for one to live by. My other favourite was Dr Nick Coatsworth – what a refreshingly humble and UObtWbO VtaBb JOWbU¿ On the Conference front, you’ll notice on our cover we have announced next year’s AFA Conference will be held at the Royal Pines Resort on the Gold Coast in September 2022. We hope you can join us at what is sure to be a fun and memorable experience for all. You may also notice the design of the magazine has changed and this is part of a brand refresh to provide a more contemporary look and feel to the AFA. The magazine is moving to a quarterly digital publication, with June and December issues also being available in print. Finally, on behalf of the Marketing team, I’d like to thank you for your ongoing support of the AFA, and wish you and your families a safe and happy holiday season. Kind regards, BbMWKO 0lObKO

Business Growth

Innovation

Business resilience and how to position yourself for the future

Deep insights from the past to build a better future

Spotlight on rehabilitation

What’s your post-pandemic productivity strategy?

The way forward – ushering in a new era of certainty, stability, and sustainability

Communities of Practice

Community & Marketplace

It’s not easy bein’ green…

At the heart of it all

AFA Foundation – every Md``Bo aB_Op B MW OoObKO¿

Giving your time and expertise to help people in need

Events 24

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Conference highlights

Congratulations to AFA’s Great Advice Award winners 2021

The Financial Adviser | December 2021

Professionalism

AFA President’s report 0Ba ,OoOoB AFA National President

Founded in 1946, this year the AFA celebrates its 75th year. Integral to its longevity and at the heart of the AFA is its people. Thousands WN UMUJMZ[ XIZ\VMZ[ [\I‫ ٺ‬IVL ^WT]V\MMZ[ PI^M KWV\ZQJ]\ML \W the success of our association which has weathered many storms, MVL]ZML [QOVQÅKIV\ KPITTMVOM[ IVL ZQ[MV NZWU \PM I[PM[ UWZM \PIV once. If not for the spirit of service of these contributors, it is hard to imagine how the AFA would have survived into its 75th year. dbsOaldoBoWOp zdt`M bM Ws MW Kt`s sd BppOaJ`O B `Wps of our most valued contributors without the inclusion of Michael Nowak who recently retired from the AFA Presidency. Having served on the AFA Board for nine years, twice as President, Mike’s dedication to the AFA and its members has been exemplary. His motivation VBp JOOb ObsWoO`| pO` Opp» BbM VWp pd`O MoWyOo VBp JOOb the desire to improve the lot of the AFA’s members, OoKO`| BssOalsWbU sd KdaJBs dyOo OB`dtp oOUt`BsWdbº In his opening statement to the House of Representatives Standing Committee on Economics in July 2021, Mike made an impassioned plea to the legislators to recognise the impact of their actions on the wellbeing of Financial Advisers and this speech highlighted the arguments that Mike has been prosecuting whilst at the helm of the AFA. This speech resonated strongly and raised the spirits of the advice community at a time when many felt disenfranchised and defeated. Mike has utilised his network of friends within the advice and broader AFA communities to build our goodwill, unite behind the cause, championing the yB`tO dT BMyWKO BbM sVO WaldosBbs zdo_ dT bBbKWB` advisers around the country. ByWbU zdo_OM K`dpO`| zWsV !W_O» zWsbOppOM opsVBbM his commitment to the AFA, which at times meant that the AFA would have come before his family and business commitments. He would take every regulatory defeat or set-back personally and worked tirelessly toward any small win with more sensible reforms.

The Financial Adviser | December 2021

The AFA’s members and friends and the close-knit Board and Leadership Team will miss Mike, however his work will continue as we build on his legacy of perseverance, championing the cause for as many tpsoB`WBbp Bp ldppWJ`O sd BKKOpp ntB`Ws| bBbKWB` advice and continue to work hard to improve the lot of our members.

As we turn the corner and enter our 76th year, the AFA has much work to do. The Leadership Team and the Board’s primary focus during 2022 will be on the following strategies:

Focus

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We will ensure that our work is closely aligned to the needs of our members and core to our purposes community, voice, and profession. Extraneous activities will be eliminated; less will be more. Policy will remain a cornerstone of our work, our advocacy will become adoO pdlVWpsWKBsOM» BbM dto O dosp zW`` JO db tpWbU the Quality of Advice review to lobby for meaningful change to the issues plaguing the sector. Our events and communications will be squarely targeted at our members’ needs and wants.

Any market analysis of the supply aspect of the sector will highlight themes of shrinkage and consolidation. Ironically, the demand for advice is ever increasing, loOpObsWbU B pWUbW KBbs dlldostbWs| Tdo lBosWKWlBbsp remaining in the market. The AFA intends to be in the business of continuing to support Advisers and their practices well into the next 75 years. However, like all stakeholders, the AFA is confronted with the need to change as certain aspects of our business model are challenged and others are redundant. Therefore, the AFA of the future will not look like or sound like the AFA of the past. The work of the Board will centre on how to preserve the important work we do for our members zVW`ps bMWbU Bb dlsWaB` JtpWbOpp adMO` sVBs zW`` enable us to deliver this work well into the future.

Additionally, the AFA must perform its essential functions that relate to its work as a professional membership organisation. This includes Board governance, as instructed by the Corporations Act, membership review committees and disciplinary functions. This aspect of the AFA’s work is compulsory in many respects and draws on considerable resourcing. Whilst we are a small business with a big agenda, we are a recognised professional membership organisation and there are responsibilities and accountabilities that ensue.

In closing, I would like to thank you for your continued support of the AFA. Your Board and the Leadership Team will continue to work hard to maintain your sotps BbM Kdb MObKOº 9O zWpV |dt» |dto TBaW`WOp» BbM |dto psB B pBTO BbM lOBKOTt` Vd`WMB| pOBpdb BbM B prosperous 2022 as we begin to turn the page on a year which has been challenging on many fronts.

Leading the AFA at this juncture is a pleasure and a privilege. It comes with tremendous responsibility to help sketch the roadmap for the viability of our organisation and the sector. I am unabashed in prioritising and advocating toward the need for policy pOssWbUp sVBs ObBJÒ bBbKWB` BMyWKO loBKsWKOp sd sVoWyO BbM dtoWpVº 2VWp Wp sVO ldWbs Bs zVWKV lBppWdb» O{KO`ÒbKO Wb KoBTs BbM bBbKWB` oOstobp WbsOopOKsº 2VO demand for our services will not diminish and if we are able to achieve these policy settings, the practices that remain in the market will be tremendously successful. In parallel, and given our social license, we must continue to prosecute the case for a solution for those that may bds JO BJÒ sd B doM dto BMyWKOº 2VOpO tpsoB`WBbp require a guiding hand to navigate the complexities of superannuation, retirement, Centrelink, aged care, and our tax system. Dignity will ensue for this cohort of consumers if we achieve success, and downstream JObO sp zW`` dzº yOo|dbO JObO sp Bp adoO tpsoB`WBbp JOKdaO bBbKWB``| `WsOoBsO BbM JOssOo OntWllOM sd aBbBUO sVOWo bBbKOp BbM oOsWoOaObsº

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The demand for our services will not diminish and if we are able to achieve these policy settings, the practices that remain in the market will be tremendously successful.

The Financial Adviser | December 2021

Professionalism

AFA CEO’s report Helen !doUBbÒ BbMB AFA CEO

When this column is published, I will be in my fourth month as CEO of the AFA, much of that in lockdown in New South Wales. As we head into the New Year I will also be collaborating with the Board, our leadership team, members, and the whole HQ team to prepare for 2022. Before I talk about the future, it’s important I take a moment to acknowledge the leadership provided by outgoing President Mike Nowak. At the AFA’s AGM on 27 September the then Vice President Sam Perera shared Mike’s decision to stand down as President and let other’s share the responsibility during a period of huge change for advisers and the advice community. Mike’s decision came after he had served for nine years, three of those as President. As Sam said at the time, the past few years have seen enormous pressures placed on advisers and the AFA which represents them and advocates on their behalf. He paid tribute to Mike’s outstanding leadership as President of the AFA and his tireless advocacy on behalf of the AFA as the Royal Commission reforms have continued unabated and the COVID-19 pandemic created major operational challenges. As Sam said last week, when the time is right, we will gather to recognise Mike’s incredible contribution and inspiring leadership. I also want to recognise Matt Hawkins who stood down at the AGM after serving seven years on the Board, sVO `Bps dT sVdpO Bp 2oOBptoOoº !Bss B`pd VBp pWUbW KBbs work and family commitments, and seven years is a very good stint in any governance role. With change comes renewal and I am excited about working with the AFA’s new President Sam Perera, new Treasurer Samantha Robinson and new Board member Michelle Veitch who now form the AFA’s Executive Team. My goal is to work with my own leadership team to support them as much as possible as they step into their new roles.

Looking forward, not back As we head into 2022 the thought that ricochets around my brain is how do you plan at a period in history beset by uncertainty. While it feels like Australia is getting a lot closer to controlling the Covid-19 pandemic, the events since the pandemic hit in early 2020 tell us that uncertainty is the only certainty we can count on.

No man is an island, entire of itself; every man is a piece of the continent, a part of the main. John Donne, British poet and scholar

The Financial Adviser | December 2021

Management consultant Peter Drucker is quoted as saying in the early 1990s that: “Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window”. After living through the Covid-19 pandemic I am sure many readers will agree with that view – the impact has been hugely variable across Australia but those who have endured long lockdowns know the huge toll it has taken on people. As Peter Drucker also said, “the greatest danger in times of turbulence is not the turbulence, it is to act with yesterday’s logic”. dWbU zVBs zOÜyO B`zB|p MdbO BbM O{lOKsWbU B MW OoObs outcome simply won’t cut it. As an organisation the AFA needs to make the reset I spoke of at our Conference in September this year and help our members and the advice community navigate our way through the changes wrought by the Royal Commission reforms. 2VOoO Wp bd sWaO sd» do JObO s Toda» `dd_WbU JBK_º 9O must look forward and equip our members with the tools to be successful in this new world and with our partners to share the knowledge and thought leadership they can JoWbU sd sVO sBJ`O Tdo sVO JObO s dT B``º In 2022, Treasury will undertake a combined review of sVO ntB`Ws| dT bBbKWB` l`BbbWbU BbM `WTO WbptoBbKO BMyWKO» rolling together two separate recommendations of the Hayne Royal Commission. The AFA has had early engagement with the Government BbM d KWB`p db sVWp KoWsWKB` oOyWOz BbM Ws zW`` oOaBWb B central focus of our lobbying and advocacy work in 2022.

Humans need each other The other issue very much on my mind now is how the Covid-19 pandemic has reminded us of the very human need we have for human connection. It is a most peculiar and very unsatisfactory experience for all concerned to get to know people in an entirely virtual world. When talking with members and partners, particularly those in states with long lockdowns, the desire to meet face-to-face is palpable. When the AFA plans its events calendar for 2022, with continued support from our valued partners, we will be looking to maximise opportunities to meet in person to network and socialise as well as to learn. On that note, I want to wish everyone a happy and peaceful holiday season with as many opportunities as possible to catch up in person with family and friends and recharge the batteries ahead of another hectic year in 2022.

BUILDING BETTER FUTURES Introducing OneCare Income Secure Protection

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This information is for adviser use only, it does not take into account any personal objectives, financial situations or needs. You should consider these factors, the appropriateness of the information and the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD), if applicable, before making any decisions or recommendations. You can find these on our website at onepathinsurance.com.au. This information is current as at October 2021 and may be subject to change. OnePath Life Limited ABN 33 009 657 176, AFSL 238341 (OnePath Life) issues OneCare. This includes OneCare External Master Trust and OneCare SMSF. OnePath Custodians Pty Limited ABN 12 008 508 496, AFSL 238346 (OnePath Custodians) issues OneCare Super. OnePath Life and OnePath Custodians are not related bodies corporate.

The Financial Adviser | December 2021

Innovation

Deep insights from the past to build a better future /dJ ,dzO`` TAL Head of Product Development

Income Protection products protect a core need of Australians, the ability to earn an income. Over the last few years, there has been a rise in the cost of claims which has led to an increase in the cost of cover across sVO zVd`O WbMtpso|» l`BKWbU loOpptoO db B doMBJW`Ws| and jeopardising the ability of Australians to protect this core need when it is truly required. Over time, life insurers have made incremental changes to Income Protection products to be competitive in the market and meet the ever-changing expectations of advisers and customers. These changes, however well-intended, have often resulted in unexpected outcomes, including circumstances where customers aB| JO bBbKWB``| JOssOo d db K`BWa zVOb KdalBoOM to earnings prior to claim. This is a key driver of the more than $3.4 billion of industry losses1 dyOo B yOÒ |OBo lOoWdM» oOpt`sWbU Wb oOlOBsOM pWUbW KBbs loOaWta increases for Income Protection across all life insurers. The intervention by the Australian Prudential Regulation Authority (APRA) has been a necessary circuit-breaker the industry sorely needed to realign the role of Income Protection in the lives of Australians, and ensure products are built for the lives we live today.

As the market evolves through this period to respond to ,/ Üp WbsOoyObsWdb» zO BoO Kdb MObs sVBs dto lodMtKs pd`tsWdbp zW`` adoO TBWo`| MWpsoWJtsO JObO sp BbM JOssOo align with the genuine customer needs of today.

Leveraging years of data and in-depth research for a sustainable product design Over the years, we’ve remained committed to supporting our customers with their claims. Now, all that history has shaped how we’ll protect them in the future. TAL’s experience in the Income Protection market meant we could draw on over 10 years of Accelerated Protection claims and take a deep-dive analysis of more sVBb » WbMWyWMtB` bKdaO ,odsOKsWdb K`BWa `Opº We went into this process with open minds, and with a view to challenge commonly held beliefs and historical approaches at every stage.

We’ve also been on a mission to uncover new insights and ideas – from how we describe Income Protection to s 2 » sVO KVBbKO sd psOl oWUVs JBK_ BbM psBos zWsV ops new customers to how we support them at claim time. Our team listened, researched, and tested ideas with principles, re-imagining the way products operate so sVBs sVO| BoO sÒTdoÒltoldpO» zWsV B TdKtp db `dbUÒsOoa hundreds of advisers and their clients to make sure we truly understood what they really valued. sustainability has been uniquely rewarding. One thing that became really clear was that we had a job to do in And the result? A range of product options which are oOMO bWbU zVBs zO aOBbs J| sVO sOoa ÛptpsBWbBJW`Ws|Üº truly tailored to customer needs today, anchored in real For us, this boiled down to fairness; ensuring that our client and adviser insights. products continue to meet the genuine needs of all customers, including those customers who need to make a claim, as well as those customers who may not claim, while ensuring all customers have access to B doMBJ`O KdyOo dyOo sVO `dbUÒsOoaº

Embracing the opportunities that come with change These changes to Income Protection products bring about fundamental shifts in design and there’s no doubt that there will be a period of adjustment while the market becomes familiar with the new product dlsWdbp db d Ooº KdaaWsaObs sd JOssOoWbU sVO WbMtpso|» BbM ObptoWbU O{WpsWbU lodMtKsp KdbsWbtO sd Oyd`yO alongside new ones, can help deliver a better experience for all. 9O BoO Kdb MObs sVBs 2 Üp bOz bKdaO ,odsOKsWdb lodMtKs dlsWdbp zW`` KdbsWbtO sd aOOs sVO lodsOKsWdb bOOMp dT dto BMyWpOo lBosbOop BbM sVOWo K`WObsp» zVWÒ ObBJ`WbU BMyWpOop sd lodyWMO Kdb MObKO sd sVOWo K`WObsp sVBs sVO bKdaO ,odsOKsWdb lodMtKs dlsWdbp ByBW`BJÒ sd sVOa BoO yB`tBJÒ» TBWo» BbM O OKsWyO bdz BbM Wbsd the future.

1 https://www.apra.gov.au/sustainability-measures-for-individual-disability-income-insurance

The Financial Adviser | December 2021

Simpler, for the better Insurance definitions, benefits and calculations can be confusing, so we went back to the foundations of Income Protection and asked: what’s it really designed to do? And how can we make it do that, simply? Thanks to people like Jo, our new Income Protection products are easier for customers to understand, so they can focus their energy on getting back to the life they love after illness or injury. Discover more for the better at adviser.tal.com.au

Jo Hetherington Head of Financial Health

The Financial Adviser | December 2021

Innovation

Spotlight on rehabilitation dBbbO oByOp Claims Rehabilitation & Wellbeing Manager AIA Australia

The retail insurance industry is constantly evolving. Recent changes to income protection products have seen the ‘bells and whistles’ being stripped out, and a greater push to sustainable products across the board. MW OoObsWBsdo loOyWdtp`| Wb lodMtKs MO bWsWdbp BbM JObO sp VByO JOOb pKB`OM JBK_ `OBMWbU B oOÒsVWb_ Wb how else insurers support advisers and clients.

The role of rehabilitation services Additional services such as rehabilitation, have formed an important part of an insurers support. However, now more than ever these services play a key role in what clients get with a retail insurance policy and adviser conversations relating to their advice. /OVBJW`WsBsWdb pOoyWKOp BoO BJdts UOssWbU lOdl`O JBK_ sd VOB`sV BbM B bdoaB` `WTO» d OoWbU sBW`doOM pOoyWKOp Bs the right time in a clients’ recovery journey. The type of services would depend on the end goal of the client; is it improving their wellbeing so they can re-engage with their community, or are they looking to return to work.

?PI\ IZM \PM ZMPIJQTQ\I\QWV W]\KWUM[' As mentioned above, there are two main outcomes; return to wellbeing and/or return to work.

Return to wellbeing

Return to work

A return to wellbeing involves the physical or mental wellbeing of a client with the purpose of getting them back to better health so they can re-engage in life.

Return to work (RTW), aims to assist a client to get back to work. In addition to tailored wellness and work readiness services, RTW can include retraining, re-skilling, business coaching and more.

AIA Australia has noticed an increase in claimants who have successfully returned to work with an increase of nearly 3 times more in 2020 versus 2017 due in part to an increased focus on rehabilitation. Equally impressive is how workplaces are embracing rehabilitation with over half of the clients returning to work with the same employer1. tosVOo» ObUBUWbU Wb oOVBJW`WsBsWdb OBo`| KBb JO sVO MW OoObKO Wb ptKKOppTt``| oOstobWbU sd zdo_º do O{Bal`O» WT B lOopdb Wp d Toda zdo_ Tdo¼

20 days

45 days

70 days

The chance of returning to work is

70%

50%

35%

?Pa [PW]TL ZMPIJQTQ\I\QWV NWZU XIZ\ WN aW]Z W‫ٺ‬MZ' Firstly, understanding that rehabilitation is not used as a lever to limit the duration of claim is important. It is way of assisting the client to TdKtp db BJW`Ws|» bds MWpBJW`Ws| BbM UOssWbU JBK_ Wbsd `WTOº /OVBJW`WsBsWdb lodUoBap BoO d OoOM sd K`WObsp sVBs zdt`M JObO s Toda Ws BbM Wp bds ptWsBJ`O Tdo OyOo|dbO MOlObMWbU db sVOWo KdbMWsWdbº bptoOop KBb ptlldos sVOa bBbKWB``| sVodtUV B K`BWa BbM BMMWsWdbB` pOoyWKOp ByBW`BJ`O sd sVOaº 9VOb B K`WObs tbMOopsBbMp B pWstBsWdb BbM Wp ptlldosOM sd BKKOpp sVO JObO sp dT B oOVBJW`WsBsWdb pOoyWKO» sVO JOssOo sVO dtsKdaOpº p Bb BMyWpOo» JOWbU lBos dT B K`WObsÜp ptlldos Wp O{soOaO`| JObO KWB` Tdo sVO oOKdyOo| lodKOpp BbM increases the chance of a return to wellness or full recovery.

dl|oWUVs Ċ tpsoB`WB WaWsOM Ì " 0 Íº `` oWUVsp oOpOoyOMº 2VWp WbTdoaBsWdb Wp WbsObMOM Tdo bBbKWB` BMyWpOop db`| BbM Wp bds Tdo wider distribution. This information is current at the date of distribution and is subject to change. This is general information in summary only, without considering the dJ]OKsWyOp» bBbKWB` pWstBsWdb» bOOMp do lOopdbB` KWoKtapsBbKOp dT Bb| WbMWyWMtB`» BbM aB| bds JO O{VBtpsWyOº s Wp bds WbsObMOM Bp bBbKWB`» `OUB`» aOMWKB`» sB{BsWdb or other advice. AIA Australia has prepared a Target Market Determination which describes the class of consumers that comprise the target market for this product. The Target Market Determination can be sourced at aia.com.au/tmds

Vsslp¼ÇÇzzzºKdaKBoOºUdyºBtÇK`BWapÇUOssWbUÒ|dtÒJBK_ÒsdÒzdo_ÇJObO spÒdTÒoOstobWbUÒsdÒzdo_

The Financial Adviser | December 2021

Starting a new conversation with

AIA AUSTRALIA’S NEW INCOME PROTECTION COVER

SCAN CODE TO FIND OUT MORE The Financial Adviser | December 2021

Innovation

MBa oBJJO Risk Strategy Specialist, Zurich & OnePath Life

The way forward – ushering in a new era of certainty, stability, and sustainability $KsdJOo » aBo_OM B pWUbW KBbs oOToOpV dT WbKdaO lodsOKsWdb d OoWbUp BKodpp sVO WbMWyWMtB` BMyWpOM market, in line with APRA’s requirements. For many years the life insurance industry has been experiencing ptJpsBbsWB` bBbKWB` `dppOp sVodtUV WbKdaO lodsOKsWdbº “Life companies have collectively lost around $3.4 billion dyOo sVO lBps yO |OBop sVodtUV sVO pB`O dT MWpBJW`Ws| income insurance to individuals,”1. So in December 2019, APRA intervened to stabilise the market. One driving force behind why the disability sector has been underperforming is because of the generosity Wb lodMtKs MOpWUb bds JOWbU oO OKsOM Wb sVO loOaWta cost. This included a range of factors, like a multi-tier MWpBJW`Ws| MO bWsWdb zVWKV aOBbs aBb| K`BWaBbsp zOoO dTsOb bBbKWB``| JOssOoÒd db K`BWa sVBb sVO| were prior. Action had to be taken and we confronted the challenge head on. At Zurich and OnePath we reconsidered products in light of APRA’s guidance, ensuring our new lodMtKsp KdbsWbtO sd d Oo KtpsdaOop KdaloOVObpWyO pOKtoWs| Tdo sVOWo WbKdaO» Jts Wb B adoO B doMBJ`O BbM sustainable solution.

Life companies have collectively lost around $3.4 billion over the past five years through the sale of disability income insurance to individuals.

We actively engaged with many of our key stakeholders – these included customers, advisers, licensees, research houses and also the community at large. What it led us to do, as a broader business, was to come up with some key philosophies.

$bO dT sVOpO zBp KOosBWbs|½ B pObpO dT tbMOopsBbMWbU B `OyO` dT KOosBWbs| zWsV sVOWo lodMtKsº We found that for our customer base there was potential detriment if there was a drop in the income replacement ratio made throughout a K`BWaBbsÜp ]dtobO|» `OBMWbU tp sd d Oo B psBsWK 70% throughout that journey.

2VO pOKdbM _O| aOppBUO dto oOpOBoKV tbKdyOoOM zBp sVO WaldosBbKO dT O{WJW`Ws|º Many customers are conscious of the increasing healthcare costs, particularly early in a claim, so we developed B pOyOoWs| JddpsOo JObO s Ô Jts db`| Tdo sVdpO customers comfortable paying extra for that feature.

tosVOo TOOMJBK_ oO`BsOM sd JOWbU d zdo_ Tdo Bb extended period and concern with employer stopping superannuation guarantee contributions to their super fund, with some wanting to know the life insurer could continue with those super contributions. So at age 65, there will be a more sizeable pool of super assets which Kdt`M sVOb KdbsWbtO JObO sp sVodtUVdts B lOopdbÜp retirement. The other focus for the design of our income protection solution was care. Our claims team have won several industry awards, and in the new world of income protection customer care is even more important than ever as we support Australian’s journey to wellness and returning to work. 9O BoO d OoWbU ptlldos sVodtUV dto ! sOBap BbM our on-demand education platform, _ZONE Education. We have sessions and materials guiding participants through a range of advice implications when looking at the new income protection products in retail and group insurance. These income protection solutions are not only more suited to an evolving world, they are better aligned to a community that expects – and deserves – more quality, value, and certainty in their life insurance.

1 https://www.apra.gov.au/news-and-publications/apraintervenes-to-improve-sustainability-of-individual-disabilityincome, sited October 2021

The Financial Adviser | December 2021

Return to life, with conﬁdence Introducing Zurich Income Safeguard In par tnership with advisers and licensees, and with customer input along the way, we have taken a truly customer-centric approach to designing solutions for a new era. These solutions are not only more suited to an evolving world, they are bet ter aligned to a communit y that expects and deser ves - more qualit y, value, and cer taint y in their life insurance. Learn more today from your Zurich Business Development Manager or visit zurich.com.au

T h i s in f o r m a t i o n i s f o r a d v i s e r u s e o n l y, i t d o e s n o t t a ke in to a c c o un t a ny p e r s o n a l o b j e c t i ve s , f in a n c i a l s i t u a t i o n s o r n e e d s . Yo u s h o ul d c o n s i d e r t h e s e f a c to r s , t h e a p p ro p r i a te n e s s o f t h e in fo r m a t i o n a n d t h e re l eva n t P ro du c t D i s c l o s ure S t a te m e n t (PD S) a n d Ta r g e t M a r ke t D e te r m in a t i o n ( T M D) , i f a p p li c a b l e , b e f o re m a k in g a ny d e c i s i o n s o r r e c o m m e n d a t i o n s . Yo u c a n f in d t h e s e o n o ur we b s i te a t z ur i c h .c o m . a u . T h i s in f o r m a t i o n i s c ur r e n t a s a t O c to b e r 2 0 2 1 a n d m ay b e s ub j e c t to c h a n g e . Zu r i c h Au s t r a l i a L i m i te d A B N 9 2 0 0 0 0 1 0 1 9 5 , A F S L 2 3 2 51 0 i s t h e i s s u e r o f Z u r i c h We a l t h P r o t e c t i o n a n d Z u r i c h A c t i v e .

The Financial Adviser | December 2021

Professionalism

Policy and Advocacy ,VW` bMOopdb General Manager Policy & Professionalism AFA

Regulatory reform in 2021 has continued at an intense pace, peaking in early October with the /OM $KsdJOo `Ws dT oOTdoapº yOb JO|dbM sVBs MBsO sVO TdKtp VBp oOaBWbOM db sVO bB`WpBsWdb of the Royal Commission recommendations, and the related impact upon the FASEA exam. With the Single Disciplinary Body legislation now passed and the Compensation Scheme of Last Resort legislation tabled in the Parliament, we can soon hope to see an end to this tidal wave of Royal Commission driven reforms. Please read this article to understand all that has happened in recent months and what is in front of us still. 2VO bBbKWB` BMyWpOo aBo_Os VBp KdbsWbtOM sd MOK`WbO sVodtUVdts » zWsV sVO sdsB` btaJOo dT bBbKWB` BMyWpOop db sVO WbBbKWB` MyWpOo /OUWpsOo Ì /Í bdz pOOaWbU`| TB``WbU JO`dz » BbM zWsV sVO ops {Ba MOBM`WbO ÌTdo sVdpO zVd VByO bds BssOalsOM Ws Bs `OBps szWKOÍ Bs sVO end of 2021, we are expecting to see this number decline further. It will be interesting to see how many advisers qualify for the extension of the exam deadline until 30 September 2022.

Single Disciplinary Body, FASEA and the Exam

Regulatory reform in 2021 has continued at an intense pace, peaking in early October with the Red October Blitz of reforms.

On 24 June 2021, the Government tabled the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021, which enabled the introduction of a Single Disciplinary Body (SDB), the winding up dT 0 BbM sVO oOadyB` dT bBbKWB` BMyWpOop from the TASA/TPB regime. The Bill also included provisions to enable the Government to issue a regulation to provide a further extension to the FASEA Exam deadline. The Better Advice Bill was subject to an inquiry by the Senate Economics Committee (SEC), which the AFA made a submission to. Our focus was on the importance of ensuring that the Financial Services and Credit Panel (Panel) was focussed on serious misconduct and not just a large and unmanageable list of minor and administrative matters. We also sought an option for ASIC to take no further action where they choose not to refer a matter to a Panel. We also raised concerns about the complexity of the way in which advisers had been removed from the TASA/TPB regime. Disappointingly, our issues were not picked up and the SEC made no recommendations for material change. The Better Advice Bill was passed in the House of Representatives on 4 August 2021, however it was held up in the Senate as the cross bench and the opposition wanted to see the related regulations before debating the Bill. The Government issued a proposal paper on the regulations in August to address what matters ASIC must refer to a Panel and what disciplinary actions must be recorded on the Financial Adviser Register. The Government then issued draft regulations for consultation on 29 September 2021, with submissions due by 15 October 2021. The release of the draft regulations seemingly opened the way for the Bill to be debated in the Senate and it was ultimately passed on 21 October 2021.

The Financial Adviser | December 2021

9O BoO bdz BzBWsWbU sVO bB` yOopWdb dT sVO regulations that will address the following: • Which disciplinary matters must be referred to a Panel. • What disciplinary actions must be recorded on the FAR. • The training and education requirements Tdo sB{ Ì bBbKWB`Í BMyWpOopº • The provision for an extension of the FASEA Exam deadline to 30 September 2022. Whilst we are pleased that the Government VBp d OoOM Bb O{sObpWdb Wb sVO {Ba MOBM`WbO for those who have attempted the exam at least twice by the end of this year, we are conscious that at this point prior to the results of the November exam, there are probably BodtbM BMyWpOop zVd zW`` JObO s Toda this. Our analysis of the numbers prior to the November exam suggested that there were 1,400 advisers who have sat the FASEA exam only once and around 2,200 who have not attempted the exam at all. We expect a larger number to attempt the November exam and sVWp aB| BMM pWUbW KBbs`| sd sVdpO zVd lBpp or access the extension.

Other Royal Commission recommendations After issuing a proposal paper on the Compensation Scheme of Last Resort in July 2021, the Government tabled the Bill in the House of Representatives on 28 October 2021. 2VO pKdlO dT sVO pKVOaO Wp `WaWsOM sd bBbKWB` advice, securities dealing, the provision of credit and mortgage broking. The proposal lBlOo ptUUOpsOM sVBs bBbKWB` BMyWpOop zdt`M end up paying more than three quarters of the cost of the scheme. There remains some debate about the narrow scope of the scheme, particularly with respect to the exclusion of managed investment schemes, and this could cause complications in getting it through the Senate. The CSLR is proposed

to commence from 1 July 2022 and the Government will meet the costs of the OpsBJ`WpVaObs BbM ops |OBo dT lB|aObsp and administration costs. A funding levy will commence from the second year, that zW`` WalBKs sVO bBbKWB` BMyWKO pOKsdoº The current unpaid determinations for the period from the start of AFCA through until the commencement of the CSLR will be paid for by a special levy on the 10 biggest banks and insurance companies.

Red October regulatory reform blitz After the commencement of the new Annual Renewal regime in July, the next big deadline for regulatory reform came Wb OBo`| $KsdJOo zWsV yO _O| oOTdoap commencing within a week. As we discuss below, APRA’s intervention resulted in major changes to the Individual Disability Income Insurance products, commencing from 1 October 2021. Two other important reforms that commenced on 1 October 2021, which were part of the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020, included the new breach reporting requirements, and the reference checking obligations. The AFA put a lot of work into seeking broader exemptions from the new breach reporting regime for those civil penalty provisions that are minor and administrative. Ultimately, the Government did extend the `Wps pWUbW KBbs`| BbM B`pd 0 O{OalsOM breaches of the enforceable provisions of the new Internal Dispute Resolution regime (ASIC RG 271), that also came into force from 5 October 2021. The key changes in the new IDR regime include a reduction in the maximum timeframe to respond to a complaint from 45 days to 30 days, the inclusion of certain complaints posted on social media and the requirement to record all complaints on the register, even those resolved within 5 days.

5 October 2021 also marked the commencement of the Design and Distribution Obligations regime. With so much reform happening at the one time, this major reform has received less attention and it has caused quite a lot of concern and confusion. Product issuers are required to prepare a Target Market Determination (TMD) for each product, which sets out which clients are suitable, what the triggers are for reviewing the TMD, the reporting requirements and UtWMBbKO db zVBs B pWUbW KBbs MOB`WbU is. Advisers are expected to take these TMDs into account, however due to other obligations, such as the Best Interests Duty, are not required to ensure all clients comply with the TMD. Regular reporting to product issuers is required, particularly with respect to any complaints about the products. It is important to note that this is complaints about the product and not just the advice, so poor investment lOoTdoaBbKO do pWUbW KBbs loOaWta WbKoOBpOp Kdt`M B`` JO K`BppW OM Bp lodMtKs complaints. Fortunately, the Government stepped in to remove the need to do nil reports, which would have been a huge bureaucratic nightmare, particularly for smaller licensees with broad APLs. There has been some confusion about the application of TMDs to investment options, and whether for example a small investment in a higher risk product by a more conservative investor is in fact outside the TMD. We understand that this needs to be assessed at the portfolio level and not the individual investment option `OyO`º 0WUbW KBbs MOB`WbUp VBp B`pd JOOb a point of confusion, with a lack of clarity BJdts zVBs Wp B pWUbW KBbs MOB`WbU BbM why some product issuers have required reporting of all transactions that are outside the TMD. It is important to note sVBs pWUbW KBbs MOB`WbUp BoO db`| zVOoO sVO client is outside the TMD and there is a risk of material detriment.

0WUbW KBbs MOB`WbUp BoO bds O{lOKsOM sd be common. We are working with the FSC and expect that further guidance will be provided in the short term.

Government intervenes to cap the ASIC Funding Levy After a lot of lobbying and pressure through a number of Parliamentary hearings, on 30 August 2021, the Government announced that they were going to cap the 2020/21 and 2021/22 0 tbMWbU Oy| Tdo bBbKWB` BMyWKO at the level of the 2018/19 levy of $1,500 per licensee and $1,142 per adviser. Given that ASIC had previously advised that the 2020/21 levy was estimated to be $1,500 per licensee plus $3,138 per adviser, this represented a savings of roughly $2,000 per year. With the 2020/21 estimate of $3,138 being based upon an earlier btaJOo dT bBbKWB` BMyWpOop db sVO /» we expected that the actual cost could have ended up being closer to $3,500. The Government has also announced that they will undertake a review of the ASIC Industry Funding Model to assess whether it is working as intended. Clearly when it zBp ops MOpWUbOM» sVO `OyO` dT O{lObMWstoO db ObTdoKOaObs sVBs dzOM Toda sVO Banking Royal Commission had not been BbsWKWlBsOMº 2VWp VBp KBtpOM pWUbW KBbs lodJ`Oap BbM oOpt`sOM Wb bBbKWB` BMyWpOop paying for activity that should have been picked up by other parties. Whilst this is very welcome relief and zW`` MO`WyOo B pWUbW KBbs pByWbU BKodpp the advice sector, we do need to be conscious that there is a risk of further increases in future years, particularly as we see the Single Disciplinary Body and the Compensation Scheme of Last Resort commence. The Financial Adviser | December 2021

Professionalism

Policy and Advocacy continued Both of these reforms will add to costs that are expected to be recovered via a Levy. The ASIC Funding Levy and the need for ASIC to do what they do for less, will remain an important issue Tdo sVO bBbKWB` BMyWKO pOKsdoº

APRA intervention in the Income Protection market The key phase of the APRA IDII intervention measures came into force on 1 October 2021 and in combination with the recommendations made by the Actuaries Institute has led to pdaO yOo| pWUbW KBbs KVBbUOp sd sVO lodMtKsp Wb sVO aBo_Os l`BKOº 2VOoO Wp B`pd bdz pWUbW KBbs MW OoObKOp Wb sVO lodMtKsp in terms of income replacement ratio, length of own occupation yOoptp Bb| dKKtlBsWdb BbM JObO s d pOsp BadbUps dsVOo _O| terms and features. A lot of advisers were very busy in the lead up to 1 October 2021, working with clients who wanted to take advantage of the opportunity to leverage the terms and features provided by what have now become legacy products.

Now that we have entered this new phase, when it comes to new clients who are not currently covered, advisers must choose between those products that are now available. It is expected that a range of new strategies will be developed, including using B KdaJWbBsWdb dT MW OoObs dlsWdbp BbM UoOBsOo oO`WBbKO tldb TPD cover. Over time, with an expectation of further increases in premiums for existing clients, advisers will need to assist clients in making that important decision about staying in the O{WpsWbU lodMtKsp zWsV Bb BppOppaObs dT sVO soBMOÒd JOszOOb the better terms and features for the legacy products and the improved pricing stability with the new products. We anticipate that it will take some time for the market to settle down and we cannot discount the prospect of further product changes as the life insurers assess their market positioning. We do need to JO KdbpKWdtp dT sVO bB` ,/ oOntWoOaObs oO`BsWbU sd yO |OBo policy refreshes, which is due to start from 1 October 2022. This measure requires that policies be refreshed every 5 years to oO OKs sVO sOoap BbM KdbMWsWdbp dT sVO dlOb lodMtKsp» BbM B`pd sVBs bBbKWB`p» dKKtlBsWdb BbM lBpsWaOp ÌJts bds VOB`sVÍ JO underwritten again.

AFA Member discounts from Education providers

As of August 2021, but are subject to change.

Provider

Deakin

UNE

$3,450 per subject (when completing a full ntB`W KBsWdbÍ

RRP per subject

$3,338 $3,859 per subject (for single subject enrolments) î » º ÌTt`` ntB`W KBsWdbÍ

Discounted price per subject

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Postgraduate courses and single subject enrolments (including Intensive Study Option Tdo sVO 0 oWMUWbU dtopO ptJ]OKspÍ d OoOM within the Faculty of Business and Law

Graduate Diploma in Financial Planning (including single unit enrolments and the FASEA Bridging Course subjects)

All

Existing Students

Yes

New Students

Yes

To enrol, contact Deakin at bBbKWB`Òl`BbbWbUĆMOB_WbºOMtºBt 03 9244 5009

To request an enrolment form, contact AFA Bs KBaltpBTBĆBTBºBpbºBt Cynthia Shannon KpVBbbd ĆtbOºOMtºBt

Eligible courses for discount (FASEA approved courses)

Eligible AFA membership categories (Membership must be current)

Discount can be applied to:

Students using FEE HELP 6*" .-- 0MTX WVTa IXXTQM[ \W MVZWTUMV\[ QV I N]TT Y]ITQÅKI\QWV not single subject enrolments)

Contact and enrolment details

The Financial Adviser | December 2021

What we expect into 2022 With the end of the year now very close, we will be awaiting the outcome with the Compensation Scheme of Last Resort legislation and the implementation of the Single Disciplinary Body. We will also be keeping a close eye on the number of advisers who get through the November FASEA exam, and what this means for those who pass and are able to continue, and those who qualify for the extension through to 30 September 2022. That becomes the next key date for adviser attrition. 2022 will also be an important year in terms of the Treasury Quality of Advice review, which will look at all the recent oOTdoap BbM BppOpp sVOWo O OKsWyObOppº dlOTt``| sVWp zW`` JO an opportunity for some sensible removal of red tape and oBsWdbB`WpBsWdb dT sVO dJ`WUBsWdbp sVBs Bll`| sd sVO bBbKWB` advice process and the client engagement requirements.

We wish good luck for those awaiting their November exam results and all those advisers going through a period of transition. We know that 2021 has been a very tough year and we ask that you keep a look out for your colleagues who are struggling and encourage them to seek help if this seems necessary. With much of this tsunami of reform behind us, we can only hope that 2022 will deliver greater stability, a further movement of the pendulum back to the centre and some relief from the dyOo oOUt`BsWdb sVBs VBp JOOb TdoKOM tldb sVO bBbKWB` BMyWKO profession.

As always, we welcome your feedback and input on policy matters by emailing us at policy@afa.asn.au

TAFE NSW

Kaplan Professional

Queensland University of Technology

$2,200

$2,500

N/A

î »

î » º

î º º

Graduate Diploma in Financial Planning (including single unit enrolments and the FASEA Bridging Course subjects)

Master of Financial Planning; oBMtBsO OosW KBsO Wb WbBbKWB` ,`BbbWbU½ Graduate Diploma in Financial Planning (including single unit enrolments and the FASEA Bridging Course subjects)

Ethics and Professional Relationships’ bridging course

All

Yes

2d Obod`» KdbsBKs KBaltpBTBĆBTBºBpbºBt for the discount code. Kaplan Course Advisers pstMObsBMyWKOĆ_Bl`BbºOMtºBt

To enrol contact: Theresa Waye. Phone 07 3138 1089 aBW` Up ObnĆntsºOMtºBt

No (NB: When using FEE Help, discount does not apply)

To enrol, contact Diana Bugarcic (Course Coordinator) WBbB tUBoKWK ĆsBTObpzºOMtºBt 02 9598 6280

The Financial Adviser | December 2021

Advice Strategy

oBWU ,Bo_Oo General Manager of Next-Generation Health and Partnerships AIA Health

The importance of private health insurance through and beyond COVID-19 Over the past years, COVID-19 has presented challenges to every industry globally. There’s been short-term impacts to individuals and businesses, and we are still yet to see and fully understand what the long-term O OKs dT sVO lBbMOaWK zW`` JOº The private health insurance (PHI) industry has faced both challenges and opportunities, requiring us to think creatively about how to support members. Despite the challenges, premium revenue grew 3.2%, claims growth oOaBWbOM Bs BbM bOs aBoUWbp WbKoOBpOM sd ă Wb sVO year ending 30 June 20211. So, what are the impacts of COVID-19 to PHI? Shortterm? Health systems and emergency rooms have been inundated globally with hospitalisations, resulting in elective surgeries on hold. Many Extras providers, such Bp dlsWKB` BbM lV|pWdsVOoBl| d KOp» VByO B`pd JOOb closed due to lockdowns. Both the public health system and private health insurers pivoted their operating and customer service models as a response. General medical practices shifted from face-to-face appointments to telehealth consults as an alternative measure of health care. Private health insurers also reacted to the limiting of their ancillary providers to support their customers through lockdowns, through initiatives such as ‘refunds’ or premium delays. For example, AIA Health introduced Extras Value Protect, a product feature that refunds a percentage of unused extras premiums paid through the year, minus any claims paid. 2VO `dbUÒsOoa O OKsp zO BoO |Os sd pOO Jts BoO inevitable. There has been less focus on early diagnosis and preventative health, such as cancer screenings. !ObsB` VOB`sV BbM zO``JOWbU VBp pt OoOM zWsV sVO impacts of physical isolation and lockdowns impacting almost everyone. Between 16 March 2020 and 25 loW` » dyOo aW``Wdb !OMWKBoO ObO sp 0KVOMt`O (MBS) subsidised mental health-related services were processed, and Australian personal crisis Lifeline

8 $3/ 20 • Smoking • Unhealthy diet • Physical inactivity

• Excessive alcohol consumption • Interaction with the environment

received close to 82,000 calls2. COVID-19 has the potential to contribute to or exacerbate long-term mental illness including anxiety, depression, PTSD and substance misuse. Both health and life insurers will see the impact of increased claims because of both these pVdos BbM `dbUÒsOoa O OKsp Tdo aBb| |OBop sd KdaOº The main opportunity for PHI is the area of preventative health. The public health system is focused on treating sVO WaaOMWBsO O OKsp dT sVO lBbMOaWK zVW`O VOB`sV insurers need to focus on helping their customers be as healthy as possible to remove the need for medical intervention later. In 2018, AIA began talking about four numbers that embodied the state of Australia’s health and wellbeing: 4490. This health insight represented four adMW BJ`O JOVByWdto TBKsdop Ìdo pWal`| lts» Tdto lifestyle choices) – physical inactivity, poor nutrition, smoking and excess alcohol consumption – which lead to four non-communicable diseases (NCDs) – cancer, diabetes, respiratory and heart diseases – that caused 90 per cent of Australian deaths. This has now been updated to 5590, with the inclusion of interaction with the environment leading to mental health conditions and disorders. Mental health conditions may present alongside, and interact with, other NCDs. For example, OyWMObKO ptUUOpsp sVBs MOloOppWdb Wp B pWUbW KBbs TBKsdo in the development of heart disease3. Personalised VOB`sV BbM zO``JOWbU lodUoBap d OoOM Bp lBos dT VOB`sV insurance products, such as AIA Vitality, work to reward their customers for engaging with their health and taking proactive steps to improve it. Overall, the impacts of the pandemic will be felt for decades to come. The opportunity for private health insurance is in the ability to react and adapt quickly to the ever-changing customer needs and continue to provide essential support in preventative health. Something that AIA Health with AIA Vitality is truly committed to.

"$"Ò $!!3" 0 0 0 • Respiratory disease

• Diabetes

• Heart disease

• Mental health conditions and disorders

• Cancer

$8 /

90%

$ 2 0 " 302/

1 https://www.apra.gov.au/news-and-publications/apra-releases-quarterly-private-health-insurance-statistics-for-june-2021 2 https://www.aihw.gov.au/reports/mental-health-services/mental-health-services-in-australia/report-contents/mental-health-impact-of-covid-19#references 3 https://www.betterhealth.vic.gov.au/health/healthyliving/heart-disease-and-mental-health

The Financial Adviser | December 2021

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Your member portal We continue to work to optimise our membership portal to enhance your membership experience 2d ObptoO |dt oOKOWyO dto WaldosBbs aOaJOo KdaatbWKBsWdbp» l`OBpO VO`l tp J| MdWbU sVO Td``dzWbU¼

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provide current credit card details ensure adequate funds are available remember that payments are processed in the fourth week of each month.

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The Financial Adviser | December 2021

It’s time to cut through the noise on IDII Russell Hannah General Manager Sales, Marketing & CX, Integrity Life

It’s important to note this isn’t just a product and pricing change – it’s a holistic change including philosophy, approach & strategy, operational practices, risk and governance, along with data management.

To say there has been a lot of ‘noise’ across the industry since the launch of the new IDII products in October 2021 would be an understatement. With the conversations focused heavily on product features and MO bWsWdbp BbM Vdz sVO| KdalBoO BUBWbps previous iterations. While important especially when considering existing clients and their circumstances, the more critical conversation is about how advisers will adjust their ‘house view’ on Income Insurance as a result of these changes and have the changes gone far enough to ensure the future of Income Insurance as a sustainable product option. 2VO ptpsBWbOM bBbKWB` `dppOp O{lOoWObKOM across the industry have been widely document and speak for themselves. APRA is a prudential regulator not a product regulator, however they were compelled to step in and take action as a result of their assessment about the overall strength and sustainability of the industry from an Income Insurance perspective. APRA’s intervention was unprecedented and far reaching. No one in the life insurance ecosystem (clients, advisers and insurers) have been immune from the impact associated with the poor experience seen across the industry over the past number of years. No single insurer was going to be able to facilitate the necessary change, hence the reason for APRA’s intervention. APRA’s intervention was based on one key principle - sustainability. It’s important to note this isn’t just a product and pricing change – it’s a holistic change including philosophy, approach & strategy, operational practices, risk and governance, along with data management. There has been a lot of debate in the market about why and how we got to this point, and while this is interesting the reality is that if these changes didn’t occur, it’s unlikely we would have Income Insurance products in the future. APRA’s expectations combined with the Actuaries Institute’s IDII Reference Product and Sustainability Guide laid out some clearly MO bOM ÙUtBoMoBW`pÚ Tdo WbptoOop Wb oOplOKs sd product design and pricing that were about re-setting the product back to its fundamental ltoldpOº ,odyWMWbU bBbKWB` ptlldos J| replacing part of a client’s regular income if they are unable to work due to accident, illness or injury.

The Financial Adviser | December 2021

Interpretation of these ‘guardrails’ has been mixed and varied across insurers but ultimately APRA will be considering whether the industry has delivered on what it was asked to do and assess accordingly in early 2022. The days of the industry seeing most applications being submitted on maximum !dbsV`| ObO s Badtbsp» B| 9BWsWbU ,OoWdMp» sd UO ObO s ,OoWdMp Bs sVO cheapest price may well be changing. IDII products in the market now are all quite MW OoObs BbM MOsOoaWbWbU zVWKV lodMtKs Wp most appropriate becomes more subjective than ever. Therefore, considering how Income Insurance will be used in the advice process is something that needs a conscious rethink by advisers moving forward. Matching shorter sOoa bKdaO bptoBbKO JObO s lOoWdMp ptKV as 2 & 5 years with complementary lump sum covers is expected to be part of the considerations that advisers will make as a result of the changing landscape. As an industry, we all have a collective responsibility to ensure Income Insurance products exist to support people when they need it most. However, we need to step up our game and not go back to the ‘old ways’ and more traditional mindsets. What was done in the past won’t work in the future. 2VO `dbUOo sVO JObO s lOoWdM» sVO UoOBsOo sVO uncertainty and the higher the risk of future premium increases. Now is the time for advisers to contemplate what these changes mean for their insurance ‘house view’ moving forward and challenge the conventional thinking about Income Insurance as the world as we knew it has now changed forever. While this may be our collective reality, the one thing that remains consistent is the need for and the value of professional insurance advice.

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LifeGoals Ad.indd 1

Laura, 50, Business owner

For more information, please read the PDS.

24/3/21 5:05 pm

Advice Strategy

Making Income Protection sustainable again !WKVBO` dzbO| General Manager of Retail Distribution and Partnerships, MLC Life Insurance

Our biggest insight though was that advisers wanted products with greater certainty of future premiums, underpinned by more choice and options.

In late 2019, APRA outlined a new framework for life insurers to improve the sustainability of income protection products. Among other requested changes, APRA said insurers must end the sale of Agreed Value policies, stop d OoWbU ld`WKWOp zWsV sOoap BoO Tdo adoO sVBb yO |OBop» BbM ObptoO O OKsWyO Kdbsod`p zOoO put in place to manage the risks associated zWsV `dbUOo JObO s lOoWdMpº The framework challenged us as an industry sd JOssOo MOpWUb» loWKO» BbM aBbBUO s Tdo purpose income protection products that would meet customer needs but, importantly, zdt`M bds oOpt`s Wb pWUbW KBbs BbM ToOntObs premium increases experienced over the last few years. Like most life insurers, MLC Life Insurance responded to the challenge when we launched our new range of income protection products on 1 October. The launch was the culmination of 18 months of qualitative and quantitative research to help understand consumer, licensee and adviser sentiment to inform an appropriate product design. 2VOoO zOoO pOyOoB` WbsOoOpsWbU bMWbUp Wb dto research. We discovered that:

•83% of our retail insurance customers

earned $150,000 or less per annum and their income needs were highest during the early stages of a claim.

•89% of these customers were able to

oOstob sd Tt`` VOB`sV zWsVWb sVO ops szd years. This showed that our approach to income support, in combination with the right recovery management program was key to getting customers back to a healthy lifestyle and to assist them return to work.

• Both customers and advisers valued price and income replacement ratios well above all other features.

s zBp sVO `Bps bMWbU dT sVO oOpOBoKV sVBs gave us pause for thought. While it’s not surprising that customers would want to have adoO dT sVOWo WbKdaO oOl`BKOM» sVWp JObO s ÒM to scenarios where customers earned similar, or even more income on claim than they would earn when they were working. Further, evidence from industry-wide claim statistics showed the higher the replacement ratio, the less incentive for customers to return to work. That is not sustainable, nor is it what the products should be designed to do, which is to provide income support to people who are not able to work for a period. Our biggest insight though was that advisers wanted products with greater certainty of future premiums, underpinned by more choice and options. In essence, match the needs of K`WObsp zWsV adoO KVdWKO BbM O{WJW`Ws| BbM JO BJÒ sd d Oo B ptpsBWbBJÒ WbKdaO lodsOKsWdb product. p B oOpt`s dT sVOpO bMWbUp» zO zObs JBK_ to the drawing board when developing our new product. We revisited the key elements of how we could meet customer needs and be sustainable. We looked at the principles of WbMOabWs| BbM WbptoWbU MO bBJÒ» KB`Kt`BJÒ» and meaningful losses caused by accident, injury or illness. For example, if we know that most people who make an income protection claim return to work within two years, and they have their most acute income need during the early stages of a claim, how can we design our product to prioritise customer needs during this time, while still providing support for customers with more severe, and longer term, sickness, and injuries? We look forward to product feedback we and other life insurers will receive from advisers and their clients. With customer needs varying and adviser preferences evolving, we have an dlldostbWs| sd d Oo adoO sBW`doOM pd`tsWdbp sVodtUV UoOBsOo KVdWKO BbM O{WJW`Ws|º

It is an opportunity we must take in supporting the insurance advice industry.

The Financial Adviser | December 2021

Events

It’s a wrap! $`WyWB 0BoBVÒ O BKVOto AFA Conference Chair

)N\MZ UWV\P[ WN \PW]OP\N]T XTIVVQVO PW]Z[ WN [XMISMZ JZQMÅVO[ TI[\ UQV]\M I]LQW ^Q[]IT KPMKS[ IVL ZMIT \QUM KWVÅZUI\QWV \PI\ our in studio guests had negative COVID tests, the Evolve Conference SQKSML W‫ ٺ‬WV ;MX\MUJMZ 2VO dbTOoObKO KoOBsOM Bb ObyWodbaObs Tdo bBbKWB` advice professionals to collaborate, advocate, innovate, be inspired, challenged and disrupted. AFA members, lBosbOop BbM pldbpdop» bBbKWB` l`BbbWbU pstMObsp and paraplanners, plus representatives from numerous trade media outlets logged on to the virtual conference platform for two days. There were four streams of content spread across two days, aligned to our conference theme “Evolve”: 1 Evolve your profession 2 Evolve your technical knowledge 3 Evolve your business 4 Evolve your wellbeing All content was recorded and is now available on the CPD hub for viewing up until late January 2022. Anyone who missed a session or wants to review content can use their Conference log-in details to access the content and secure CPD points. Two aspects of this Conference made it particularly special for me, the AFA’s 75th birthday and the Great Advice Awards. Appearing on video or in the studio, a number of past CEOs, Presidents and Members celebrated 75 years of the AFA advocating for advisers and advice, recognising what we have achieved as a profession BbM sVO Obdoadtp ldpWsWyO MW OoObKO zO VByO aBMO to our clients and the Australian community. It was heartwarming to walk down memory lane and understand how the AFA have grown and evolved, and the real sense of community that has been built through the Communities of Practice, the National Roadshows, annual conference and individual member connections.

The Financial Adviser | December 2021

The Great Advice Awards celebrate our shared belief in the need for great advice for more Australians and dto yWpWdb sd OaldzOo bBbKWB` BMyWKO lodTOppWdbB`p to transform the lives of Australians through quality bBbKWB` BMyWKOº zWbbOo zBp BbbdtbKOM Wb OBKV psBsO» with QLD, SA and WA being able to hold COVID safe face to face events to present the winners with their plaques and collectively celebrate the power of great BMyWKO¿ dbUoBst`BsWdbp sd¼ QLD | B|`O !K Oz Toda ,odplOoWs| ,`BbbWbU ,BosbOopæ NSW | 2Ooo| dVbpdb Toda O|aBb WbBbKWB` 0OoyWKOpæ VIC | MoWObbO /tpV Toda W BoO WbBbKWB` MyWpdo|æ SA

| 0Wadb Bll from Treehouse Financial Planning

WA | Bzb 2VdaBpæToda bsOUod ,oWyBsO 9OB`sV As always, the AFA community and Conference attendees supported the AFA Foundation with donations to charity partners Lifeline and Foodbank. Lifeline will be able to answer another 41 calls with a trained counsellor and Foodbank will be able to deliver 3,894 meals thanks to our donations. These life saving and life changing results are something we can be so proud of. It takes an enormous amount of thought, passion, hard work and collaboration to bring a conference with 35 speakers across multiple locations to life on a custom built event platform with a comprehensive CPD hub. ÜM `W_O sd KdaaObM sVO OBM $ KO 0sB » National President and Vice President, our Community of Practices, our Conference MC, and our event suppliers (Scene Change, Because, TPM) for working virtually to bring together an event that resonated with attendees, sponsors and the media. Staying connected in a community that has done, and continues to do so much is invigorating and inspiring. While I can’t wait to get back to in-person conferences and feel the energy that only comes from being together, I’m proud to have worked side by side with the team that bought this virtual event together.

Conference highlights This year’s AFA Evolve Conference in September had a number of engaging and thought provoking speakers and topics. Here are some of the highlights. Shadow Minister – Stephen Jones Stephen Jones discussed a broad range of regulatory WpptOp Wb bBbKWB` BMyWKO BbM BosWKt`BsOM VWp OaOoUWbU thinking with respect to a number of key issues that are pd WaldosBbs sd sVO bBbKWB` BMyWpOo ldlt`BsWdbº

Minister the HON Jane Hume Minister Hume provided a broad ranging update on key regulatory developments across the Single Disciplinary Body, Compensation Scheme of last Resort, the ASIC Funding Levy, the 2022 Quality of Advice Review and Digital Advice.

ASIC Chair – Joe Longo

Dr Adam Fraser – sponsored by AIA

VBWoaBb dbUd Kdb oaOM sVBs VO zBp loWdoWsWpWbU sVO bBbKWB` BMyWKO lodTOppWdb» MOpKoWJOM Vdz sVO| VByO responded to COVID 19 and the work underway as part of the Unmet Advice Needs project. He also spoke about sVO WalOMWaObsp sd sVO lodyWpWdb dT bBbKWB` BMyWKO» what he understood the advice profession wanted and the role and priorities of ASIC.

Research by Dr Fraser, Deakin, and e-lab, provided insight into why some advisers were thriving whilst dsVOop zOoO bMWbU sVO KtooObs ObyWodbaObs pd challenging. Having a clear focus around your purpose and meaning as an adviser was key. Having several advisers discuss their journeys to success was really inspiring.

The Financial Adviser | December 2021

Events

Conference highlights continued

Conny Kalcher – sponsored by Zurich

Dr Nick Coatsworth – sponsored by TAL

What a compelling session, hearing about Lego’s journey to becoming the iconic customer experience brand that it is today – to the world of insurance and understanding the needs of customers in this critical space.

Dr Coatsworth was engaging, genuine and provided insight into Australia’s COVID 19 response. He was extremely open about his own mindset at the start of the Pandemic and as it unfolded. His session reminded us all of the importance of looking after our own wellbeing as well as that of others.

Life Company CEOs An open and frank discussion from these key Life company leaders on the challenges faced by the life insurance industry and the ongoing importance of zdo_WbU zWsV bBbKWB` BMyWpOop sd BKVWOyO sVO JOps possible outcomes for clients.

The Financial Adviser | December 2021

Congratulations to AFA’s Great Advice Award winners 2021 This year the AFA ran a special award that acknowledged great advice examples in our community. Advisers were asked to submit an advice story that demonstrated a great outcome for their clients. 2VOpO psdoWOp BoO sOpsBaObs sd sVO zdbMOoTt` O dosp dT BMyWpOop Wb VO`lWbU sVOWo K`WObsp OyOo| MB|º dbUoBst`BsWdbp sd sVO Td``dzWbU zWbbOop Wb OBKV psBsOº

dbUoBst`BsWdbp MoWObbO¿ 2VO ]tMUOÜp TOOMJBK_ WbMWKBsOM sVBs zVOb reviewing Adrienne’s submission it highlighted her willingness to go above and beyond to achieve the desired outcomes for her clients. Her focus is to provide her clients with a highly tailored & comprehensive piece of advice, in a timely manner under often stressful circumstances.

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dbUoBst`BsWdbp 0Wadb¿ s zBp K`OBo sd sVO ]tMUOp sVBs 0Wadb VBM UdbO to great lengths to assist a client after a family loss. He had not only empowered his client but provided education in the process, allowing the client to plan a future knowing that they could retire comfortably.

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dbUoBst`BsWdbp Bzb¿ 2VO ]tMUOÜp TOOMJBK_ Toda BzbÜp ptJaWppWdb UByO tp WbpWUVs Wbsd zV| Bzb zBp ptKV B zdosV| oOKWlWObs¿ s zBp K`OBo from the client story that she was able to build trust with her client who had previously experienced bad advice. Dawn was able to help her client recover compensation as well as empower her client to achieve the independence that she valued. Most importantly, by restructuring the K`WObsÜp B BWop BbM lodyWMWbU UtWMBbKO» Bzb VO`lOM VOo K`WObs BKVWOyO work/life balance.

dbUoBst`BsWdbp 2Ooo|¿ 2Ooo| Wp B lOoTOKs O{Bal`O dT Bb BMyWpOo sVBs UWyOp great advice. He has invested heavily in his own business in terms of JBK_ ObM O KWObKWOp BbM lodKOppOp» Bp zO`` Bp aBWbsBWbWbU sVO VWUVOps compliance framework possible. Two of his children have joined him in his business. Terry has many successful claim stories of which to be proud. Not only has Terry administered claims pro bono, but he always shows the utmost care to his clients when they need it the most.

dbUoBst`BsWdbp B|Ò¿ B|ÒÜp zOB`sV dT O{lOoWObKO» KdalBppWdb BbM relatable manner with her clients makes her a worthy winner of the Great Advice Award for QLD. The judging panel felt her submission was Bb O{KO`Òbs O{BalÒ dT K`WObs KBoO zVWKV VWUV`WUVsOM sVO JObO sp dT WbsOoUObOoBsWdbB` bBbKWB` KBoO BbM lodTOppWdbB` BMyWKOº

B|`O !K Oz

The Financial Adviser | December 2021

Business Growth

Business resilience and how to position yourself for the future BooOb 0sOWbVBoMs Founder and Managing Director, Infocus

Whilst many of us are lobbying hard for more KdbpWMOoBsWdb dT sVO KVB`ÒbUOp TBKOM J| bBbKWB` BMyWpOop» the reality is that the changes we desire won’t ever be as fast as we’d like. What we can do now, however, is take action on fortifying our practices to be ready for the opportunities that I believe will come. Here are my key tips on how to do this: 1 ÒBb tl |dto Jdd_p – it’s hard to move forward when you are at risk of lookbacks and the consequent high-jacking that occurs to your business plans while you resolve legacy issues. Knowing your book is clean and compliant enables you to move forward with Kdb MObKOº `pd» MdbÜs zBWs Tdo |dto `WKObpOO sd sB_O the lead on this. 2 bdz sVO ÒUWp`BsWdb – whether you agree with it or not, the faster you adopt it, the faster you can build O KWObs lodKOppOp BodtbM Wsº ;dto `WKObpOO pVdt`M JO able to support you with this too.

3 bdz |dto sBoUOs K`WObsp BbM KB`Kt`BsO |dto aWbWata yWBJ`O TOO – the reality is that we can no longer serve all the clients we may want to. Understand your position in the market, know the cost of servicing these clients, and build your book with this focus. 4 2VWb_ dlOoBsWdbB` O KWObK| – never has it been adoO WaldosBbs sd UOs |dto JBK_ d KO Wb doMOoº 2d O OKsWyO`| pOoyO |dto O{WpsWbU K`WObsp BbM MOyO`dl dlldostbWsWOp zWsV bOz dbOp» |dt bOOM |dto JBK_ d KO otbbWbU pVBol`|º 2VWp aOBbp paBos lodKOppOp» O OKsWyO zdo_ dzp» BbM O KWObs» psoOBa`WbOM sOKVbd`dU|º 5 ,dpWsWdb |dtopO`T Tdo UodzsV – while we acknowledge the sad truth of advisers leaving the industry in droves, there will be opportunity for the advisers who remain. Consider your growth strategies and how you will make yourself more visible to your target clients. Yes, it is a challenging environment right now, but what hasn’t diminished is the need for Australians to have BKKOpp sd ntB`Ws| bBbKWB` BMyWKO Ô WT Bb|sVWbU Ws VBp increased. ,dpWsWdb |dtopO`T sd JO lBos dT sVBs TtstoOº

Genxt Community of Practice

It’s not easy bein’ green… VBo`Op oOOb

Don’t worry, dear reader – you are not about to embark on a 700 _WZL XMZ[WVIT TIUMV\I\QWV°+PIZTQM /ZMMV Q[ LWQVO R][\ ÅVM

AFA Genxt National Chair

I’m referring to the trend of ESG investing that has become increasingly prevalent over the last decade; and the trend shows no signs of slowing. In my role delivering investment solutions to advisers, I am asked with increasing ToOntObK| BJdts 0 dlsWdbp» adMO`p» BbM OsVWKB` ToBaOzdo_pº JO`WOyO sVBs WT Wb yO |OBop |dt MdbÜs d Oo sVWp type of investment solution to your clients, you will be in the minority. But don’t take my word for it – Morningstar recently released their quarterly report outlining sustainable investment trends in Australia and found that FUM in sustainable investments rose 18% for the quarter to August and is up 66% compared to June 2020. The introduction of FASEA’s ethical framework also ensures clients must be informed of their potential investment universe, including the option to invest ethically. Not only has the societal shift of wanting to “do good” increased the demand for ESG portfolios, but to act in clients’ best interests, this will become part of advisers’ JtpWbOppÒBpÒtptB` ldosTd`Wd d OoWbUº 0d `Os tp JoWO | tblBK_ sVO KdbKOls dT 0 WbyOpsWbU» sVO MW OoWbU BllodBKVOp sd 0 ldosTd`Wd KdbpsotKsWdb BbM how you can implement this in your business to get ahead of the green wave.

?PI\¼[ Q\ TQSM JMQV¼ OZMMV' Environment, Social and Governance investing (ESG) is the widely accepted term for ethical investing, however this acronym covers three main methods of portfolio construction you could consider when looking to formulate an ESG solution:

ESG overlay

Socially responsible investing

Impact investing

When choosing whether to include an asset in the portfolio, a manager will assess the environmental, social and governance practices of the companies and invest based on their performance in these areas (generally against their competitive peers) alongside bBbKWB` lOoTdoaBbKOº T sVO aBbBUOo JO`WOyOp db JB`BbKO sVO bBbKWB` lOoTdoaBbKO outweighs any potential ESG issues, they will include the investment in the portfolio.

Managers will actively include or exclude certain investments from portfolios based on a predetermined ethical overlay. For example, you could exclude fossil fuel companies, gambling or weapons. This has almost become the baseline in clients’ minds for ESG investing as it demonstrates a clear desire to ensure their money is at a minimum not going to “bad” companies.

This is the gold standard (green standard?) of ESG investing, whereby you are seeking out investments or companies that actively strive to JObO s pdKWOs| BbM Vd`M sVOapO`yOp accountable to bettering the world through positive investing.

This a particularly light touch approach to ESG investing and may not satisfy the needs of clients looking to take a stronger stance – but a good place to start.

?PMZM LW aW] LZI_ \PM TQVM' This is commonly thought by those unsure of how to start down the path of ESG investing. Are all banks bad? Is Woolies bad because they own pokies? A way to manage this uncertainty is to apply your ESG framework rules to portfolio decisions and always refer to this when discussing with your clients. For example; if you implement an ESG Overlay, you can support your decision to hold banks JOKBtpO sVO bBbKWB` dtsKdaOp dtszOWUV sVO negative impacts. If you apply an exclusion BllodBKV» |dt KBb `sOo dts JBb_p sVBs `dBb to fossil fuel companies and include those that don’t - what’s important is that you are consistent and clear in your process so clients can make an informed decision.

1[ \PM OZI[[ OZMMVMZ' Another concern is that clients will pBKoW KO MWyOopW KBsWdb BbM WbKoOBpO oWp_ due to the narrowed investment universe. This was perhaps true ten years ago, but it’s now possible for ESG portfolios to match or even outperform the alternative on a risk adjusted basis. With sustainable focused ETFs, SRI managed funds and broadly available green bonds you can cover your asset allocation and MWyOopW KBsWdb bOOMp zWsVdts `WaWsWbU potential returns.

The movement toward ESG minded portfolio construction is a good thing for the community and should be embraced. I’ve only skimmed the surface, but the _O| aOppBUO Wp sd K`OBo`| MO bO sVO s|lO of ESG manager you want to be, which will help de-mystify the investment universe and translate into practical solutions for your clients. And at this point of the cycle, implementing now will ensure you’re ahead of the curve.

To quote a perhaps more enlightened Gordon Gekko – “Green” is good. The Financial Adviser | December 2021

Community & Marketplace

AFA Foundation – every dollar makes a difference! $`WyWB 0BoBVÒ O BKVOto AFA Foundation National Chair

We know that every dollar donated is powerful for the charity partners who receive funds from the AFA Foundation. None more so than ddMJBb_ tpsoB`WB who can turn $1 into 2 meals for a family in need. Foodbank provides food relief to more than a million people a month. Food relief is not only being sought out by those who are homeless and unemployed, but working families, refugees, single parents, school leavers, First Nations People and many more. The AFA Foundation is a proud partner of Foodbank which helps charities across Australia to provide food relief to those in need. Over the last few years our AFA community has raised around $7,000 for Foodbank through donations to the AFA Foundation, delivering almost 14,000 meals. Head to Vsslp¼ÇÇoOldospºTddMJBb_ºdoUºBtÇÁpsBsOûBt to read the Foodbank Hunger Report 2021 or go to zzzºBTBTdtbMBsWdbMdbBsWdbºKdaºBt to make a donation today.

In November 2021, we celebrated the AFA’s 75th anniversary with a donation campaign titled Ù yOo| !OaJOo Wb "dyOaJOoÚ. Members were invited to make a donation to celebrate the incredible community that we have created in the AFA and our connection to the communities we live and work in. At the time of going to print, this campaign was still tbMOozB|º 9O zW`` tlMBsO |dt db sVO oOpt`sp Wb sVO bOz |OBo¿ In February we will also share with you the dtbMBsWdb oBbsp . The AFA Foundation provides grants to member bdaWbBsOM KVBoWsWOp do doUBbWpBsWdbp zVd aB_O B pWUbW KBbs MW OoObKO Wb sVOWo KdaatbWs| Jts aB| JO KVB``ObUOM Wb bMWbU TtbMWbU sVodtUV dsVOo ByObtOp ptKV Bp UdyOobaObs assistance or larger organisations. AFA Foundation Grants are funded through Foundation Fund reserves. Grant applications will be assessed for Deductible Gift /OKWlWObs Ì /Í BKKoOMWsOM KVBoWsWOp BbM "ds Tdo ,od s (NFP) organisations that align with the core purpose of the Foundation (as outlined in the ACNC Charity Registration Summary for the Foundation). The format of the grants will be the same as prior years where a brief application form needs to be completed by a current AFA member. Announcements about the grants and the application form will be sent to members in early 2022.

The Financial Adviser | December 2021

After a forced pause in 2020, the 0tlOo ddbU tbKV returned for the 7th year to support the Kayser Family and their 14 year old daughter, Mabelle.

2VO 0dtsV tpsoB`WBb bBbKWB` pOoyWKOp community came together on Friday the oM dT 0OlsOaJOo sd d Oo dto lOopdbB` BbM bBbKWB` ptlldos sd ObBJ`O sVO TBaW`| sd KdbsWbtO !BJO``OÜp UVsº $yOo $30,000 was raised for Little Heroes, a Foundation that provides daily support to seriously ill children like Mabelle, and their families.

Pulse Community of Practice

At the heart of it all WB BobBoM AFA Pulse National Chair

Firstly, I would like to thank Hayley Knight for her tenure as National Chair, on behalf of the entire Pulse committee. You lead the charge in founding this important community and we wouldn’t be where we are now without you! As we to look forward to 2022 and the next chapter for ,BoBl`BbbOo ,t`pO» bM a|pO`T oO OKsWbU db zV| sVWp Community of Practice for paraplanners was founded.

OTdoO WsÜp d KWB` `BtbKV» B btaJOo dT bBaOp zOoO suggested for the new CoP. We wanted something sVBs oOB``| oO OKsOM sVO lodTOppWdb BbM sVO lOdl`O sVBs choose it. I’ve often heard paraplanners talk about being ‘the meat in a sandwich’, and while I’ll admit it certainly feels that way some days, I’m not sure ‘Paraplanner Ham’ would’ve made it past the marketing sOBa¿ 2VBb_Tt``|» !O` oBUd» dbO dT lBoBl`BbbWbUÜp great advocates in Australia, came to our aid and suggested “Paraplanner Pulse: The Heart of Advice”. So what does it actually mean to be ‘the heart of advice’? From a literal perspective, we paraplanners sit at the heart of the advice process. Our role picks up sVO lt `O BTsOo K`WObs pOoyWKO d KOop BbM JBK_ d KO psB UBsVOo sVO MBsB» BbM zO zdo_ sd lts sVO lWOKOp together before advisers present the completed work to our clients. I say ‘our clients’ with intention. In recent years, the advice profession has grown and matured to a point that we are now part of an ‘advice team’ where each member has equal value and input to ensure the client is serviced well, and compliantly. I’ve never met a career paraplanner who doesn’t take great pride and ownership over a job well done. Although we are often a step back from the client connection and we may never meet them in person, we care deeply about the outcomes for the client. Being at the heart of advice gives us an unparalleled understanding of the bBbKWB` l`BbbWbU lodKOpp BbM sVO yB`tO Ws JoWbUp sd people’s lives. With this in mind, the purpose of the Paraplanner Pulse Community of Practice is clear. Having a community that is distinctively ours is an important step in acknowledging the valuable role we play in the advice process, and as part of an advice team.

The nature of paraplanning means that many of us work in isolation from other paraplanners, or if we’re lucky, in small groups. At times it really feels like the old adage “you don’t know what you don’t know” was written FOR paraplanners. Pulse provides a space for us to share and learn from the absolute treasure trove of knowledge in the community, and discuss issues that are uniquely important to us, whether we are an in-house paraplanner or work as an outsourced team member. At the risk of sounding like a motivational poster from the noughties, Together veryone Achieves MdoO¿ So, if you’re a paraplanner and you’re not in our Pulse BKOJdd_ Uodtl |Os» zVOoO sVO J`ddM| VO`` BoO |BÁ¿ 9O have so many exciting ideas for the Pulse community and the best place to hear about them right now is by joining the group. Not only will you hear about future events and lodUoBap ops» Jts |dtÜ`` B`pd VByO sVO dlldostbWs| sd get social with other paraplanners. Let’s face it, we’re a special breed… Not everyone is going to laugh at an {KO` aOaO zWsV |dt¾ Jts dsVOo lBoBl`BbbOop ptoO zW``¿ We’d love nothing more than for you to join the party. As we move into a new year, you’ll have the chance to mould the future of Pulse, and your input on how we can provide real value to you will be appreciated and considered thoroughly. Advisers, if you’ve made it this far, I have a cheeky favour to ask you. Actually, while I’m asking for TBydtop» zBbs szd¿ Wops`|» lBpp sVWp BosWK`O dbsd |dto lBoBl`BbbOop½ zO zBbs sd aOOs sVOa¿ 0OKdbM`|» sB_O B moment to let your paraplanner know how important their work is. Being in a non-client facing role, we often have to assume that ‘no news is good news’, so hearing any feedback about our work or how the client responded to the plan we built together really does make our day. dWb sVO BKOJdd_ Uodtl¼ Vsslp¼ÇÇzzzºTBKOJdd_ºKdaÇ UodtlpÇ ,BoBl`BbbOo,t`pO

Being in a non-client facing role, we often have to assume that ‘no news is good news’, so hearing any feedback about our work or how the client responded to the plan we built together really does make our day.

The Financial Adviser | December 2021

Community & Marketplace

"WKd`B OpzWK_ Chair, Pro Bono Financial Advice Network

Giving your time and expertise to help people in need Giving to charity does not always have to be about giving money to an organization. It can be about giving your time and expertise to those less fortunate. This is what the Pro Bono Financial Advice Network (PFAN) is about. I met Laura, a PFAN client, in late April 2021. She had completed our request for help form with the basics as her multiple sclerosis (MS) impacts her ability to concentrate on one task at a time. Laura got in contact with us because she was running out of money fast. For a range of factors including COVID and her MS, Laura VBM psotUU`OM sd bM B ]dJº bdzWbU pVO needed money, Laura had taken two lots of $10,000 out of superannuation to help meet the basics. Laura confessed to me that although she knew it wasn’t ideal, she had no other choice. Laura lived in a home she built and moved into two months after her MS diagnosis and was using her Centrelink payments to fund the mortgage repayments, but the burden was getting real. She wanted advice around whether she should sell her home or not. Her savings had disappeared. Her superannuation statement noted a TPD ld`WK| Tdo Bb Badtbs sVBs zdt`M lB| d VOo mortgage and leave a residual amount to assist her with her living. Laura had no idea, and I didn’t want to UOs VOo VdlOp tl tbsW` VBM Kdb oaOM sVWp MWoOKs`|º TOz zOO_p `BsOo» zO Kdb oaOM sVO insurance was still active.

Laura & Suki

Our next meeting, went along these lines: “I’ve done some investigating on your superannuation, and you have an insurance policy.” “The amount of cover you have will enable |dt sd lB| d |dto adosUBUO» pd |dt MdbÜs have to sell your home. This is going to help KVBbUO |dto `WTO¿Ú I share this story to highlight the importance of what we do as advisers by guiding others through some of the most emotionally daunting times in their lives, and especially if they’re impacted by a serious illness. Someone in this position is unlikely to seek bBbKWB` BMyWKO JOKBtpO sVO| BoO BToBWM dT sVO cost of obtaining advice. And they may not be aware of programs such as PFAN which d Oo BKKOpp sd BMyWKO» BbM adoO dTsOb sVBb bds» MO`WyOo oOB` bBbKWB` JObO spº T BtoB had not gotten in touch, she would have eventually lost the insurance policy, most likely would have sold (or lost) her house, and detrimentally impacted her future without even knowing it. 2VO bBbKWB` l`BbbWbU lodTOppWdb Wp BJdts the people it serves and their lives. Expert guidance, compassion and support is what we deliver on the job every day. Pro bono advice is simply doing what we do every day without expecting anything in return. It’s easy to get involved. You can help by taking on just one case a year. That’s one person’s life you are changing. Multiply this by all the advisers in the PFAN program, BbM sVBsÜp B pWUbW KBbs MW OoObKO zO KBb collectively contribute to the community. WbM dts adoO BJdts , " Bs lodJdbdBMyWKOºKdaºBt

My advice to people who need help with their finances is not to be embarrassed about it if you have no idea, just start. That’s what I did and it was humbling to realise how much I didn’t have in place. My adviser Nicola stepped through everything with me, explained concepts clearly and backed everything up with emails. I now have my finances sorted. Thank you Nicola, PFAN and MS Australia for providing this service.

The Financial Adviser | December 2021

AFA Mentoring Program Connecting experience with the future

Access to an impartial sounding board

Share viewpoints, advice and information from your own knowledge, experience and expertise

Create valuable space and time for you to ‘stand-back’ and review where you are now, where you want to get to and how best to get there

Assist you to achieve changes and goals that enhance your professional and personal life

Mentoring is a brain to pick, an ear to listen and a push in the right direction John C. Crosby

To enquire about joining the 2022 AFA Mentoring Program, visit www.afa.asn.au/membership/afa-mentoring

The Financial Adviser | December 2021

Advice Strategy

`BWbO 0 O Regional Manager, Centrepoint Alliance AFA Mentoring (NSW/ACT Contact)

‘Tour d’Advice’: Key insights to progress through the advice business life cycle Our dynamic industry is testament to the saying: “change is the only constant in life” – Heraclitus. Having the honour dT Kd``BJdoBsWbU zWsV dto BMyWKO KdaatbWs| Wb JtW`MWbU O KWObs» lod sBJÒ BbM ptpsBWbBJÒ JtpWbOppOp dyOo B KdtlÒ of decades, the level of resilience continues to amaze me. This commitment is driven by one main force; and that is advisers and their teams doing everything they can to improve our society’s wellbeing, one person at a time. Witnessing generous mentors and enthusiastic aspirants working through the AFA mentoring program also demonstrated myriads of learning opportunities. Despite trials and tribulations in varying business life stages, advisers are open to share best practices and ideas to help their peers thrive. p zWsV sVO TBaOM JWK|KÒ oBKO» UOssWbU sVodtUV B psBUO oOntWoOp MOMWKBsWdb» sOBaÒzdo_ BbM O OKsWyO KdaatbWKBsWdbº Üa Kdb MObs sVO KBaBoBMOoWO zWsVWb dto BMyWKO KdaatbWs| zW`` KdbsWbtO sd TtO` JtpWbOppOp db sVOWo journey across varying stages. VdlO |dt zW`` bM sVO Td``dzWbU BMyWpOo psdoWOp VO`lTt` sd |dt» oOUBoMÒpp dT |dto JtpWbOpp `WTO psBUOº

Business Life Stage 1 Foundation and development – building momentum and early success

0VBbO ,Opsdb]W Principal Shape Financial Advisory since 2017

!| ]dtobO| Wbsd bBbKWB` l`BbbWbU aB| pdtbM KVOOp|» but I’ve always experienced enjoyment from assisting people. Helping clients achieve major life milestones `W_O BKntWoWbU sVOWo ops VdaO do oOsWoWbU KdaTdosBJ`| Wp extremely satisfying to me. !B_WbU B KBoOOo pzWsKV Toda `BoUO bBbKWB` pOoyWKO corporates to small business ownership was a dramatic change, but one that was certainly right for me. Having the chance to build my own business and reap rewards Toda sVBs» WbK`tMWbU O{WJW`Ws| BbM bBbKWB` oOzBoM Wp BbdsVOo _O| oOBpdb Tdo MdWbU zVBs Mdºæ I know the landscape for new advisers is now more challenging regarding studies and ongoing costs, however, I believe it is still an industry that is worth zdo_WbU sd UOs Wbsdºæ It was quite a daunting thought to start my business doUBbWKB``|º 9VW`O MW Kt`s» TdtbM Ws oOzBoMWbU sd challenge myself and build recurring revenue from the ground up. That said, I was also in a position at the time to take on calculated risks of committing to adbsVp dT pWUbW KBbs`| oOMtKOM pB`Bo|º 2d psB| db track and get critical scale, I adhered to very clear and MO bOM lOopdbB` UdB`pºæ I know successful peers who built with a mix of organic growth and acquired base. There is no ‘silver bullet’, and varying factors will determine which option suits advisers best. Some of those include: • Do you have capital available to buy clients? • Do you require ongoing revenue from Day 1? • Do you have enough savings to sustain you whilst your salary is lower?

The Financial Adviser | December 2021

A factor that helped me build early business momentum and continued to deliver has been having B Kdal`OaObsBo| adosUBUO Jod_WbU d Oo zWsVWb Shape Financial to provide a holistic solution. My initial commitment was based on the belief that here in Australia, property has and will continue to be a large part of a client’s overall asset position, so being able sd BppWps sVOa zWsV bBbKWbU pOOaOM `W_O B zdosVzVW`O service. A few years on from starting up, another critical stage was to build a small support team by weighing up aOoWsp dT VWoWbU Tt`` sWaO psB BbM dtspdtoKWbU KOosBWb functions. I landed on my preference of having a team Wb sVO d KO» VdzOyOo JO`WOyO dtspdtoKWbU KBb B`pd JO WMOB` Tdo KOosBWb sBp_pºæ I’m really looking forward to my next business lVBpO» BbM sVBs Wp VWoWbU WbKdaO lodMtKWbU psB º sÜp paramount to balance a high level of client service whilst continuing to grow. What’s important here is knowing I cannot do this without the right team to represent Shape. I’ve thoroughly enjoyed growing with my clients. Many dT sVOa VByO pOOb aO psBos B TBaW`|» pOs tl dto d KOp and grow the business. In return, I have been privileged ObdtUV sd zWsbOpp a| K`WObsp Jt| sVOWo ops VdaOp» psBos their own families, and achieve some major life goals. 2VWp sd aO Wp sVO yB`tO dT bBbKWB` BMyWKOº

Business Life Stage 2 Validation – ensuring continuous improvement and growth

BoOb 9B`ap`O| Principal, Powe Financial Advice since 2008, AFA National Practitioner Chair

My advice career started as part of an existing adviser’s succession plan. He wasn’t getting any younger and needed someone to look after his clients that he had accumulated over 40 years. It was a bonus that I was someone who already knew many of the clients personally whilst working in the accounting practice. Both of my children were at school and my role of mother had changed. After completing the required study and spending about 18 months working in tandem with my predecessor, he retired, and then... sVO VWs¿ Whilst an awful time from a market and client investment balance perspective, the positive takeout from this crisis was that I was able to work alongside clients, constantly updating them and together we made it through. It established a great rapport that still exists more than 13 years later. The business is client centric, as the clients have aBstoOM» pd sdd VByO sVO pOoyWKOp zO VByO sd d Ooº Specialising in the Aged Care space has enabled me

to service not only my existing clients but their parents as well. There is a great deal of satisfaction when we can make the confusing journey into aged care less complicated than it actually is, and also be able to let a person know that when they pass that their loved ones will be okay. Situated in Gymea Village, we have always said that we are like one big family. It means a great deal to be seen as the local accountant and trusted adviser. Many of my retiree clients have indeed known me as a child. The business has continued to evolve, and through constant education and training we have been able to remain relevant. Each year the cost to serve is reassessed to ensure it is competitive and sustainable. d``BJdoBsWbUæzWsV WbMtpso| lOOop BodtbM JOps loBKsWKOæB`pd VO`lp zWsV KdbsWbtdtp ObVBbKOaObspº Remaining resilient while adapting to constant changes of our industry can be challenging, my driver to persevere is knowing that I’m making a positive MW OoObKO sd K`WObspÜ `WyOpº

Business Life Stage 3 Realisation – planning early to maximise value and build future purpose Having concluded a 40-year Advice career recently, I have had to ‘re-set the sail’ to ensure I enjoy the ‘3rd Act’ of the ‘3 Act Play’ that is my life.

W`` 9OJpsOo Mentor, Base Mentoring, Founding Partner/Adviser, Tempus Wealth (2006-2012) Adviser/Team Member (2012-2020)

Many advisers are being challenged by current industry changes and must make decisions about their careers and lives. Some, like me, may have a succession plan in place, while others are seeking directions. My work with clients was to facilitate decisions NOW, to provide security for themselves against events in the FUTURE. With every transition, whether it is your choice or not, a decision must be made, as tough as it may be to make them. The key is to MAKE the decision, as it is only after it has been made, that you can formulate your ‘game plan’ and get some momentum. In 2004, the Advice Industry was going through change, and I asked myself the questions: • Do I value my current situation? … ‘yes’, • Can it be improved? … ‘yes’,

My key message is, it starts with a decision to make the transition. Once you have a clearer idea, then ‘go public’ and share it with colleagues and friends who can support, challenge, and encourage you through the process. Focus on what you can control and decide on next steps. Re-imagining and re-constructing our ‘stories’ are vital to the meaning of our lives. Earlier in 2020, I asked myself the same questions (mentioned earlier in this article), my responses to those questions, came other questions. • What do I want the last 3rd of my life to look like? • What do I want from it? • How can I use my experience and expertise in a tpOTt` zB| dyOo sVOæKdaWbU |OBopÁ It is up to us, as to what challenges we take on. The meaning we get from life is built on how we manage things, like our health, thinking, relationships, social connections, and most of all, our purpose.

• How can it be improved? But more importantly ‘WHY’? My responses to these questions formed the ‘blueprint’ of a business succession plan. I met my business partner about 10 months later, we spent 12 months ‘getting to know’ each other, developing the idea, and then commenced as a joint business in late 2006. The plan was executed in 2012. I continued to be a member of that practice until December 2020. Things wouldn’t have fallen into place, as they did, if I had not made the decision and got focused.

The Financial Adviser | December 2021

Business Growth

What’s your post-pandemic productivity strategy? 8BbOppB ObbOss Performance Mastery Coach, Next Evolution Performance (NEP). She helps leaders and teams build aObsB` sbOpp sd perform at their best without burnout for better business solutions. She has completed her Masters in Psychology and Neuroscience of Mental Health – with Distinction – at King’s College London.

In a recent session I attended, Professor Lynda Gratton from London Business School highlighted that the two biggest issues facing people as we come out of the pandemic are: 1 Energy depletion 2 Lack of ability to focus Now many of you who are familiar with Next Evolution Performance know that we have been banging on about the importance of cognitive energy and focus for productivity for many years, not just during or postpandemic, but it’s useful that the pandemic has shone a great big spotlight on the issue. To be fair, it’s usually toward the end of the year that people are feeling like their batteries could do with a recharge, but this year, after two years of a pandemic, aBb| lOdl`O BoO TOO`WbU MOl`OsOMº $T KdtopO bBbKWB` advisers, who have also had ever-increasing compliance regimes to contend with, resulting in changes to business models and processes on top of BAU as well... ntWsO ToBb_`|» WsÜp B `ds¿ bM zO`` MdbO Tdo aB_WbU Ws sVWp far.

Have you thought about your post-pandemic productivity [\ZI\MOa' Courtesy of the pandemic we now have a once in a lifetime chance to really rethink human productivity in the workplace. For anyone who hadn’t really given this much thought pre-pandemic, you’ll almost be forced to think about it now, especially if you want to attract and _OOl UddM psB º You may have heard about “the great resignation” which is happening overseas and now people are starting to see this in Australia too. It’s important to be BzBoO dT sVWp» Bp psB stobdyOo Wp yOo| Kdps`| sd |dto business, and awareness of these issues will help you to avoid it. So why is this occurring? Here are a few reasons: 1 ,Odl`O VByO O{lOoWObKOM zdo_WbU adoO O{WJ`| over the pandemic and they want to maintain that O{WJW`Ws|º

And let’s face it, many people opted not to take holidays to explore their 5km radius, and so the natural recharges that people are used to throughout the year just haven’t happened for many.

2 People are just generally exhausted and sick of working in a way that makes them exhausted (note sVBs sVWp O{VBtpsWdb KBb JO oOUBoM`Opp dT O{WJW`Ws| dT location and hours).

And people have decided that if they are going to be exhausted, they may as well go and work for another company prepared to splash the cash at them to compensate them for feeling that way. 3 People have thought further about what’s really important to them and have decided to change career completely.

The Financial Adviser | December 2021

And be careful hiring anyone at the moment as they are possibly KdaWbU sd |dt Wb pdaO Tdoa dT Jtobdtsº ÜyO BòOBM| pOOb bBbKWB` advisers pay a premium to hire someone who ended up coming to them exhausted. One person ended up having to quit just a few weeks after being hired. They were making silly mistakes which they said wasn’t like them and so the new employer suggested they see a doctor just to make sure all was ok. The employee was diagnosed with severe burnout and depression and advised to sB_O Bs ÒBps Ò adbsVp d zdo_º dbpOntObs`|» sd aBWbsBWb BbM WalodyO lod sBJW`Ws| Wb |dto business, it’s now imperative (we would argue it always has been) to really focus on the human elements of productivity in your business, especially when it comes to helping people to increase their energy and focus to help them to get more done, in less sWaO» zWsV Òpp O dos BbM Jtobdtsº Anyone assuming that the talent in your business will just go back sd sVO d`M ÙbdoaB`Ú BbM zBbs sd JO Wb sVO d KO yO MB|p B zOO_ is possibly a little naïve. 2VO zBo db sBÒbs Wp dyOoº 2VO sBÒbs zdbº ;OBop BUd¿

What outcomes are required from TMILMZ[PQX' Arguably, leadership has always involved the following outcomes, but the pandemic has shone a big spotlight on energy depletion. So now, more than ever, leadership skills need to include knowing how to lead your team so that they: 1 Don’t become exhausted. 2 Learn how to use their cognitive energy wisely to work smarter not harder – whatever location they are working from. 3 Work on something that brings them joy at least 20% of their MB| sd pWUbW KBbs`| MOKoOBpO sVOWo KVBbKOp dT Jtobdtsº 4 Use their strengths every day. 5 Have a clear understanding of what’s expected from them, and ensure they are rewarded for results, NOT just for “working hard” or “looking busy”.

What should leaders do to achieve \PM[M W]\KWUM[' First and foremost, it’s highly likely that you are going to need to clearly articulate some form of agreement about a hybrid working culture. If you only want to hire people who will work 5 days a week from 9-5 you will either need to pay a premium, or settle for average performers. And this doesn’t just stop at agreeing on hours or location or work, the culture needs to be clearly articulated about what’s expected in the hybrid environment. For example, when someone Wp MWB`WbU Wb Tdo B yWMOd aOOsWbU zVW`O dsVOop BoO Wb sVO d KO» simple things like: • agreeing on a dress code for all in person and virtual attendees • zVOsVOo KBaOoBp BoO d do db» • what preparation should be done for meetings, and

So it’s important to drill deeper and adjust your Key Behaviour, Activities and Mindset (BAM) Indicators for a hybrid environment. These will help to establish clarity on your hybrid working agreement which is an important foundation of building a high performance culture. It’s also important to increase your understanding of cognitive energy – what is it? What gives you more of it? And how to spend less of it unnecessarily by better bespoke structure of your days, weeks, months and years, for everyone in your business. !dps dTsOb zVOb zO psBos zdo_WbU zWsV bBbKWB` BMyWpdop» sVO| sVWb_ sVO| BoO pd Jtp| BbM bOOM adoO psB º 2VO| UObOoB``| don’t, they need the people they currently have (often including themselves) to turn up with more cognitive energy, and to spend it more wisely. This could give you an extra 2 hours a day per person of additional productivity – it’s like having 4 people in your JtpWbOpp BbM sVOb VWoWbU Bb O{soB lOopdb Tdo ToOO¿

Do some maths on that in terms of your salary costs. There is some neuroscience to maximising cognitive energy and we’ve been helping people through this for many years. And the pandemic has upped the ante with the ever increasing issue of KdbsWbtdtp lBosWB` BssObsWdb – this is where people are trying to focus on so many things at once that they are less productive, and drain their energy way more quickly. Continuous partial attention results in a triple whammy of tired psB » zVd BoO `Opp lodMtKsWyO» BbM Kdps |dt adoOº ;W_Op Ô ptoO`| sVBsÜp bds B paBos zB| sd Md JtpWbOppÁ¿ Oh and it’s even changing the way we breathe, and leading to massive health problems similar to sleep apnea, but I digress. Creating an environment where people understand what’s happening in their brains with continuous partial attention, how it’s draining cognitive energy, and how to avoid it, is now one of your biggest superpowers towards performance.

Conclusion It is a really important time to enhance your self-leadership skills, as well as leadership skills for your team. Those who do, will have more energy and focus, and will build a high performing team full of energy and focus. This is a once in a lifetime opportunity to renovate the way that we work, to maximise both individual and team productivity, which is largely driven by maximising cognitive energy. 9W`` |dt aB_O sVO adps dT sVBs dlldostbWs|Á

+WUXTQUMV\IZa KWOVQ\Q^M MVMZOa KWV[]T\I\QWV W‫ٺ‬MZ T |dt BoO WbsOoOpsOM Wb bMWbU dts adoO BJdts aB{WaWpWbU |dto cognitive energy and team performance in a hybrid environment, please reach out for a complimentary, no obligation, 15 minute consultation at: zzzºbO{sOyd`tsWdblOoTdoaBbKOºKdaÇKdbsBKs

• procedures to make sure everyone gets a chance to speak…… all go a long way to removing any ambiguity so that people can spend their cognitive energy on the meeting topic instead of sVWb_WbU ÙzV| MdOp sVBs lOopdb VByO sVOWo KBaOoB d ÁÚº

The Financial Adviser | December 2021

AFA Financial Adviser Magazine | Vol 25. Issue 3.

Articles inside

‘Tour d’Advice’: Key insights to progress through the advice business life cycle

It’s not easy bein’ green

AFA CEO’s report

Congratulations to AFA’s Great Advice Award winners 2021

Making Income Protection sustainable again

At the heart of it all

AFA President’s report

Business resilience and how to position yourself for the future

Deep insights from the past to build a better future