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United we stand, divided we’re still doing fine Convergence of general insurance brokers and financial advisers is possible – but it’s still not common By John Wilkinson Editor, Life+Health insuranceNEWS.com.au

TALK OF CONVERGENCE BETWEEN brokers and financial advisers has been a subject of debate for many years. While the two sectors have moved well past the implacable viewpoint that they are completely foreign to each other and “never the twain shall meet”, the emergence of the one-stop shop for life and general insurance products isn’t common. Will that situation change as regulatory changes enable intermediaries – and accountants – to break down the barriers? The opinions among practitioners are mixed. Association of Financial Advisers President Michael Nowak says bluntly that the expectation of impending convergence is “overcooked”. He says the new Future of Financial Advice regulations, such as the best interest duty, have made it more difficult for intermediaries to become masters of all trades. “Specialisation is becoming more prominent because of the new compliance measures and to meet that demand, advisers will need to form alliances,” he tells Insurance News. “The links between advisers and brokers have always been there, but now they will have to be more formal.” As Mr Nowak points out, such links between brokers and financial advisers are 38

not new. In fact, they have been going on discreetly for years. That is confirmed by the National Insurance Brokers Association’s (NIBA) Needabroker online guide, which lists the specialities of its members. Outside of the major global brokers and some of the larger Australian brokerages with national footprints, few brokers have inhouse life insurance facilities, and even fewer offer financial planning. Only 35 of its member companies list life insurance as one of their services. In New South Wales – which has more brokerages than any other state – the guide lists only seven mid-sized broking houses offering life insurance services on top of general insurance. Those offering financial planning don’t indicate if it is an in-house service or operates on referral. General insurance brokers who do offer in-house life insurance services tell Insurance News it’s not always easy, with different compliance regulations and product offerings requiring distinct skillsets and a mass of extra paperwork. “It can be a nightmare,” one says. “Life people do things differently.” Melbourne suburban broker Graham Hiscock agrees. He previously maintained a life insurance business in-house using an authorised representative working under an insuranceNEWS

December 2013/January 2014

external licence, but gave it up when he found the two sides of the business weren’t particularly compatible. “We had difficulty finding and retaining suitable people,” he tells Insurance News. “The life side has a different way of going about business. “The general insurance side is about building and maintaining relationships with clients. Some [life insurance specialists] understand the need for relationships, but they are hard to find. “My gut feel is that we will see convergence in the future. It’s odd that it isn’t more common now.” NIBA Chief Executive Dallas Booth says members who have chosen to operate a life insurance business often hold two specialist licences, “usually with separate people doing different roles with the expertise in both roles”. But he adds that while life insurance is a “discrete part” of many brokers’ businesses, it is a “fundamental part” of financial advisers’ work. Asteron Life Executive Manager National Sales Mark Vilo says referral arrangements between advisers and brokers are far more common. “A lot of advisers refer general insurance business to brokers, and it’s a two-way street,” he says.

Profile for Insurance News (the magazine)

DEC/JAN 2013/14 - Insurance News (the magazine)  

The December edition of Insurance News (the magazine) contains our annual list of the 20 most influential people in the insurance industry....

DEC/JAN 2013/14 - Insurance News (the magazine)  

The December edition of Insurance News (the magazine) contains our annual list of the 20 most influential people in the insurance industry....