FEATURES
How financial advice is changing Philip Macalister speaks to Naomi Ballantyne, managing director of Partners Life, on how the industry is looking under the new regime and the issues with PI cover. A few month into the new regime with advisers. What are you seeing in the marketplace at the moment and has it changed behaviours? We've already seen some immediate changes. We've seen a spike in agency transfers in March. So we've seen an increase in the number of people that are selling their books. Who's buying the books? We've lost four BDMs to become advisers. But that's a good thing, isn't it? It is a very good thing for the industry. It will be very good for us because they clearly know us and what we're about so hopefully that will translate to them trusting us with their customers. It's hard for us, we've lost an awful lot of experience and relationships [there] but the timing of the regulations has prompted advisers that they've worked with to go, "Hey, I'm needing a successor. I know you well and I can trust you with my client base – would you like to come into business with me?" Would you have expected that to happen? We've always expected that the career path for BDMs is either management within the company, a narrow channel, or go out and become advisers because of what
12 | ASSET 03 | 2021
they've learnt and they've seen different structures, what works and what doesn't. To get so many happen all at once is around timing of the regulations and them having an opportunity to buy a client base. They can start with an income stream as opposed to starting from scratch. You're on the hunt for a few new people. We will be. A number of our BDMs, we've recruited from within so we're certainly going to look to that first. Any changes in the business coming in? New business, replacement business? That's a really good point actually, Philip. We expected it to happen but we didn't expect to see it happen quite so quickly. We have always thought that the regulations would slow replacement business down, not that there shouldn't be replacement business but we've also been on that receiving end of opportunistic churn. I'll give you an example, advisers that write all of their new business for us but when they come across a new client that's already got a Partners Life policy, suddenly there's another company that's better for that client. And from that persistency point of view, they think we're invisible because they're not the broker that brokered the business.
But the new regulations have made people stop and think, should I and can I justify that and what trouble will I get myself into? We thought it would take time to flow through but we've just done our most recent measurement and we're probably one of the only companies that can measure – and has always measured – the percentage of business we get that is replacement. We were sitting at around 40% for the last five years of our business's replacement and the other 60% is new – top-ups or brand new business. In the last quarter, it's dropped by 10%, that replacement business so it's about 30%. That's a big drop. Do you think advisers under the new regulations are thinking more about replacement business? And does that indicate that maybe they were doing things that they shouldn't have been doing before? I think most advisers, nothing's changed because when they replaced business, they were genuinely doing it where they felt that it was right for the client. I think the few that weren't doing that and thought that they were kind of invisible so it was a nice bit of money on the side, are rethinking that strategy. It'll be interesting to track those numbers and see what happens. It will be. But there should be a healthy degree of replacement business because people's
