Consumers should not be afraid to challenge their life insurance and investment advisers – the real industry professionals thrive on it and the end result is even better service for the public.
The consumer tip comes from Liberty Life, a life office that is a heavy investor in professional training and compliance systems and a strong supporter of the Financial Planning Institute (FPI) methodology to foster objective, needs-driven consultancy.
Liberty Life notes that an informal type of ‘consumer testing’ is already faced by financial advisers as the public is increasingly aware that industry transformation is under way and improved levels of professionalism are demanded by leading life offices.
Jay Naidoo, Divisional Director for Learning at Liberty Life, points out: “At the moment more intense questioning comes from a few well-informed consumers who want to know about an intermediary’s qualifications and experience. They then prompt a discussion of product alternatives, costs and perhaps the adviser’s own remuneration.
“We encourage our advisers to use the FPI planning structure to put all these issues on the table at the outset, but the well-prepared consumer sometimes has a checklist and puts a tick in every box as the professional process is followed.
“We don’t feel threatened by this; nor do other industry players that have made the requisite investments in professional training and intermediary aids that support an objective approach.”
Liberty Life expects the trend towards stronger consumer engagement to continue and become a central feature of the marketing and distribution environment in the financial service sector.
“If the outcome is a financial plan that’s fully aligned with the consumer’s needs, we’re all for it,” says Naidoo. “Better questions lead to better solutions.
“The process is not only pro-consumer; it also works to the benefit of the industry. Needs-driven solutions encourage a long-term commitment to appropriate products without the sort of chopping and changing that might destroy value for the consumer and add to our costs.”
The final deadline for full implementation of the Financial Advisory and Intermediary Services Act is expected before year-end when professionalism and ‘best advice’ will be demanded by statute.
Naidoo notes: “We welcome the full implementation of FAIS. The industry has had several years to prepare for it. Reputable and well-resourced industry players have been keen to differentiate themselves by insisting on professional standards long before they become compulsory.
“We see competitive advantage in early commitment to total professionalism. Reluctant ‘converts’ who view this merely as a compliance issue will be ill-suited to the new era.”