Insurance brokers have welcomed the FMA’s announcement of its annual corporate plan along with ANZ’s recent scrapping of sales targets for its internal staff, saying it will shift the focus for the industry towards quality independent advice.
According to Insurance Brokers Association of New Zealand (IBANZ) CEO Gary Young, the ongoing industry shift away from sales will create an environment where there is a clear differentiation between pitching a product and offering independent financial advice, and ensuring that advice is tailored to the customer’s needs and is not influenced by any external factors, including incentives.
“Like a lot of advisers within financial services, we are always concerned about the differentiation between sales and advice” Young told Insurance Business. “The issues coming out of Australia have highlighted the problems of people pushing policies and consumers assuming that they’re getting advice, when in fact they’re only getting a pitch for one particular product. Those who are selling single products for insurance companies and banks will need to be particularly focused on ensuring that they don’t have inappropriate incentives.”
When it comes to independent advisers, Young says their lack of need to commit to one specific product will help ensure that they are offering well-rounded advice on the best policies, rather than just pitching one employer-owned product. He says training programmes for younger brokers will likely reflect this, and will move away from sales tactics to an increased awareness of customer outcomes.
“From our members’ point of view, their added value is going to be centred more around advice than it has been in the past,” Young said. “If we’re going to give advice, then clearly we are going to need a training regime that supports that. I think the space for newer brokers is certainly going to change.”
“Ultimately, if you look at the way things are going, more and more is happening through online sales,” he continued. “If a consumer is simply looking for the cheapest product, then the opportunity to find it by going online is increasing all the time. Advisers need to find where they can really add value, and that’s why they will ultimately become more focused on advice rather than on finding the cheapest product.”