The new regulatory regime provides an opportunity for the industry to raise public trust in financial advice and address the country’s underinsurance issue, says Katrina Shanks, CEO of Financial Advice NZ.
“The need for insurance is clear, as advisers know all too well,” she says. “As a sector, our role is to help people see it, recognise it, and get advice to better understand it.”
Shanks says advisers add value with the holistic approach they take to client relationships, regardless of how complex their insurance needs might be.
“From helping clients understand risk and their personal goals, requirements and challenges, to the many unexpected benefits of advice conversations – knowledge, awareness, and peace of mind to name only a few – now is the ideal time for advisers to consider how they communicate the value of their advice.”
The need for insurance is clear, as advisers know all too well…
Shanks says the financial product mix in New Zealand is different from much of the rest of the world. For example, life insurance products are mostly risk-only rather than a combination of savings and risk.
“This has an impact on how life insurance products are promoted and marketed,” says Shanks.
“While the concept of saving money for the future is pretty straightforward, ‘risk’ isn’t always easy to understand. It relates to something that may or may not happen in the future, so the benefits of insurance can sometimes be difficult to quantify in the here and now.”
Shanks says another good example is trauma insurance.
“The term ‘trauma’ can be misleading, potentially turning people away from a powerful protection tool that’s designed to cover them for common serious illnesses and injuries,” she says.
Shanks also points to the changing world of product marketing with the emergence of robo-advice, virtual underwriting and direct online sales.
“According to Deloitte, many insurers around the world are planning to increase their investment in the online market and underwriting transformation projects,” says Shanks.
“This accelerated wind of change will soon reach New Zealand, so now can be a great time for advisers to consider new technology and cater to younger generations of consumers.”