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PAA defends advisers against MJW Report Recommendations

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NZ Adviser | 23 Nov 2015, 03:34 p.m. Agree 0
The PAA has spoken out against the MJW Report released today saying it is the FAA Review that deserves adviser attention, not the Report.
  • | 24 Nov 2015, 12:01 p.m. Agree 0
    Having read the report and seen the TV interview I was appalled at the total lack of understanding of the insurance distribution system by the authors of the MJW report. It starts with the statement that the NZ public is underinsured. I agree. It Puts forth recommendations that focuses on commissions to advisors which in its wisdom is said to be far to high. That position is far to simplistic and the unintended consequences would decimate the independent distribution capacity resulting in decreased ownership of insurance products which is the opposite of the desired result.
    Having been in the industry for 47 years at all levels of insurance distribution and in several countries my observation is that the industry has become very complex and the average Kiwi is overwhelmed to the point of inaction or defaulting to inadequate solutions.
    If you combine life insurance, trauma, medical, income protection, business covers, mortgage cover, etc. etc. with KiwiSaver, home mortgage, fire and general cover, ACC, the complexity can be daunting. Then there is the claims issues and the need for a client advocate as well.
    Who is there to actually deliver proper advice, not the banks, not the supermarkets, not the internet. Its the advisor supported by a team able to oversee that the correct product is used in the correct amounts for the appropriate reasons. The seemingly large commission provided by the insurance companies is used to provide office facilities, support staff, fees, transportation needs etc. The amount of work needed to provide good advice is mostly under rated. The result is that the net income to advisor is no where near the gross commission paid by the insurance companies. Sure there are some advisors earning high incomes but most are not. They deserve more considering what they would have had to forgo in the early years when they mastered the art of meeting various people with complex problems, unravel them and guiding client to activate solutions. Insurance as important as it is, is a grudge purchase needing the advice of a caring advisor.
    Who is there that can do the job?
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