Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
Life insurance advisers plead for reform before election muddies the water
The Council of Life Insurers has made an impassioned plea for the government to push through the second tranche of its Delivering Better Financial Outcomes package, arguing that Australian consumers will face “generations of financial uncertainty” if they’re not completed before the federal election and a possible new government.
The second phase of the DBFO reforms, which is still being drafted, is set to modernise the best interests duty, remove the safe harbour steps and reform advice documentation. Most importantly for the insurers, the reforms are also set to create a new class of adviser that will provide a stripped back, “simple and safe” version of financial advice according to Financial Services Minister Stephen Jones.
Under current legislation, the life insurers that make up CALI’s membership – groups like TAL, Clearview, AIA, MLC, Metlife, Challenger and Zurich – are restricted from providing any meaningful degree of advice to customers who ask questions, and are limited to providing the most general information.
The new class of advice will sit somewhere between general advice and personal advice, which takes into account the full breadth of a client’s financial situation (unless scoped).
It’s this level of advice that CALI believes will help boost consumer access to the life insurance industry, which is challenged by increasing lapse rates due to a confluence of factors, including a steady decrease in the number of registered advisers providing life insurance advice.
“Australians have made it clear. They want these changes, and they want them now more than ever,” CALI chief executive Christine Cupitt (pictured) said.
According to research commissioned by CALI, 40 per cent of Australians want advice that’s more personalised and can help them select the appropriate products for their life insurance needs, while less than a quarter of Australians want “basic or general information” only.
CALI’s major concern is that the reforms, which have already been beset by drafting issues and delays, will not be ratified by the time the election rolls around. With the Albanese government likely to go full term, the election is forecast to take place in mid-May, 2025.
“Without these reforms, millions of Australians and their families will be left behind in financial limbo,” CALI chief executive Christine Cupitt said. “Doing nothing won’t just hurt today. It’ll set in motion a chain reaction over the next 10, 20 and even 30 years as many Australians remain priced-out of getting the right advice to secure their financial future and look after their loved ones.”
Not reinventing the wheel
Financial services minister Stephen Jones has been careful not to put a firm date on the release of the second reform tranche, but did say he wanted to push it through “within a year” when speaking on a Financial Services Council webinar back in May 2024.
In a separate FSC event in July, shadow minister for financial services Luke Howarth expressed a desire to implement the reforms with minimal amendments, if they were not completed by the election and the Liberal party successfully ousted the Albanese government.
“We want to get the industry reform done as quickly as possible as time is of the essence,” Howarth said. “The work has been done; it just needs to be implemented asap. We wouldn’t be reinventing the wheel.”
The position was made uncertain last week, however, when Howarth seconded a competing advice reform Bill put forward by liberal MP Bert van Manen, the Corporations Amendment (Streamlining Advice Process) Bill 2024.
The competing Bill, which focusses only on the replacing SOAs with shorter Letters of Engagement and Records of Advice, is pitched as an attempt to get the most meaningful reform completed before the election.
“Time is running out before an election is called and I have decided to act by bringing forward the most impactful reforms for the advice community,” van Manen said.
Advice accessability crisis
The legislative squabble has not quelled the concerns of CALI, which reports that in the past three months more than a quarter of surveyed Australians considered getting financial advice about life insurance, while only five per cent did so.
“We have an advice accessibility crisis in this country. It’s leaving too many people underinsured and unprotected because they can’t afford to get the right advice about the best cover for them,” Cupitt continued.
“The barriers to getting advice remain far too high. Australia’s life insurers just want to be able to provide simple advice on their own products when people ask them to, at no extra cost to the customer.”
