Planners need to increase insurance knowledge

Financial planners need to increase their insurance knowledge, according to Avenue Capital chief operating officer Mandy Penkin.

The financial planning industry needs to “up-skill” or increase the number of planners who specialise in providing insurance advice, Penkin said.

There is a shortage of insurance specialists, with the required insurance knowledge within financial planning dealer groups, Penkin said.

“I’ve seen circumstances where the client’s been declined by an insurance company and when they’ve gone to the right adviser, who’s phrased the condition in the right way, then they’ve been accepted for cover,” Penkin said.

She said planners need to give advice in this area, even if it doesn’t seem as “sexy” as traditional financial planning advice, however, planners need to up-skill and reach a level where what they’re giving is “quality advice”.

Penkin believes the complexity surrounding insurance is such that it requires specialist advice.

“Things like critical illness, income protection, how to structure the policies, what should you have in and out of super, those kind of things are a little bit more complex and require somebody who knows about the tax implications, the proceeds on insurance policies and what happens to the benefit payout depending on which beneficiary receives it. That requires knowledge.

Penkin questioned whether a client may see a financial planner as an insurance salesman.

“They need to think of the adviser as an insurance adviser … somebody who knows about the industry,” Penkin said.