This article is mainly written for the existing life insurance agents who have outgrown the agency environment; those who are considering a career in life insurance and financial planning; and life insurance purchasing public who want to know the changes happening in the industry that will benefit them.
In the first article of this series (Part 1 of 5), I have touched on the right to choose for financial services buying public. And for financial services intermediaries like insurance and unit trust agents, the opportunity has arrived to consider the financial advisory (FA) platform which can provide the consumers the choices they crave. Any distribution channel that ultimately provides more benefits to consumers will do well over time.
Here I present a list of benefits for financial service intermediaries to provide better choices through FA platform:
- Wider choices of life insurance products through multiple products providers.
As the FA channel is new, and to avoid any confusion among the consumers who may get inaccurate information from unreliable sources, let me explain that our licenced advisors register with life insurers using Financial Adviser Representative license, (not using PCE certificate which is for agent’s contract ) and thus we can register with many different life insurance companies.
For example, my personal name is registered with the following life insurers: AIA (Code: 6141-59117); Prudential Life (Code: 60100111); Allianz Life (Code; SFP00-QKC001); Axa Life (Code: 16000-04-00-4464); HLA (A0051914); Manulife (QKC001); UniAsia Life ( K00162 )
2.For Malaysians registered unit trust funds, the FA company needs to have Corporate Unit Trust Adviser ( CUTA ) license and the licensed advisor needs to have CUTA Representative license to tie up with iFast Capital Sdn Bhd.
iFAST is registered with Securities Commission and also has Institutional Unit Trust Adviser ( IUTA ) license. Through iFAST, an individual licensed advisor has access to unit trust funds from near to 20 unit trust companies at the moment.
3.Through a tie-up with London & Isle of Man-based Hansard International Limited, that is licenced by Labuan Financial Services Authority (Labuan FSA), individual licenced adviser can have access to more than 150 international offshore funds by renowned world class international investment funds. Our advisors can also can recommend offshore Investment-linked (IL) life insurance from Hansard.
4.The financial adviser (FA) representative licence also allows individual licensed advisors to source Takaful products from various Takaful operators registered in Malaysia.
5.The same FAR licence can also be used to tie up with various Malaysian general insurance companies.
Products comparison
Now you can see clearly the licensing and ‘infrastructure’ for licensed financial advisors are fully in place. Licenced advisors can now have access to much wider range of financial products so that they can make customised recommendations to consumers.
Consumers can receive better recommendations because licenced advisors will be able to compare the premium rates of products from different insurers as well as the different features of their products.
We can also help clients construct a personalised recommendation consisting of the most competitive products from different insurers.
Recently one of my advisors had made customised recommendations to one of her clients consisting from quotations from different insurers. Her client was impressed with her ability to give the best possible financial solutions from different insurers.
Life insurance sales quotas
Equally important to both advisor and consumers, the FA licencing structure and arrangement prevent life insurance companies from imposing sales quotas on the advisor.
So the advisor can make objective recommendations without the pressure from the insurers who are known to impose sales quotas on their tied agents to get more new sales. It is just absurd to think of the situation that a medical doctor in a clinic or hospital is imposed a minimum quota for how much panadol he or she must prescribe in a year to maintain his or her contract.
This licenced independent distribution channel is made possible because the regulators had the vision of creating another distribution channel that are not tied-agents of any product provider.
This was documented clearly in the earlier Financial Sector Masterplan ( 2001 – 2010 ). Now this is continued in the new Financial Blueprint ( 2011 – 2020 ).
Let me quote you the objective of the new Financial Blueprint, “The aim is also to build at the core of the financial system, strong domestic institutions that provide Malaysian consumers with world-class products and services, while meeting international commitments to liberalisation of the sector in the medium term. “
It is worth quoting the Recommendation 4.9 of the Financial Blueprint here.
It says, “ Consumers in Malaysia currently find it difficult to obtain professional independent advice on financial products, including insurance, that will most effectively meet their financial needs.
Different forms of representations received from various tied agents and distributors who act for, and are remunerated by particular financial institutions tend to make comparisons between alternative solutions difficult for consumers. Therefore, certified Independent Financial Advisers (IFA) who can represent a broad range of competing financial service providers will be introduced in Malaysia.
Products sold by IFAs for other institutions may include insurance policies, unit trusts, bonds, shares, mortgage loans, savings accounts and term deposits.”
