The Australian life risk market is set to see continued optimism, with Zurich’s recent Risk Adviser Sentiment Index showing an uptick in sentiment among financial advisers.
“Historically, we have seen that risk sales prove to be extremely robust in challenging economic times. And so, despite any lingering economic uncertainty, overall there is a justified sense of optimism about the outlook,” Zurich general manager of life and investments Philip Kewin told InvestorDaily.
The index found the increase was largely driven by an increase in advisers’ sentiment toward the regulatory environment, and increased optimism about the long-term viability of their practices.
Mr Kewin continued that, as with any regulatory change at this level, there is bound to be a period of adjustment following Future of Financial Advice (FOFA) reform implementation on July 1.
“It is possible that this could negatively impact the sentiment towards the regulatory framework, but given that this is only one of five measured criteria in the index, we don’t know that this would be sufficient to drive a downward trend in the index,” he said.
When asked for how long this positive trend in the index was likely to continue, Mr Kewin said that local economic conditions could have a bigger short-term impact on advisers than other factors, such as regulatory changes or the looming federal election.
“Ironically, while the tide seems to be turning overseas, locally we are getting mixed signals about consumer spending and so there’s no doubt that the resilience for which advisers are famed will be put to the test,” he said. “But this isn’t ‘new’ news, so for them to be feeling upbeat against this backdrop shows they are up for the challenge.”
According to the index, approximately one third of advisers are ‘extremely’ or ‘very’ positive about their readiness for FOFA reform implementation; only 15 per cent indicated any negative sentiment.
The overall sentiment score for December 2012 was calculated as 4.89 (out of a possible 7) – up from 4.40 in June 2012.
“These results show adviser sentiment to be at its highest level since we started the survey, despite challenging economic conditions,” Mr Kewin said.
“I think we are seeing evidence that the FOFA readiness programs initiated by dealer groups and licensees are hitting the mark and that the mindset of advisers has shifted from one of ‘How do I comply with this?’ to one of ‘How can I use this as an opportunity to improve my business?'” he said.
“We are probably also starting to see the shoots of recovery in investment markets and this is helping make advisers feel more positive overall.”
The survey was conducted by Beaton Research & Consulting and surveyed 200 advisers actively writing life risk insurance.
