Philip Holland Financial Independence financialindependence

In short, the new regulations state that if you are only charging clients a fee and not collecting any commission, then you can call yourself independent.

There are a large number of financial planners and investment advisers who now do this, so yes there are ‘independent advisers' in this area. But what about insurance advisers?
The new regulation goes some way to help consumers to determine this for insurance advisers. But like anything in life, consumers will need to dig deeper if they want to know if they are getting the best solution available. So let's look at some different types of insurance advisers:

• QFE advisers – these advisers will typically be bank employees or advisers working under a large financial institution. It is obvious that a bank adviser will generally be limited to only selling the bank's products. Maybe not so obvious is the advisers who are under insurance company QFE's. Generally, these advisers are extremely limited in whom they can place business with and this may not be to the advantage of the consumer.
• Independent advisers – there are not many of these in the insurance world. This is mainly due to consumers not wanting to pay fees for the time spent on cases. One way to look at it is that the insurance companies pay for the adviser's times rather than the consumer. Time will tell on whether this will change.
• Unaligned advisers – these are advisers who do not have any affiliations or sales quotas with any insurance companies. Generally, these advisers will quote on and research a number of insurance companies. One big advantage here is that when it comes to exclusions and issues in underwriting, these advisers are able to shop around the insurance companies for better terms.

An example of this recently was a lady who had a cancer exclusion placed on her new policy. We argued it was too broad, but the insurance company would not budge. So we shopped it to another couple of insurance companies and managed to get the exclusion narrowed to only two types of cancer. This could make a huge difference to the client should she have a different type of cancer not excluded.

So make sure to ask your insurance adviser some simple questions about how independent they are. This is only one part of getting good advice, but it can be the difference in you getting the best possible product for your circumstances.

Philip Holland is the managing director for the Financial Independence group, Tauranga's leading specialist insurance and mortgage advisers. For further information please contact an adviser at Financial Independence phone 07 578 4414 or email info@yourbroker.co.nz. A Disclosure Statement is available free of charge on request. The opinions stated in this article are those of the writer and should not be taken as specific advice.