Delivering better insurance outcomes to your clients
MBS are excited at the prospect of delivering better insurance outcomes to clients of Macquarie Private Bank, providing a service and expertise to which they are accustomed, and one that is aligned with your offering.
We believe we are the right firm to deliver insurance advice and ongoing portfolio management to your clients in a collaborative approach with your team. Wealth creation is clearly the cornerstone of your proposition. It is imperative to overlay your wealth creation strategy with the necessary wealth protection strategy. MBS can provide a level of expertise, access and specialised advice to complete the Macquarie Private Bank proposition.
Macquarie Private Bank’s client base is compatible with MBS’ existing operations and will complement our continued endeavour to deliver better outcomes to clients, facilitated by our scale.
These better outcomes manifest in:
discounted insurance products
retention discounts to existing policy holders
health loading discounts
dedicated claims management
MBS have never deviated from remaining life Insurance (only) specialists, and our established and successful joint ventures with wealth management and accounting firms, ensures that this remains our focus.
The MBS group has been built on a foundation of delivering our solution to leading Wealth Management and Accounting firms. Since inception in 2006, we have operated in the knowledge that our management of their clients’ life insurance policies, reflects on the broader offering. We always operate in a manner that is protective of their clients, their reputation and their brand. This awareness has guided our culture, our operational capabilities and our advice expertise, and we pride ourselves on our client service.
MBS operates as a secondary advice practice, complementing the primary adviser relationship, which, in most instances, is the wealth adviser. This is not to downplay the importance of expertise, specialisation or, in fact, quality insurance advice and ongoing portfolio management. It is, however, this recognition that has been the operational driver to ensure the experience for the client is uncomplicated. Moving through the insurance process effectively, efficiently, and painlessly for the client is paramount. At large, our industry has failed at this, which is why our focus is to change the perception that many clients may have from previous experiences. The ability to send nurses to your clients’ homes, along with Insurer connectivity, will be immediate service enhancements.
As the custodians of well-known brands and their clients, our compliance requirements have always been managed with professionalism and proactivity. Like Macquarie, we recognise the importance and significance of the compliance function. Compliance is both procedural and behavioural and, as such, our systems, process, remuneration and governance are designed to enhance (not derail) the compliance function. Over the years, we have engaged Mills Oakley to consult on our processes as an added layer of due diligence. While internally auditing every file provides a level of comfort, it is our culture that is a key driver and, with management concentrated in our 40’s, we are compelled to instil discipline for longevity.
Salesforce is a highly beneficial resource for our advisers, para planners, client services and management. In an adviser’s world, it provides live data, workflow tracking and the ability to proactively manage their client base. At a management level, Salesforce provides a high level of transparency and real-time activity and document tracking. The operational infrastructure is widely enjoyed by our advice and support teams, as they are provided the tools to appropriately manage their clients with current data and key metrics. This platform has enhanced our consistency and capability to scale.
With respect to Macquarie Private Bank, we believe this need exists at a client, adviser, and business level.
It is important that insurance advice remains appropriate, necessary, and reviewed (not set and forget). Life insurance, total and permanent disablement, trauma insurance, income protection insurance, key person insurance, buy/sell insurance products are all designed to protect wealth. As such, insurance should be viewed as hedging (protecting the downside) and complementing the wealth creation strategy.
Not all clients of Macquarie Private Bank will require advice, however many will require advice that is tailored to their needs. It is this advice that requires the specialist knowledge of the client (Macquarie Private Bank), the appropriate insurance strategy and access to products and pricing that is not available to the wider market (MBS). Clients will vary from executives, to wealth accumulators, those with gearing strategies, self-employed clients and family groups looking to attain intergenerational advice. As MBS has not marketed to the public, this is the client group that we retain, and have great experience in managing.
Heath raised the query of the client journey and process. While I have touched on above (ease of experience), I wish to reinforce that part of our role is to make the experience seamless and painless for the client. The insurance that we specialise in does not have a call to action date (unlike general insurance) and, largely, clients are not eager to spend significant amounts of time moving through the process. This presents a risk that the client or business is exposed in the event the client suffers a health event prior to the cover being incepted. Our process has been continuously refined to ensure the right advice is underpinned by a streamlined process for the betterment of the client. This is aided by our business to business DNA and scaled access to preferential treatment across the insurance landscape.
I recognise the reality that some advisers within the bank enjoy the insurance revenue, however I suspect that most retain an investment focus as their core expertise. Our offering would not merely remove the insurance requirement from your advisers, but would also enhance the client engagement. They should expect an entirely different outcome for their clients with our preferential underwriting, significant ongoing premium discounts and, in effect, an insurance concierge at their disposal, designed to strengthen their relationship with their clients. Our advisers, para planners and client services teams will operate under a lens that your advisers are key clients of our firm.
Circling back to my remark that compliance is both procedural and behavioural, the comments from you both, and other members of the Private Bank team, indicate that insurance is sometimes avoided, or is not addressed, with the same level of attention as other core services provided. Exposure can reside in many forms beyond not raising the need, such as:
policies left inside (external) super funds that incur changes in definitions, loss of cover due to inactive accounts or insufficient balances;
an inefficient process leading to an extended application and underwriting process that sees cover not finalised;
Advice implemented on substandard terms: outdated advice/strategy and closed retail contracts resulting from infrequent policy reviews or adverse claims outcomes.
Setting aside the compliance and exposure component, we wish to establish a client delivery that is aligned with the expertise and excellence Macquarie Private Bank clients receive across your business. The ‘champagne before take-off’ experience.
It would be challenging to argue against the need for specialist Life Insurance advice and dedicated portfolio management in the current Australian landscape. Like mortgages, once upon a time, life insurance policies and portfolios would incur little change year-on-year and, as a consequence, it was common to see the ‘set and forget’ practice of many clients and advisers. With so many moving parts, industry challenges and change, the practice of advisers delivering holistic advice (wealth creation and wealth protection) has come further into question.
In 2016, Macquarie Bank made the determination to exit Life Insurance, selling Macquarie Life to Zurich. Since then, a chain of industry events has seen a mass consolidation of Life Insurance companies – Nippon acquired MLC, AIA acquired CommInsure, TAL acquired Asteron, Zurich added OnePath (ANZ) to their stable and, more recently, AMP disposed of their Life Insurance arm to Resolution Life. In addition, a handful of boutique Life Insurers have emerged. However, it is the significant consolidation that has seen ‘the big four’ (AIA, TAL, MLC and Zurich) now manage over 80% of Life Insurance policies in Australia. M&A activity has not diminished uncertainty around sustainability and profitability.
This consolidation has not been without challenge and uncertainty. With John Trowbridge’s delivery the LIF (Life Insurance Framework) reforms and the Hayne Royal Commission, we are witnessing a once-in-a-generational shift in the distribution of Life Insurance. CBA, NAB, ANZ and AMP have transitioned away from their distribution, and traditional adviser distributors have deviated away due to the complexity or the economic challenges of the increased cost of advice, commission compression and premium volatility.
Consistent with the intent of FASEA, it is our belief that the distribution of Life Insurance advice will become a specialty and profession. Advisers who are more focused on wealth and those ‘one-man band’ (or smaller practices) will not have the scale or leverage to deliver clients better outcomes, in comparison to the dedicated practices of life insurance advice.
As if enough recalibration has not occurred, we expect the current mix of price/product to change significantly over the next 12 to 36 months. APRA’s statistical reporting on the industry products suggests the current model is broken, Income Protection in particular (beyond the recent intervention).
Perhaps this is the consequence of policy wording improvements to attract the best score from ratings agencies, the distribution exodus from the banking sector, the increased mental health claims and social pressure, increased challenges in the adviser model, or a combination of everything. Needless to say, the economics do not read well, and more change is on its way.
The impact of low interest rates is often missed in the economic commentary on Life Insurance. The current landscape, coupled with the significant reduction in distribution, caused APRA to intervene, and our expectation is that this may be required to occur again.
All is certainly not lost, and with every threat comes great opportunity. While there are many macro factors at play, our focus is strictly on delivering our clients better outcomes. We are forging ahead proactively to combat the impact on our clients via negotiated discounted premiums for both new and existing clients. This is all well and good, but we also need to be proactively engaging our clients about their circumstances and current portfolios. Once again, this was an industry that would see little changes to policies year-on-year and this narrative does not ring true for the next 36 months (at least).
Insurance portfolios should remain appropriate, necessary, and be reviewed by a speciality insurance advice practice.’
We propose a National delivery to the Macquarie Private Bank business, clients and team, rather than reside on a preferred panel. It is our view that this will lead to significantly better outcomes across all stakeholders. This approach would provide the opportunity for our two businesses to define the process for:
~1,000 insurance-only clients
existing clients with policies under management
existing clients who may not have been adequately offered the opportunity
onboarding new clients to Macquarie Private Bank
The process would be known and documented for your front-of-house team, advisers and management. We would establish the connectivity and discipline required to integrate our offering at the level desired by Macquarie Private Bank. This may include coordinating the timing across the four bullet points above. For instance, it may be the case that the insurance only clients are not as engaged, or they may not have received advice in recent times. Rob, we also spoke of our experience working with institutions and the need for the appropriate messaging to your clients. We will expect materially better outcomes for your clients by way of discounts, preferential underwriting and claims management. This will be compounded, should the commercial arrangement between our firms be directly passed on to the client.
Our scale, relative to the market, has provided us the opportunities to deliver better outcomes at the front end (ie policy terms and pricing) as well as claims management, which is often when expertise and specialised delivery is called upon. This pursuit will not cease as we continue to build our offering.
Following the LIF reform, MBS observed an opportunity for specialist risk advice and a scaled proposition that would assist in enhanced client outcomes delivered by product manufactures. The strategy was established with a very deliberate ‘bottom up’ approach.
Prior to growing the client base, our focus and discipline guided our efforts to increase our capacity. This started with a significant investment into Salesforce, compliance, building out the para planning and client services teams, as well as commencing an Associate Adviser (intern) program. The ‘bottom up’ approach is certainly a more patient approach, however as a business to business firm it is paramount that we expand the capacity prior to increasing the client base. This ensures managed growth and, more importantly, protects the quality of the client service delivery and outcome.
Throughout this process, MBS has enjoyed the support of Macquarie Business Banking, and it would be our hope that the team would categorise us as a business that does what it says it will do. Rob and Heath, thank you again for your time last week. As I mentioned, I certainly feel a sense of alignment beyond the recognition of the need and best process to address.
With a National infrastructure, MBS would establish a dedicated team to work with the Private Bank. This provides an opportunity to develop connectivity and consistency in the client experience. We would want to work with you on an induction for our team, to enhance the complementary nature of the offering, values and service standards your clients have come to expect.
Thank you for allowing MBS to present our proposal. Please contact us if you require any further information.
Any advice in this site is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. © MBS Insurance is a Corporate Authorised Representative of Bombora Advice Pty Ltd AFSL 439065