Post the Haynes royal commission and QAR the Life industry has faced increased costs, compliance and uncertainty.
Whilst political parties have different views on risk businesses and the advisors who provide this critically help, the fact remains that the public service and the permanent bureaucrats seem to have a lasting and powerful impression on what happens in this maligned sphere of advice.
And it is not necessarily what risk advisors want!
Whilst it appears that the industry is trying to become more efficient and utilise technology to reduce costs it cannot escape the day-to-day challenges of rising costs, increased premiums, more stringent underwriting conditions and client affordability, combined with a regulator that is constantly reviewing advice models and consumer benefits.
As an industry there are an increasing number of advisers questioning the future and looking to realise and stabilise the value of their asset before retiring. Or waiting like a possum in the spotlight if the industry takes an unexpected lurch into the unknown to lowered returns and resale values.
From my experience in and around the industry I understand that there are probably 1000+ risk advisers over 50 that are in this position. One could guess that there is a higher proportion of risk advisers over 50 than under 50 in this position.
What are your options?
- Remain and hope that the industry stabilises, and multiples remain firm for the foreseeable future. And that people will still want to buy risk books.
- Take the capital your risk business is worth now. Invest it into less volatile assets or will you allow it to be eroded as the client base ages.
Based on current age and CPI increases overlayed with cancellation rates running between 12% and 16% there is risk of your asset losing value every year. This is a reality, even with CPI increases.
Please do your sums. If your risk book is worth $200K in RR and it decreases by just 12% p.a. it will only be worth around $140K in 3 years.
But what if you took the $200K @ say 2.75 times RR today, your capital is just over $500,000, NOW.
At present Knowledgemaster has cashed up national buyers ready to acquire risk books. One such acquirer will even offer a no rise and fall condition!
Don’t you owe it to yourself to at least discover what multiples are being received, amounts (%’s) paid up front and the time a sale contract is exercisable?
Give Jim Prigg a call on 0408 520 453 to discuss your options before the new education qualifications come into effect on Jan 1 2026, won’t you?