Episode 6: Specialist Insurance Partnerships with Jade Burford

Rob Pyne is joined by Jade Burford, partner at MBS Insurance, to explore the intricacies of personal insurance advice. They delve into the importance of specialisation in financial services, the benefits of joint venture models for wealth planning firms, and the evolving challenges of the insurance industry. Jade shares her extensive expertise in improving client outcomes, navigating regulatory changes, and leveraging technology for efficient operations.

LISTEN

SHOW NOTES

Topics covered

  • Introduction to MBS Insurance: The business model, focus on B2B partnerships, and what sets MBS apart in the industry.
  • Joint Venture Success: How collaborative partnerships with financial planning firms enhance client outcomes and streamline operations.
  • Specialist vs. Generalist Advice: The value of specialised knowledge in navigating complex insurance landscapes.
  • Leveraging Technology: How MBS uses Salesforce and other tools to enhance efficiency and client service.
  • Proactive Client Management: Strategies to review and improve existing policies, including negotiating better terms and removing exclusions.
  • Claims Expertise: How MBS’s dedicated claims team ensures timely and effective resolution for clients.
  • Industry Trends: The sustainability of the insurance market in light of rising healthcare costs and regulatory challenges.
  • Client Education: Overcoming misconceptions about insurance through informed decision-making and personalised risk management plans.

Highlights

  • MBS Insurance’s productivity per advisor significantly surpasses industry averages, according to NMG data.
  • Joint ventures help wealth planning firms refocus on their core business while providing superior insurance advice.
  • Technology-driven efficiencies have increased MBS’s operational capacity by 50% over 18 months.
  • Real-life client success stories illustrate the tangible impact of specialist insurance advice.

Connect with Jade Burford

TRANSCRIPT

Welcome to The Trusted Adviser podcast where you get a deep dive into the world of financial planning with industry leaders who share their stories of winning and learning as they chartered their path to success. This podcast is for the curious, those of you that like to dig into the detail that sounds like you get ready to listen. And Wayne, today

Rob Pyne:

I’m excited to introduce Jade Burford, a personal insurance advice specialist and partner at MBS Insurance through a joint venture with our business. Jade and the MBS team provide expert guidance that only a specialist can deliver. Jade joins us to share some key insights into the complexities of personal insurance, from regulatory challenges to the evolving landscape of client coverage options. Welcome Jade to the Trusted Advisor podcast.

Jade Burford:

Thank you, Rob. Looking forward to having a chat.

Rob Pyne:

Jade, to start us off, could you give us an overview of MBS insurance? Tell us a bit about the business model, your team, and what sets MBS apart in the insurance advisory space.

Jade Burford:

So MBS is a risk only advice specialist firm. We’ve always been that way since around 2006. We specialise in B2B business working. We’re a specialist B2B business working with accounting and wealth planning firms to service the needs of their clients. In wa we currently have a team of 11, which is comprised of five advisors and six very key support staff, but as a national business we also have a large support team over east that provides some key services to our business. We’ve got some portfolio management team, we’ve got a claims management team, we’ve got an in-house compliance team and our SOA production team.

Rob Pyne:

You do hold a very impressive position relative to many others in the advice industry that are specialising in insurance. It has been a part of the industry that has really shifted dramatically more than most, I think over recent years, such that many financial advisors have wanted to divest themselves of their insurance work. It’s become a challenging space to be in and really as specialists. What have you seen in your experience, in your time working as an insurance advisor perhaps tell us how long you’ve been giving insurance advice and what you’ve seen over the last perhaps five to seven years that you’ve been working in this space.

Jade Burford:

Well now you’re going to get me into telling my age. I’ve been advising for over 12 years in the insurance advice sector. I’ve always been in the risk space. I worked in a holistic advice firm, but as the risk management specialist and went on to head the risk management team. I’ve always seen the value in insurance and always thought of it as a specialist field. And so the decision to go out and start MBS insurance WA was largely driven by the view that it is a specialist advice area and that not many wealth advice businesses were doing the advice particularly well or to the best of their ability because they weren’t specialised or focused in that one area of advice. I have a medical background and I use a lot of that in the integration of how we engage with our clients and ensuring that we can get best terms and best underwriting outcomes and actually align that medical background with the advice that we provide.

Rob Pyne:

So the way that the industry has shifted where people have moved away from providing it in as part of their wealth management firm and perhaps looking for a specialist like yourselves to provide personal insurance to their clients. Can you tell us a bit about the joint venture arrangements that you have at MBS insurance with advice firms? Because it’s probably one of the more unique aspects of the MBS insurance model that you have built out, that B2B service model, we know it from personal experience, so we’ve been doing that together with you guys now for a few years and it’s working tremendously well for us and for you. So can you share a bit about what MBS has done to form these joint ventures with planners and what factors do you think have contributed most to the success of that?

Jade Burford:

Yeah, I think that the core part of that is partnership. At a core, it’s the aligned desire to achieve better outcomes for our clients. Traditionally, you have holistic advisors that are helping clients with wealth creation strategies or managing their funds or assisting them in meeting their goals and objectives. And then as part of that, you have them as a byproduct of that advice. Then assisting clients with their risk protection strategy. Over the years, insurance advice has no doubt become a specialist area of advice. We have different providers offering different product structures with variance in the product wording and variances in the product definitions. There’s a lot more complexity to insurance advice and understanding the risks involved in utilising one product over another. Nobody has a crystal ball. We don’t know what a client’s going to need in terms of a claim time, which part of a product component that they’re going to need to claim on and what part of that product’s going to be important for them.

So for the wealth planner, the benefit of partnership is risk mitigation in not providing risk advice that isn’t specialised. Also, it allows the wealth firm to free up their capacity then that they can enhance their wealth business and refocus a lot of their resourcing towards the wealth side. For MBS, the partnership gives us distribution, but it also allows us, I think importantly to work with great advisors that understand the value of what we do and who we can collaborate with to ensure that the client’s looked after in the best way. It’s not so easy for a lot of people to identify the need for insurance, but wealth advisors actually do that particularly well and they collect a lot of information about their clients. And so for us and working with your team as an example, really able to leverage off that information that you collect and that strategy that you’re employing for clients in order to assist in creating a good risk management strategy. So the joint venture model works particularly well because of partnership?

Rob Pyne:

Yeah, it got quite a bit of interest. I was at a dimensional practise management symposium in the last 12 months and I was asked to speak and this subject came up around the joint venture we have with you at MBS insurance and it generated quite a lot of interest from the audience and a lot of questions around why did we do the joint venture and the points you’ve just raised certainly resonate with us. It was around freeing up capacity and focusing on wealth and staying in our lane. What we knew well, it was also about managing the risk around risk because if people don’t execute correctly on placing policies and people have health claims and we are found to be negligent in our efforts to establish that policy for the client, then the potential claim against the business would be very high. That was a really significant reason and a third reason that this particular person in the audience that was asking me the question asked us about independence and removing insurance from our wealth business because it would be seen to be then not receiving commissions and therefore satisfying the definitions under that Corps act, whether we could be classed as independent.

And that was certainly a part of it for us, but it was more significantly around management of risk and recognising that it was a specialist area, that we didn’t really have great people at it. They were good, they were comprehensive. But what we found just after working with you guys after a period of months, just the level of detail and depth that you were going into with clients and helping to resolve long held issues on policies around exclusions and loadings that you were able to resolve for our clients. So it was an eyeopener. We thought all the way along that specialists would do a better job of this than us and it was vindicated very, very early in the piece. So I guess the joint venture partnership in that sense has worked great because as you said, we’ve supported the MBS business by referring our clients to you, but also equally you’ve just done the specialist work that we weren’t really well equipped to do at the level that you do. So can you walk us through that process that you undertake with financial planning partners who outsource their insurance advice to MBS and how do you ensure there’s that integration between the wealth advisor and the risk specialist? How does it typically work with clients?

Jade Burford:

Yes. So as you’ll know Rob, and I’m sure you could attest to, we largely view our business as an extension of our JV partners businesses to a large extent. We’re seen as an internal division of the businesses that we work with and we acknowledge that the wealth advisor is the key relationship manager of the client. We want to come in and compliment what they do with our advice. So we have accountability to your firm and to the firms that we work with. We have accountability to the client and also to the advisor. We do want to do our best to fit in. We don’t want to overcome complicate things. The clients are used to your process, your team is used to your process and we don’t want to be disruptive in any way to that process. We just want to fit into the process and then underpin our advice with yours or your advice with ours rather.

You’ve got a large amount of data on your clients. You’ve got all of their financial information, you’ve got their superannuation details, you’ve got often details of their insurance policies that they hold, and we can use that data to ensure that clients are not having to provide that same information over and over again in order to make things, I suppose as easy and efficient for them as possible, both for the client and for the advisors that we’re working with. So we really do tailor our process to suit the businesses that we work with so that we can seamlessly fit in and integrate and try to make things pretty seamless. I mean, we’ve worked with your business for a number of years now. Are you able to share anything as to how you feel we’ve fitted into your business?

Rob Pyne:

Absolutely. I can share that. As you said there, you’re always treated and really approached it like you were an extension of our own business and that has been the thing that’s made it work so well for us. Obviously we’ve socialised it every opportunity to connect you to our team. So you felt a part of our team and that was very deliberate, not just because we like you, but because we actually want to build a very strong professional and personal relationship with everyone we connect with. So it was always in the early days, people just getting comfortable with how it would work. You obviously were meeting clients jointly with our wealth advisors. Sometimes it was simply an introduction to a client and you would meet with them in your own time. But knowing full well that we overcame those issues around clients aware of the fact there was information being exchanged and that clients were acknowledging that and approving that, that had made the process almost if you were in our business.

So the client’s experience wasn’t in any way impacted negatively by, in fact, it was only a positive experience because we now had people who really knew the job at a level that we weren’t at and able to do a superb job for our clients. And that feedback came through loud and clear. So we knew very early on that it was the right decision because all the reasons why we decided to do it before we started were proven to be true, but the experience was just that much better after the partnership was established. It’s been a wonderful experience for us and obviously it’s been successful for you guys too, so it’s working particularly well.

Jade Burford:

Absolutely. I also think that, I think you touched on it before. A lot of the time when you come into a new joint venture and we come into a new business there, there’s teething issues and there’s a little bit of pushback from advisors who are used to doing risk advice and it’s always a challenge to overcome that and get them comfortable with actually not providing that risk advice anymore and having us come in to actually do that piece of advice, they hold the primary relationship. There’s sometimes concern if we don’t do a particularly good job, what impact that’s going to have on them, retaining that client or how that’s going to be perceived. But it’s also about not only working with the business and the processes, but actually getting to know and understand the advisors that we’re working with. Everybody works differently. They have different ways, different things that make them feel comfortable, different ways that they like to work.

So a large part of what we do certainly initially and on an ongoing basis is relationship management and building relationships with the team because we want to be able to make everybody comfortable. Some advisors want you in the meeting with them, some are happy to handle the referral and let you run with it. There are different advisors and it would be remiss to think that you could implement one process seamlessly across a business and have everybody just follow that process and there’d be no issues. So we really want to tailor how we work to make everybody comfortable and make it as seamless as possible.

Rob Pyne:

Speaking of process and seamlessness, let’s talk technology. I hosted Pat Gardner from Collins SBA for episode four of the Trusted Advisor podcast specialising in technology and Pat’s business down there in Tasmania. Collins, SBA. They have invested considerable time and effort in building out a Salesforce CRM and I know that MBS insurance is on the same platform, Salesforce and has invested considerable time and effort to build out good systems and process because naturally when you’re working with joint venture partners, they want to know that you are managing their data well, that you’re staying on top of the workflow, you’re going to be contacting their clients on schedule. Can you share a little bit about the systems and technology MBS have that supports you as a frontline insurance specialist and are the recent innovations that maybe you’ve put in place to enhance the efficiency and accuracy of the advice you provide?

Jade Burford:

For sure. So from a systems perspective, as you’ve said, we’ve stayed within the Salesforce and Microsoft ecosystems. We do have four people working in the business internally in data and technology. Our approach has been rather to use the customization available in Salesforce to build out our internal processes into the platform itself. The focus has been to use Salesforce to create a very MBS or risk specialist platform to support our business. We’re not trying to reinvent the wheel, we’re not trying to develop or build new technology. We’re really just trying to utilise technology to enhance the process that we’ve already got within Salesforce. A great example is dishonest. It’s a pain point for many businesses. It was a pain point of ours and a very manual process for a very long time. So instead of going out and finding software like a ticketing system or a workflow system, we figured out how to turn our process into a technology based process within Salesforce.

And that’s made a huge, huge difference to the way that we can interact with dishonours, the efficiencies that that’s created in freeing up the capabilities and capacity of our team. We also utilise technology in Salesforce for reporting, in monitoring our advice process timeframes. How long does it take for a client to move from point A to point Z being implementation, individual advisor activity, and where are things getting held up? We’ve looked to see if we can automate any part of that process to see if we can reduce processing times, increase our outputs and free up our capacity. And very happy to say that over the last 18 months we’ve actually seen the capacity of our team increase by SOCA 50% by monitoring those processes and timeframes and implementing those changes via automation and tech capability

Rob Pyne:

And timeframes are so critical, aren’t they? Because in reality, if you’re in the process of lodging, someone’s application, timeliness is critical. Something would’ve happen to that client in the process and perhaps the application hadn’t been lodged. There’s obviously risk around that execution from your end. So timeliness is obviously critical, could be super critical in some circumstances.

Jade Burford:

Absolutely not having that timeframe pushed out and not having somebody implemented from an insurance perspective quickly enough and something happens and they’ve passed away or they’ve gotten really ill in the meantime and they’re uninsured, definitely exposes the business but also the client. And so we want to ensure that we can get clients insured in the most time effective way and seamless processes possible. And so as I mentioned, instead of trying to develop tech for the big picture stuff that’s complex that a lot of advice firms like to go out and do, like SA production, we’ve tried to focus on the low hanging fruit instead. So we’ve tried to really nail those quick wins that can reduce our timeframes and increase our capability and our team’s capacity. A couple of other things that we’ve implemented have been from a client perspective, we’ve implemented a client portal and that’s been really effective because it means that from a client’s perspective, they can easily share data with us.

They can share information in a secure environment without having to email us confidential information or even drop it in a box. They’re able to interact with our system live and we then don’t have to double handle data entry or information. There’s a self-serve functionality for our referrers through our referral portal, which has been amazing in terms of our team’s capacity and time going back and forward with your referrers, trying to provide updates of where clients are, where things are in the implementation process, providing information on their existing portfolios or when their premiums due, how much the premium’s going to be, where it’s drawn from, which superfund. So implementing technology and working with Salesforce to sort of iron out those issues has been a game changer for us.

Rob Pyne:

Yeah, I was going to share that about the referrer portal because that’s something that’s been tremendously beneficial to our team to be able to log in with our own ID and check the workflow and the policies that are coming up and all the details of those policies as well. So that’s been a great innovation you’ve introduced after we actually had commenced the joint venture, that has been a massive boost to our capability and not having to check in with you guys frequently to ask for information that’s as basic as when’s this policy due and how much cover do the client does the client have? So speaking of coverage, when you are reviewing clients’ existing insurances, how do you identify opportunities to improve terms or improve coverage? The policies and the insurers are changing significantly at times that levels of premium are adjusted, obviously not just for age but sometimes the insurer’s circumstances and what they are doing. Can you share some examples of changes you’ve made, I guess, that have provided clients with better protection?

Jade Burford:

Absolutely. Perhaps you might touch on the scale of MBSA bit later, but with that scale obviously comes opportunity. And I think how we think as a business from a client perspective is really around three key pillars. The first being new clients to MBS or to our joint venture. How do we look after those clients? How can we most effectively look after them? How do we negotiate with the insurers for best possible terms, loading reductions, getting the best terms in terms of exclusions and policy wording. Can we negotiate our new business pricing? Are we working with insurers all the time in negotiating better pricing, flatter premium structures to ensure premium sustainability? So there’s a lot of work that goes on in the background that we as a business to ensure that new clients coming in that we’re achieving the best outcomes for them the first time around.

The second one would be existing clients that have existing policies in the market that they have underwriting outcomes that they’ve achieved in the past, but what are those underwriting outcomes look like now? Are they loading, sitting on the policies that we can review that we can get reduced down or that we can get removed? Are there exclusions that were put in place by an advisor five years ago that may be able to be removed now and just haven’t been looked at? And that’s the benefit of the specialist advice we provide is the advice you provide is not reactive advice, it’s proactive. So we wanted to shift that narrative from being reactive and only looking at client’s policies when we have to because we’re doing a wealth review or a client’s phoning because their premium has gone up and it’s unaffordable and we are needing to look at the policy then to more proactive approach around actually looking at what the policy entails, what is the wording?

Is it outdated? Have there been medical advancements that have occurred in the medical sector and has the policy actually moved with those advancements or is a claim going to actually be very difficult to achieve? Can loadings and exclusions get removed? Are there any term improvements? Are there any retention discounts that we can negotiate with the insurer on behalf of that client? Unfortunately, insurers don’t reward loyalty and we’re in a market currently where new business pricing is substantially more attractive than existing policies. And so those retention discount discussions have become critical in trying to retain cover with existing insurers whereby a client can’t move because they’ve had adverse medical history or things happen. So we’re doing a lot of work in that space. And then thirdly, I would say the key pillar would be our claims capability, which we view as a critical component part of our business.

We do have an internal claims division in the business that currently has four team members that are all dedicated in ensuring that we’re there for our clients when they need us the most. Our head of claims is very, very specialised and has a very strong relationship with dedicated claims assessors in each of the insurers. And we’ve done a lot of work to build that division and to ensure that we can get really good effective time, quick turnaround times and claims paid in a timely manner. We’re managing 120 claims at any given point in time on average in the business with about a hundred being ongoing IP claims. And then the other 20 just those quick lump sum in and out claims. So it’s certainly a part of the business that’s expanding and evolving and will continue to grow over time and it’s rewarding for us as a business because that’s where the impact of what we do actually comes to fruition.

Rob Pyne:

Well, I can speak to that personally. I was one of those 20 in the month that you were looking at, that was a lump sum claim. I don’t mind sharing a little bit of how that came about. I’ve had a policy in place or a number of policies in place, one of which was a trauma insurance policy with MLC for many years. And it was when you came in to sit in our boardroom and share with our advice team a story where you’d spoken to a client that had a policy in place for a number of years that had a health event and they hadn’t thought to claim or tried to claim on the policy. And you picked it up and said, I think we can get you a claim on this. And it was some years had passed since the health event, but you successfully claimed for that person.

And I thought to myself, I had something very similar. I had a health event back in 2016. It turns out I’ve got a genetic condition which makes my blood clot more readily than most people. It’s a prothrombin gene mutation that my father and two other brothers have as well. So we’ve all had, well, all but one of our brothers has had regular clots. Most often a blood clot will end up, if it starts in your legs, it ends up in your lungs, it goes through the heart one side and ends up in your lungs and you end up with clots on your lungs are pulmonary embolism. Well, turns out I didn’t get that. I actually had a clot, but it didn’t end up in my lungs. It ended up in the left hemisphere of my brain. Hence it was a health event that was very noticeable at the time that occurred.

And I had a temporary period of paralysis down my right leg and my right arm while having a shower after a bit of cricket coaching. And thankfully I’ve got a good friend who’s a client of ours, but become a good friend who’s a neurologist. And it was about six 30 at night and I rang her up and I said, Hey, sorry to ring you. It’s probably dinner time, but I’ve got this issue and I’m not really sure what I should do. What do you think? And so I spoke about it with her for a few minutes. He said, I don’t like the sound of that. You should get down to Fiona Stanley and go to emergency and get scanned, which I did and waited a while in emergency as you do. But once they realised what I was in there for, they rushed me through and did some scans but didn’t find anything immediately.

And then my neurologist friend managed to get me into an MRIA couple of days later and found out that sure enough, yep, they’d been a clot. And thankfully it had passed pretty quickly. The effects hadn’t lasted. But certainly it was very evident at the time we put a preliminary assessment claim in with MLC at the time and they said, oh, you’ve had no lasting effect and therefore we’re not really going to look at banking a payment on your trauma policy. And I didn’t push it any harder than that and thought, okay, well the policy’s still in place and if something happens again in the future, then I’ll have a policy still in place. But the reason it ended up where it did turns out that apparently one in four people also have a hole in their heart between the atri, it’s the atrial septum, it’s called a patent RAA Novelli, and I have a slight hole in my heart that didn’t close over at birth.

So three out of four people, it closes over, but one out of four, apparently it doesn’t close over and I’m one of those. And so the clot, instead of ending up in my lungs, it ended up in my brain, which was, as I said, an unusual experience at the time. Anyway, so long story there, but one I can speak to personally after you told that story about the other client, I thought, I wonder if Jade, you can help me on this. And so you said get all the health assessments that were done at the time, which I did shot it through to you. And within a matter of weeks they paid out the policy in full as at that date, which surprised me, no end, but it just reminded me just how someone who really knows what they’re doing and specialises in this space can actually end up with a claims result that we’d put to bed eight years ago. And so that was a really quite a surprising outcome, but one that I could certainly attest to the process of having a specialist look at it and then having a dedicated claims team process it. So thank you again publicly for that. It was quite a surprise and really not something I at all expected. Speaking of client awareness being one of those, in your experience, what are clients often misunderstand or overlook about personal insurance and how do you address those gaps when you’re talking to people during consultations?

Jade Burford:

I think ultimately client knowledge around our industry is not where it needs to be, and I don’t think that’s a surprise to anyone. A large part of what we do on a day-to-day basis is education. Clients think that they’ve got cover through superannuation when we know that it’s default cover and in reality may not be the most appropriate cover for them. They also have often the mindset of it’ll never happen to me or they have the mentality that should be right. So we do have fortunately a lot of safety nets that we can lean on in Australia, and I think that that sometimes is to the detriment of people when they think about their risk management plan. So a lot of what we do is education around why we would consider having the cover that we have. What is it designed to do, when would it pay out insurance is a grudge purchase.

It always has been. It always will be. I do this day in day out and I hate paying for insurance and I don’t think that’s ever going to change. But what I found is that if you can take the client through the journey of education in understanding why it is that they’ve got what they’ve got and why they’re paying what they’re paying and they have a purpose behind that and they understand the purpose behind that, it makes it a little bit more palatable, still not going to love it, but it’s more palatable. And I just think that that’s a very big part that a lot of advisors miss actually taking, not telling client you need $2 million worth of cover, but actually taking the client through the scenario of in the event that this was to occur, these are the things that would need to occur in reality, these are the things that we’ve seen from a claims perspective.

These are the things that you may need to consider. Are you going to move your children’s schools because you can’t afford private school fees? Are you going to downsize your home when one of you is really, really unwell and move your children from their safety blanket home into a smaller home or into a different place because you can’t afford the mortgage? So it’s just tying back the concept of insurance and the concept of what the things that can happen, how that actually is going to relate and play out in the event of a claim so that there’s that personal connection to their risk management plan and understanding actually no, I don’t want to downsize my home. I want to keep my kids in the same school. So that conversation and process that we take clients through, if they do want to reduce cover and they do want to take lower levels than what we’re recommending, that’s completely fine. So long as they understand where they’re pulling it from, which lever are they pulling to reduce their risk or retain risk or mitigate risk before we transfer it.

Rob Pyne:

It’s that informed choice, isn’t it? They understand why the cover is recommended where it is, and they’re making a decision about what level of cover they’re prepared to take on and what level of risk they’re prepared to self-insure, I guess. And so it’s keeping them informed of the, and working them through those scenarios as you say, as to why they want cover makes them better connected to the end result.

Jade Burford:

Absolutely, and I think a lot of people approach insurance like, oh, you need to replace your income from now to 65 or you need to get rid of debt and then do a multiple of income to 65, and it just doesn’t stick. It doesn’t make it personal enough, it doesn’t make sense to a lot of clients. They lose the concept of the purpose of insurance. And so for us it’s more around taking them through that journey and letting them understand, like you said, why it is that they’ve got what they’ve got, what is it actually designed to do. And I think broadly broader than that, it is also for a lot of people understanding that there’s two risks that they face and one is not having enough cover or being inadequately insured with bad quality cover or having no cover, and the other is overpaying for insurance. If we’re really thinking about risk management in totality, overpaying for insurance is a substantial risk that a lot of people face, and so we are a hundred percent paying a premium. We’re not necessarily ever going to claim, and statistically it’s actually a low probability. Sure, we’re ensuring that low probability, but that overpayment needs to be addressed. And so just because somebody earns $500,000 a year for example, doesn’t mean they need $500,000 to live.

Rob Pyne:

How do you think about default cover inside superannuation funds? I was listening to a podcast just yesterday, the day before, I think it was, that’s the Shape of Advice podcast with Simon Hoyle. He was interviewing Senator Andrew Bragg about default insurance cover and the changes that have been made there in recent years. How do you approach default insurance and evaluating those policies and do you have any general thoughts about what you’re seeing for that type of cover?

Jade Burford:

I think it’s actually very disappointing to see what kind of coverage is currently being held by clients inside super. I think the levels, looking at the levels of cover, the price of the cover and the quality of the cover is extremely disappointing. There is certainly a place for default cover in the market. Don’t get me wrong. There are times where default cover is a good option for people and it is something that we would advise to retain or to obtain, but broadly speaking, I think reality is that cover inside super is not guaranteed renewable and changes can be made at any point in time. There is a space for it like I mentioned, but I feel like if you can obtain fully underwritten retail cover that is comprehensive in quality and in definition and the insurer is locked into that contract provided you keep paying the premium, it is a hundred percent what insurance is supposed to be.

I also think that there is a misconception that in order to fund your insurance through super, you need to take default cover through super. You’d be surprised that that’s not even a misconception only from clients, but it’s a misconception by advisors that we’ve worked with and advisors that we’ve spoken to where they think that in order for clients to continue to pay their premiums through super, they actually need to retain the default cover that they hold. And it’s largely inaccurate. You can hold insurance cover with any provider in the market and still have it funded via partial annual rollover from superannuation. So that sort of is easily solved from a funding perspective.

Rob Pyne:

I guess another reason why advisors I guess are seeking out and specialists like yourself, Jade, just because you know the market better and understand these issues that perhaps some advisors are not up to speed with. I guess the other thing that’s very become very obvious in the insurance industry just because in healthcare in general costs are on the rise all the time. What challenges are you seeing that the cost of rising healthcare posing for the insurance industry and how are providers of insurance cover and advisors like yourself adapting to that

Jade Burford:

Can certainly say that to be true for mental health. It’s a big contributing factor is the mental health discussion. Healthcare incidents are on the rise. It’s apparent in our industry around the level of disability claims that we’re seeing for mental health and the insurers in the life insurance sector, they’re bleeding money from a mental health perspective in terms of claims. And so we’re now going through a phase where previously income protection went through a huge overhaul and the product design had to change because it wasn’t sustainable. We’re now going through that for TPD or with TPD, and so it is something that is impacting our industry. The current TPD product, as I mentioned, is being challenged in the same way that income protection was, and there are going to be future changes to the industry around how we evaluate portfolios and TPD for clients moving forward, the rising costs, there’s less people managing insurance advice, and so we’re just going to have to stay across some of the changes. If you look at it from a macro perspective, the insurance market is largely consolidated. You have four insurers dominating what 80% of the market, and we’re seeing that their advice market is now following suit. So it’s about scale. I think the sustainability is going to come down to scale.

Rob Pyne:

So Jade, as a wrap up question, for financial planners who might be thinking about outsourcing their insurance advice, what key factors do you think that firms should be considering if they’re thinking about outsourcing their personal insurance advice to a specialist?

Jade Burford:

I think that financial advisors generally do act in the best interest of their clients, and if life insurance isn’t their core discipline or their specialty, then our view is it’s not your specialty. So understanding what your core business specialty is and then focusing in on that, it is important. And there’s complexity to life insurance advice. There’s a level of expertise required to deliver better outcomes for clients. So the risk, as I mentioned, in not doing it correctly, doesn’t need to be carried both from a claims issue later as well as from the risk of losing a good wealth client due to giving poor risk advice. I think further to that, the distraction away from the team, from the core focus of the business being wealth advice doesn’t need to exist. You have the ability to redeploy resources to further grow and enhance the wealth side of the business and not be distracted in trying to provide mediocre risk advice that you are not completely focused on.

I think that that is something that we’ve seen all of our joint venture partners thrive from in having the ability to redeploy those resources and fully focus and hone in. From a financial perspective, a lot of firms worry about not receiving the same level of revenue once going into a JV that they’re normally used to receiving. And I think that’s a very short term outlook. The joint ventures that we have will all attest to the fact that financially, the opportunities that have arisen as a result of the joint venture have been very fruitful. And the risk only referrals coming in from being able to turn on the taps to risk only referrals coming in from accountancy firms or from their professional network that they haven’t been able to take traditionally in the past because there wasn’t that core client or core wealth client attached has been hugely beneficial in the joint venture because we can now start to take those clients and in effect, what the joint venture entity has been able to do is house those clients for future referrals back into the wealth firm.

They may not be ready initially, it might be a young doctor who’s just starting out and is on a lower income, but in three, four years time has grown rapidly in terms of their wealth accumulation strategy and is ready to be pushed back as a now client for the wealth firm. I think also the ability for us to identify wealth clients is a lot easier. All of us have either done holistic advice or we’re very familiar with the holistic advice process and the wealth process. And so where we’ve seen a large amount of success is where they’ve opened up their relationships or turned on the taps to get insurance referrals from their professional networks such as an accountant or a GI broker or a mortgage broker. And it’s very easy for those people to refer for an insurance need because it’s easy to identify and they’ve been able to push that referral in and through the insurance process that we take the client through, we’ve been able to identify on a number of occasions the need for wealth advice and push that client back. So there are a lot of different ways that the joint venture entity can grow. We’ve done acquisitions with our joint venture partners where we’ve been able to support the acquisition from an insurance perspective. There’s been opportunities, as I’ve mentioned, where we’ve been able to take clients that traditionally the business wouldn’t have taken. So growing that back book has actually been hugely successful. And I think, Rob, you can attest to that too,

Rob Pyne:

As you were talking about all those points, I was thinking, yep, all of those things you said are all the things that we’ve experienced. The ability to, perhaps a client rings in and is a young person looking for advice, and we realised very quickly that insurance advice is what they need most of all right away. So we can introduce them to you guys, you can do the insurance work, and then as they mature into needing wealth advice, they can circle back around to us. We’ve introduced our professional network to you, our accounting and legal friends that are actually referring their clients to us, but now also recognised that you are a really key part of our team and can refer clients that have insurance needs to you. So yeah, it’s been a wonderfully successful joint venture arrangement, largely because you are specialists. You are at a level that advisors, no disrespect to any advisor out there, but if you’re not specialising in risk insurance, you’re not going to do it as well as you and the team at MBS because that’s all you think about.

So you are actually better able to serve the clients. As you said right at the start there of that question, your answer was about doing the best thing for your clients and the client’s best interests. The best served by putting ’em in the hands of a specialist. And our experience in terms of the financial question has been that’s been a far more rewarding experience to be a partner with a specialist firm and introduce our clients than to try to manage the challenges of getting clients insured and the claims processes and so on ourselves when we weren’t really as well equipped to do it as clearly you are. So perhaps just one final point, I would like to just get you to speak to where MBS sits in the market relative to other providers that are out there. I mean, you’ve shown me some data in terms of what you guys are writing in terms of new premium lives insured and the like. I know you’re doing exceptionally well here. Can you just speak to that in the most humble way possible, just what you are doing at MBS and how it contrasts with others in the market? Have you got some stats that you can bring to mind?

Jade Burford:

The NMG data is probably the most obvious thing to point to. We sort of do our thing. We’re not really looking at what others are doing in terms of competition or whatnot, but when the NMG report came out, it was both surprising and then not surprising at the same time. I think the key differentiation with a business like MBS is because we have focused as a risk specialist business only in the space and we have scale and we focused in on our processes and ultimately using technology to enhance that process and increase capacity. The amount of premium written per advisor in the business is substantially larger than what the market shows. So the productivity per advisor is the key thing that was the standout for us in that report. We are one of the largest life insurance advice businesses in the country. That’s not a secret.

Rob Pyne:

When you got the NNG results and compared it to others in the market, perhaps advisors like our firm who maybe had someone who was a wealth advisor predominantly, but doing a little bit of insurance on the side, how did that contrast it given that you are specialists and do nothing else? I remember seeing the chart that you showed me and the gap was so stark between how much your business was writing in terms of new insurance cover versus the cover that’s being written by other advisors perhaps that aren’t specialists.

Jade Burford:

So from the NMG data, MBS was sitting third in a rolling 12 month new sales from a licensee perspective or a self licenced business. So we’re bundled with licensees, but in reality, we won business and we’re sitting third behind a MP and syncro. But the startling thing is that the productivity per advisor in MBS over that roiling 12 month period was 410,000 odd as opposed to the 22,000 or 23 and a half thousand of the ones that were slightly in front of us. So it is about we’re capturing a large part of the market, we’re writing huge amounts of new business, but it’s the productivity piece that was the standout for us,

Rob Pyne:

The per advisor piece, because obviously volume can disguise the fact that in fact, per head of advisors that are sitting there in the market, you guys are far and away ahead of

Jade Burford:

The market. But if you look at the likes of a MP or Synchron, if you understand how many advisors sit in those licensees versus MBS, I think that’s where that productivity figure is really apparent.

Rob Pyne:

Yeah, yeah. It stands out, doesn’t it? So that was the thing that struck me when I first saw it. So it is a testament to the work that you and Shane and Chris and Drew and Grant and the team are doing. It is a tremendously successful business. It’s because it’s providing a service that is a necessity. It’s something that people really as just say, it might be a grudge purchase, but it’s one of those things that people need to have covered to protect themselves, speaking from personal experience. So again, thanks for the work you’re doing for our business. I know that you’ve done a number of joint ventures after our business as well, and so you’ve really established yourselves as the premier provider of personal insurance advice, certainly in our market here in Perth, and I know across the country from the stats you’ve shown me. So a wonderful business doing a terrific amount of work for businesses like ours and our clients. So thanks again for joining us today, Jade, on The Trusted Adviser Podcast.

Jade Burford:

Thank you for having me.

Thanks for listening and learning with us. For a complete list of episodes, show notes, transcripts and more, go to thetrustedadviser.com.au.

Scroll to Top