Merger Complexity Demonstrates Insurance Advisory Advantage

The proliferation of pension fund mergers and possible member insurance changes should be a talking point for advisors to demonstrate their value in insurance advice.

Speaking at the AFA’s roadshow in Sydney, Zurich risk strategist Adam Crabbe said members may have been unaware their super fund had merged.

There have been many mergers over the past few years, with some funds such as Aware Super and Hostplus doing multiple mergers of smaller funds.

Crabbe said, “There have been several acquisitions over the past few years, but 20% of members are unaware that their fund has merged. What does it mean when they come for advice?

Regarding insurance, he said the funds would likely have different policies and it could be difficult for an adviser to work out how someone’s coverage might change when their fund merges. This complexity could be a cue for the advisor to demonstrate how they are helping the client, especially since consumers were often reluctant to pay for insurance advice.

He gave the example of Hostplus which had merged with Statewide Super, Intrust Super and Club Super but the insurance policies all differed widely between the four funds.

“All funds have their own strengths and weaknesses and how does this affect member coverage? The merging fund should be able to provide you with this information, but you should have the confidence to provide fee-for-service for this engagement.

“Where there is complexity, it can help you explain to the client where the research and work is needed and why the costs will be incurred.”

Sharon D. Cole