Adviser burnout – what to do if it hits you

why is there suddenly a concern about advisers' mental health and burnout? i thought the "experts" who came up with all these regulatory requirements should have known it already.
or, did i smell something warning advisers that mental health management course and checks being part of the licensing requirement is on the card? (ka-ching $$$)

Unanticipated consequences!

@W K, Newpark had an EAP program for advisers running for two years.

Stress impacts, and claims, are well known in the industry but are rarely talked about.

It is well known that financial advisers are eight times more likely to claim for mental health disability than any other occupation. Dentists hold the spot for suicides.

We also know that financial advisers medical schemes are significant loss-makers. I had a scheme of financial advisers I was looking after that had a 216% loss ratio. Southern Cross pulled out of adviser schemes some years ago and the rest have pulled away or haven't done them for almost two decades.

Jeff Tobin first mentioned the term Compassion Fatigue to me some years ago, this is a significant issue in the industry, potentially one that many advisers have experienced and has resulted in part of the reason advisers don't get as involved with claims as they could.

Frankly, I'll be the first to admit it was a major issue last year, story after story of people and families in financial strife, looking for ways to balance the books, keep the coverage they can't replace and ensure they can pay the bills and feed the kids. As a human that's tragic, but we did get through it.

Others will have scars and experiences they would prefer to forget and may not get over. And out in the community, there are plenty of stories like this too.

Long story short, this is a report from the Aussie, where they had a situation where the suicide rate among advisers was something like 14 times the normal for the population. Which will have driven the commission of this report.

The FMA and others looking at the review at the time had this front of mind with where they were going. The wheels were already turning, I'm thankful we haven't adopted the bloody crazy Aussie approach. At the same time, lifting the bar on financial adviser that were not in the investment space was always going to happen.

@Murray maybe, at the same time the reality of what we have been working with in society is a significant issue. Yes, compliance is a drag, the bigger issue has been financial stress, clients under stress, job losses, and industry failures that have compounded the demand on advisers.

A demand that not only hits psychologically because we are human, but also one that impacts on lifestyle and livelihoods with those same clients in crisis cancelling and dropping cover that causes advisers direct financial harm.

This isn't unanticipated, it was visible and known, just no one was talking about it.

In the last month here in Auckland we have had two psychiatrists pull out of practice for medical reasons, their book of clients was booked solid until September.

As a result, all of those clients have to find someone else. The three other practices that were suggested had appointments in June, two of them now are not taking new clients as they can't be accommodated in a reasonable amount of time. The third only has one Psych available and they are booked through to late July. Makes it tough for people in crisis today.

I've two clinicians on a disability claim in the last month out of mental health, and another is coping though they are fully booked and they have a waitlist of 40 sexual assault clients waiting for support and treatment, that can't be met because there are not enough people to do the work.

Talking to claim managers this week, they are struggling to find reasonably timed clinical assessment appointments for new claims, because the whole area is under significantly increased pressure.

Looking around the industry yes, there is some stress from the regulations changes, however, the demands on people with workload to just get the job done is more than enough. The banking and finance area including mortgage brokers is under huge pressure from the market and clients. Sure they're making good money, many are working crazy hours and health issues are starting to show up.

So no, not unanticipated, quite the opposite. Finally, someone is talking about it.

I should have been more explicit with my earlier comment. So here goes attempt 2 -
Unanticipated (maybe better expressed as unexpected) consequences [sarcasm].

Anyone who has followed Australians 20 year track of regulation on top of regulation on top of more regulation will be aware of the mental toll on advisers over the ditch.

@Murray thanks for clarifying, yes, sarcasm doesn't translate that well in print ;)

@JPHale thanks for your detailed statistics above.

You are quite specific which is good.

Are you able to share the source of these statistics you quote or are they anecdotal numbers ?

The usual source of disability claims data is New Zealand disability income experience study 2012-2019 produced by Gen Re which uses data from most insurers.

I was not aware that this detailed survey (which is well respected) provided such granular information as you quote.

brilliant, murray.

jp, thanks for those info.

i wasn't aware of the extent of mental health issues among financial advisers.

fma and other looking at the review had this in front of their mind? really?

i'm always puzzled, why if these guys who are "experts", kept looking across the ditch, then "cut and paste" their policies and implement it here. i would have thought, if anyone is an expert, you'll come up with your own idea and create an efficient system / model for others to follow. but then, of course, this can only happen if that someone fully understood the mechanics of how the sector works.

@d lythgoe, the 8 times more likely was a stat from Sovereign claims at the time, internal information and not published externally. (they were running 600 new claims per year at the time late '00s so 20 years of claims behind that) The other stat on medical scheme loss ratio was for that scheme I looked after and it had around 400 members from memory. And the Aussie suicides was news media reports 2019 to early 2020.

@w k, it's always been an issue that no one is talking about.

As to the experts, part of the reason I have actively engaged with the FMA team on how life insurance works for the last 5-6 years. If no one is helping them understand how are they expected to figure it out.

Also part of the perspective I've been trying to convey, they are trying to work with us, but lack of engagement with them has been part of the issue too. Advisers have largely been why should I? What's in it for me? Not realising that what's in it for them is not facing extreme change that upsets their ability to be an adviser.

I've found it's one of those things where those outside looking in go: "WTF, how does that work, it sounds arse backwards"
we go, this is how it works...
They go; "You have a vested interest, we don't believe you."
Ok, come in and find out...
Oh, "right, so that's how it works, cool."

Goes back to where ever, "hey, this is how the life industry works..."
The rest go, "we don't believe you, you joined them and you've been converted"

And the bloody cycle goes on.

The reality is if we do the right things for the right reasons it works. The major issue is most advisers have been crap at the documentation and admin aspects, and this is where the stress is coming from, they haven't been forced to address this aspect as the wider industry has picked it up or covered it up for decades.

What's being expected isn't actually hard, but it requires some time and attention to learn and understand what's needed. And my next article on education talks about this, as it's probably the biggest area we have underestimated so far.

My average client file from start to finish for initial onboarding is about 300 pages. Sounds a lot, but when it's digital it just collects as you go. This I how I've operated for the better part of a decade. Most will say it's overcooked, and maybe so, but the reality is I have a high persistency client based with excellent diversification of benefits and claims that work without complaints and extremely low levels of non-disclosure.

All things that we desire in our advice businesses. We're always going to have an element of non-disclosure as the client just don't think historic stuff is relevant or they just plain forget.

Also, my business doesn't contribute to my stress load outside of plain workload because I have a high volume of client enquiry and there's pressure from getting that work done. Not the documentation and admin, that's taking care of itself. I'm the bottleneck and that's more brain to keyboard specifically around advice and claims than anything else.

https://www.insurancebusinessmag.com/au/news/breaking-news/alarming-insights-into-the-mental-wellbeing-of-financial-advisers--aia-australia-256204.aspx

Above is a reference to research on this topic. I could not find the actual research but someone from AIA may be able to post

@jp: you've been actively involved with fma for 5-6 years, how much of yours or advisers' recommendations have been adopted or concerns addressed?

i've made submissions and attended meetings, and spoken to the chap leading the working group. he said to me, it's adviser like us who can make contributions. never heard from him since. you see, that's the problem, and why many advisers couldn't be bothered. many of us already knew, their mind had been made up even before consultation, feedback, submission, meetings, etc with advisers. maybe we're wrong, but tell us, how much in the regulations, past and current, introduced were suggestions from advisers?

from past comments, some advisers said the new regulation is here to stay, move on and stop complaining. oh sure, not every adviser is pleased to pick up anything that's being thrown at them. remember, we had to pay for it. you pay a tailor to make a suit for you and it doesn't fit well, do you accept it and move on? if it's free, most definitely i will move on.

ah, you touch on poor documentation. so, that's the main issue? i don't disagree with that. then why make everyone go through the whole chunk of irrelevant studies??? what has the bond or stock market got to do with an adviser who is only practicing general insurance? he can't give investment advice anyway. this whole "education" thingy advisers have to go through sounded like the "experts" haven't got clue or using advisers as a money-making machine. leave no stones unturn, make the advisers cover as much as possible. pretty much like panadol will solve the problem, but let's give him a pain killer jab and morphine, just in case, eh?

and, just learnt an adviser went through the famous "6-steps" with his prospect (known to him) who needed a mortgage. after spending 2-3 hours going through the whole process, his prospect (friend?) said he felt being interrogated and insulted. basically, told him, thanks for your time but i'll not be dealing with you. i'm not surprised because i knew some culture won't accept this famous "6-step" approach - better consumer outcome, eh?

well, PI premiums has gone up. next up will be our fees. the regulators are more 80% self-funded (i stand corrected). just like insurance premiums, the smaller the pool of advisers, the more each adviser have to contribute to the pot. my take is that consumers will not be getting better advice, but lesser advice.

like murray said, it's all unanticipated consequences. "experts", eh?

@w k, valid points. Much of what I have seen has been adapted to the feedback received rather than baby out with the bathwater approach. Much of what we have now is what was initially proposed for us the first time around back in 2009/2010, just more and a bit different.

Added to that, the learnings of the AFA side of things plus the experience in struggling to bring cases and secure change in the RFA space.

Documentation was a significant part of the problem. And not just with advisers, with the providers. Remember the replacement business stuff? a good part of the issue for the FMA there was they didn't have the information from the insurers, so they had to take a stab then go and follow up in advisers files. Which would have been an eye opener at the time as to what was there, or more the point what wasn't there which has further driven the changes from the FMA perspective.

The education piece is an interesting one, as that driver comes from the code working group and their commentary around that has been every adviser needs to be at a minimum level, know the legislative piece and be competent in the areas they give advice.

A CLU or CFP couldn't demonstrate competence with the new environment without doing the paper, so back to school they go. And the result of 50% of advisers not being linked to a FAP today is demonstration of that exact issue. Not that CLU's/or CFP's are in this group, but the point the CWG was making at the time.

Education breaks out into two parts, the core bit which is about ensuring that the industry has a minimum understanding on how financial services works, what the various financial tools are and how they generally work.

Followed by more specialised learning in the area people are giving advice in. And yes, this area for a lot of risk advisers is like going back to kindergarten, I avoided addressing it for years. I started my NCFS in 2012 and flagged it before completing the NZCFS in 2018.

Anyone in insurance life or general saying that they don't need to know what a bond or stock looks like is someone to probably stay away from. As transfer of risk with insurance is the last thing on the list of options before many other tools. Sure most people don't have other options and weget to insurance very quickly, but not knowing what these things are when scoping needs and gathering information for advice leaves advisers exposed to being sales people and not advisers.

In the same vein you wouldn't argue knowing how a mortgage works is a core requirement for both general and life advice. Minimum standards and minimum bar is what this is about.
And the education piece is painful as it was handed to NZQA to oversea this so it meets their standards, which means a bunch of stuff I agree is painfully backwards is required.

On the 6 step process piece, your friend needs to look at what they are doing, this isn't as hard as they are making it out. I've been doing things this way for 9 years, and it works. You need to think about what you are doing and why, then unpack it from there in a way that gets the job done for the clients while meeting the requirements for the new rules. And yes, I have plenty of short attention clients, so it's not like everyone is a raving analytical like me either. Though that's probably why they come to me, the confidence I have dug into things.

As to premium and fees, it's expected every other jurisdiction out there has had the same thing with new rules.

I get the unanticipated bit, that's by advisers and financial services at large. Not by the government or the regulators, I've asked them those questions directly and what we have is very much anticipated.

The unanticipated, yeah I've been standing against the noise. I have also spent 3 years writing about here in GR with my own column that is rarely commented on, leaving me wondering if it is read, when I have stated all of what we are seeing months and years out. So no not unanticipated, unaccepted by those having to undergo change.

I've seen the book "who moved my cheese?" scoffed at in comments here in GR over the years, except the joke is this book epitimises the financial services industry in the last 4-5 years...

@jp: this the root of the problem. i read your previous reply, it reads "If no one is helping them understand how are they expected to figure it out."

1. the WRONG people were employed to do the job. the one/s who hired them ought to be FIRED! which private corporation hires people who don't know their job???
2. they DON'T value advisers, hence are UNWILLING to listen to advisers, not even those who's been in the biz for 30yr+.
3. they take the financial industry for a EXPERIENTIAL ride.

for the record, the above are not only my views. all the advisers i know are in agreement that there should be some regulatory control, however, this lot have left much to be desired.

as the adviser, i don't know if it's his approach or the prospect is just one of the odd ones.

this "6-step" approach is nothing new. learnt that in the early 80s as part of sales training. it was NEVER a regulatory requirement. i use a 7-step, so, that run afoul of the law???

@WK, let's unpack that a bit. (Not that I agree with it all, more that I understand the perspective and our choice is button up and get on with it, or grizzle and moan and find another industry)

1. the WRONG people were employed to do the job. the one/s who hired them ought to be FIRED! which private corporation hires people who don't know their job???

In your opinion. That doesn't appear to be the opinion of the government or FMA. For all intents and purposes, they have the right people, they are employed, have been for a long time and don't seem to be getting fired. More that the "issues" with them are from our perspective as advisers being regulated. And to be fair to the FMA and what we have, there are many things that have been taken into account. Once you come to the realisation that without adviser and professional body engagement with the process we were set to have the same regime as Aussie and the UK. So in contrast we have done pretty damn well.

2. they DON'T value advisers, hence are UNWILLING to listen to advisers, not even those who's been in the biz for 30yr+.

No, not quite correct. They value advisers that are able to demonstrate that they are good advisers. They can demonstrate that they can operate a stable business and have sufficient risk management tools to mitigate the issues of harm to clients and stability of operations.

Time in the industry does not convey competence. Are we talking about an adviser that has come in and actively developed their skills and practices through ongoing education and development, or are we talking about someone who came in did year 1 and then repeated it 30+ times?

That's the issue, we have had very little in the way of past standards and that doesn't give the government or regulators confidence which is why it is back to school for everyone. And I dragged my feet on the school bit too.

3. they take the financial industry for a EXPERIENTIAL ride.

Maybe so, the harsh reality is this is what we have and we have to get on with it. Complaining about it now when we have had 4-5 years to lobby change isn't going to change anything. Added to that a good number of people in the industry across advisers, providers, educators, and consumers have endorsed what we have. It was never going to suit everyone, but nor should it, that's the nature of setting frameworks and regulations.

Personally, I'm quite happy with what we have, it's had little to no change on my business, if anything I'm busier with more clients and they are not complaining about the paperwork or the time. However, I know many businesses are not in the same position as I am and have some complex issues they need to manage. That too is part of doing business, especially when you want to grow significantly.

* - (from W K) for the record, the above are not only my views. all the advisers i know are in agreement that there should be some regulatory control, however, this lot have left much to be desired.

And that is going to be the response from those being regulated. It's been the response every time an industry has had new rules applied and it will continue to be the response. The bit that should hearten people (in NZ) is when it has clearly been too tough they have changed the rules. It has taken time, but it does evolve. And that was a core part of the design of the rules we have, flexibility to change the approach that suits (the regulator) on the balance of having an advice industry that works. The Government wants and needs us, we save them a lot of money in social support, they get it. But they also want transparency and reduced issues making headlines too. AKA our Dunedin adviser in jail...

* - (from W K) as the adviser, i don't know if it's his approach or the prospect is just one of the odd ones.

Often it is just one in my experience, at the same time, probably one that is better not being a client.

* - (from W K) this "6-step" approach is nothing new. learnt that in the early 80s as part of sales training. it was NEVER a regulatory requirement. i use a 7-step, so, that run afoul of the law???

Many of us do more than 6 steps, the 6 step process isn't the complete measure it is the minimum measure, something everyone needs to get used to. The lines are pretty faint on the pitch presently, so taking a precautious approach is recommended. Once the FMA has coloured in a few lines we will be able to adjust to what that looks like, some with a higher bar and some we'll realise is overcooked in our approach. That's also part of adapting to the change when they move the cheese.

jp: i say this again, the advisers that i know do not have a problem with GOOD EFFECTIVE regulations, but this is not one of them.

so far, you are the only one who defended strongly for the regulators. maybe after being with them for 5-6 years, you're a de facto spokes person for the regulators? i don't know. it doesn't convince me one bit. try convincing the majority of the advisers, including those who had to leave the biz.

don't compare aus and uk. i say again, if an expert was hired, i would expect this person to come up with his OWN plan and create an effective solution for the nz market. a cut and paste expert don't count. from you earlier posts, does it mean that advisers were given the false impression that experts were working on the regulation????

as for the adviser who went to jail. you are long enough in the biz. you should know that even the toughest regulations
won't stop a crook. and i can tell you that crooks can pass exams with flying colours, but that does not change their spots. unfortunately, a lot of good ethical experienced advisers will struggle with their exams.

:D calling it as I see it, and no not speaking for the regulators. I have to contend with the same rules and challenges as everyone else.

When we had the same people who setup Aussie coming to NZ to setup here, yeah we were on track to get the same stuff here.

Fundamentally we have quite a good start on this when compared to overseas. As to these experts you talk about, exactly where are they supposed to come from, if they aren't from overseas with those systems we don't want or locally grown with no reference point?

It's easy to throw stones in the glass house without profering solutions.

The reality is we have a good start.
We have to be registered, so the regulator knows who we are and where we are
We have to have appropriate structures in our businesses to provide advice (a major point lacking in the majority of Kiwi businesses not just advisers, just ask any decent accountant or lawyer)
We have to document what we do
And we have to provide a bunch of stuff to client's to ensure that they are informed.

As you said you've been doing most of this for year's, so it's adaption to the change not start again.

We can debate the minute on this but the reality is it's not actually that hard if you have spent the time to work through it over the last few years.

A large part of the problem is people spent that time complaining, denying it would happen and generally ignoring it. Like the life industry has done for decades.

Frankly, it's no surprise we have the mess with advisers we have, history says we were going to have it repeat.

The last “major” change still had advisers 18 months after the new rules came in sorting registration and disclosure. Frankly not that hard, but they missed by a mile. Same thing again.

I was still hearing a month out advisers were saying it wasn’t going to happen. What I don't get is they seem to have missed the point that laws had been passed and stuff had already happened. This isn’t advisers being professional, this is advisers demonstrating they are stupid.

And from the regulators perspective, they want the stupid ones to leave and find something else to do. And if that offends people, tough, it's been coming for 3 years.

Yeah, I seem to be a lone voice in adviser land, which is great for my business, not great for the industry gnashing teeth and ignoring the freight train coming.

We’ve seen law change rolled out in the building industry, health and safety, and residential property recently. And none of it didn’t happen. The building industry also had to be certified too.

TBH the parallel raised by Tim Peat at an early meeting was they were doing to financial services what they did to the building industry, and he was smack on the money there. The writing was on the wall back then.

But hey, let's play the game of who yells the loudest is right. When the reality was those with a financial gain of keeping the gravy train going as it was were some of the loudest deniers.

And all the while the poor bloody adviser has just been trying to make a buck to pay the bills. Yes, I talked about this aspect too.

All hat no cattle said it well. If you didn’t see this coming and prepare. “You’re the weakest link, goodbye.” they linked a YouTube vid on that in another comment.

As to crooks, yeah that's one that is always going to be present, that was recognised with the CWG, FMA, and MBIE. The difference we have is there’s stronger rules around this so they can find and prosecute it. Which is better than what we had, mostly nothing.

The harsh realty is we have what we have, you have a choice, get on with it or there's the door. There isn’t another option available.

Advisers are very important to customers outcomes but the regulatory change was about a better outcome for customers.

The view and input from advisers is important but regulators would I suspect have looked at input from consumer groups just as much if not more so. Of course exams, standards, CPD and the like are not everything but they are part of lifting the standard and / or helping gain consumer confidence?

Adviser burnout is not good but is not a reason for not having a robust framework for advice. Maybe there is an opportunity for adviser bodies and product suppliers to help address burnout through support and training - I think someone mentioned Newpark used to do work in this space.

@jeff m: i was at the conference when fma was asked to define "better customer outcome". they spent 10min or so explaining, but no definition provided. do you know the definition?

robust framework for what? so that good ethical independent advisers who are bad at admin work have to leave, increase the operating costs so much so that good average sales producing independent advisers find it become not viable to continue, and these advisers got kicked out together with the dodgy ones? how does this translate to better "customer outcome"? would it easier for consumers to get independent advice?

the adviser's experience mentioned earlier followed the regulation to the T, and his customer was peeved off.

anyone who's been in sales long enough should know that every customer is different and can't be approached in the same manner. the amount of information customers are prepared to reveal is different.