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Insurance Advice

Photo Credit: caseygoodness via Compfight cc

Photo Credit: caseygoodness

There are biases that affect the quality of advice we get every day of our lives. And not just financial advice.

When a real estate agent shows you houses for sale, they are working for the seller, not you. This affects which properties you are shown and your ability to negotiate the best price.

(This is why buyer’s advocates have become popular. As you are paying them to find your ideal property, your advocate’s interests are aligned with yours.)

In assessing the quality of any advice, it’s worth considering which party the seller is working for: you or the owner of the product.

There are other more subtle influences on the advice we get. While the medical profession manages potential conflicts by operating under a professional code of conduct, your GP may be influenced to prescribe some brands over others, due to a relationship with the pharmaceutical company (this could be done unconsciously…see below).

 

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Photo Credit: mtlchiconline

Photo Credit: mtlchiconline

Noel Stevens was dying when CommInsure rejected his insurance claim.  The NSW District Court ruled the insurer was right to turn down the claim.

Mr Stevens passed away, but not before taking Commonwealth Financial Planning to court as he believed he had been given bad insurance advice. The court agreed.

Commonwealth Financial Planning (CFP) appealed the ruling and recently lost when defended by Noel Stevens’ daughter (CFP v Couper). The evidence in this case showed it’s possible to receive insurance advice that leaves you uninsured, where you were previously covered.

This client had no idea his insurance advice was poor. The CFP advisor didn’t know he’d given the wrong advice. In fact, the advisor followed a process you could find in any bank across Australia.

When your advisor is none the wiser, how can you check you have received proper advice?

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