How to lower your PI premiums

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Mark Euvrard ran a financial planning group for about 13 years and had around 50 advisers within the group. However, he saw that the whole landscape of financial planning was changing, and that’s why he decided to leave his license and set up a new one.

He’s now the managing director of Libertas, and in a strategic partnership with My Dealer Services, has set up the back office infrastructure for a group of 20 advisory practices that came together to establish their own dealer group.

It’s the first success of the strategic partnership, and Euvrard believes that it shows the direction the profession is heading.

“I think it makes all the sense in the world and I wouldn’t have changed careers to do this unless I thought this is where it should go,” he said.

Euvrard is talking about bringing together planning firms that have a similar offering, and combining them under their own license. He says that it is really for planners who feel “they are being hamstrung with the APL of their license”.

“They can control their own destiny, do the right thing by their clients, because that’s what I’m passionate about…and still use what they’re using at the moment. So I’m not trying to steal them away, in fact this would work for the institutions because their financial planning license is a loss leader while they make their money on their products.”

He says it’s “nonsense” that running your own license is more expensive, and explains how he has been able to secure cheaper PI cover for the group.

“The PI is a fraction of what it is for these bigger groups because it’s not tainted by the one guy in the group that uses base capital and Timbercorp – to use that example.”

Euvrard even approached a PI company and asked for the four things that were going to drive the cost up. The insurer said:

  1. Structured products
  2. Agri business
  3. Specific products
  4. Excessive gearing

“So we banned those things, because the guys never did those things in any case, and our excess is $7,500 and the PI companies are happy because those four things have been taken out of the equation.”

Euvrard says that he knows a number of dealer groups where the PI is twice as much, and their excess is up to $50,000.

He says that essentially, planners can lower those prices by moving to a smaller group and weeding out those people or practises that are driving up the cost.

  • GAB on 2/10/2013 10:54:22 AM

    Not much of a plug for alternate investments is it...when the adviser seems to cop full responsibility for product or even sector failure..and the PI insurer won't go there. What about gearing property in SMSFs...wonder what they think about that?

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