Table of Contents

Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Key Issue: Advisor Distribution 2
A large proportion of life insurance and superannuation business is generated by financial advisors 2
Australians are reluctant to employ the services of a financial advisor because they feel they can do it themselves 2
However, those individuals who have a financial advisor tend to be in a better financial position 4
The demand for financial planners is set to increase strongly within the next five years 4
An ageing population is set to fuel the demand for financial advice over the coming decades 4
The majority of existing financial advisors will reach retirement age over the next five to ten years creating a widespread staffing concern 6
Market Context 6
New business premiums have increased for life insurers particularly in 2007 6
Superannuation products account for the majority of new life insurance income in Australia 7
Consumers have been investing an increasing share of their superannuation in equities over the last five years 8
Life insurance companies have benefited significantly from the regulation changes 8
Competitive Dynamics 9
The top three life insurers accounted for more than three quarters of total new business premiums in 2007 9
The top three life offices manage the two-thirds of the assets for Australian policyholders 10
Table of Contents 11
Table of figures 12
Table of tables 12
Key issue: Advisor Distribution 13
Are financial advisors providing value to clients for their services? 13
A large proportion of life insurance and superannuation business is generated by financial advisors 13
Australians are reluctant to employ the services of a financial advisor because they feel they can do it themselves 14
However, those individuals who have a financial advisor tend to be in a better financial position 16
The majority of surveyed advisor clients are happy with their financial planner but would like to know the fees involved 16
The future looks secure for financial advisors as they focus on superannuation business 18
The demand for financial planners is set to increase strongly within the next five years 18
An ageing population is set to fuel the demand for financial advice over the coming decades 19
The majority of existing financial advisors will reach retirement age over the next five to ten years creating a widespread staffing concern 20
Market Context 21
Australian life insurance premiums increased over the 2003-2007 period 21
New business premiums have increased for life insurers particularly in 2007 21
New individual business has outperformed new group business in recent years 22
Superannuation products accounts for the majority of new life insurance income in Australia 23
Consumers investing an increasing share of their superannuation in equities over the 2003-2007 period 25
Superannuation and pension/annuity premiums increased strongly in 2007 as a result of legislation changes 27
Regulation changes have encouraged investors to save into superannuation 28
Employers in Australia are required to make superannuation contributions for their employees 28
Australian retirement savings have benefited from the recent superannuation changes 29
Individuals aged 60 and over can access their superannuation benefit tax-free 29
Limitations on concessionally taxed superannuation contributions have changed 30
Post- tax superannuation contributions are limited to AUD150,000 per annum 30
The transitional AUD1 million contribution limit served to boost fund inflows 30
The 50 per cent asset test exemption for the age pension was removed for complying income streams 31
Life insurance companies have benefited significantly from the regulation changes 32
Competitive Dynamics 33
The top few life insurance players in the industry dominate market share in Australia 33
The top three life insurers accounted for more than three quarters of total new business premiums in 2007 33
AMP, National Australia/MLC and ING/ANZ are the leading groups for new superannuation business premiums 34
Colonial/CBA, Westpac and ING/ANZ are the leading groups for new ordinary life insurance premiums 35
The top three life offices manage the two-thirds of the assets for Australian policyholders 36
The top three life companies in Australia had strong business growth during 2007, utilising their large distribution networks 38
AMP is the leading life insurance company in Australia 38
National Australia/MLC is the Australia's second largest life insurance provider 38
ING/ANZ is the third largest life insurance office in Australia 39
APPENDIX 40
Data 40
Methodology 45
Further reading 45
Ask the analyst 45
Datamonitor consulting 46
Disclaimer 46
List of Tables
Table 1: Do you use a financial planner to help with your superannuation? 40
Table 2: How satisfied are you with your financial advisor? 40
Table 3: Proportion of the Australian population aged 65 years and over 40
Table 4: Total new business premium received by life insurance providers, 2003-2007 41
Table 5: Breakdown of individual and group business premiums, 2003-2007 41
Table 6: Breakdown of total new life insurance premiums by product type, 2003-2007 42
Table 7: Breakdown of superannuation assets as of December 2003-2007 42
Table 8: Quarterly splits of superannuation premium income during 2007 43
Table 9: Market shares of life insurance companies for total new business in 2007 43
Table 10: Market shares of life insurance companies for total new superannuation business in 2007 44
Table 11: Market shares of life insurance companies for total new ordinary life insurance business in 2007 44
Table 12: Market share and growth of life insurance companies Australian assets, 2006-2007 45
List of Figures
Figure 1: Just over a quarter of surveyed Australians admit to using a financial advisor to help with their superannuation 3
Figure 2: The Australian population is expected to age rapidly over the coming decades resulting in an increased the need for professional retirement advice 5
Figure 3: Life insurers have received an increasing amount of new business over the last five years 7
Figure 4: The top three life insurance companies dominated new business premiums in 2007 9
Figure 5: The top three life offices hold the majority of Australian fund assets in 2007 10
Figure 6: Just over a quarter of surveyed Australians admit to using a financial advisor to help with their superannuation 15
Figure 7: Clients have became increasingly satisfied with the financial advice they received in 2007 17
Figure 8: The Australian population is expected to age rapidly over the coming decades resulting in an increased the need for professional retirement advice 19
Figure 9: Life insurers have received an increasing amount of new business over the last five years 22
Figure 10: New retail business from individuals has been strong in the life insurance market 23
Figure 11: Superannuation business generates the majority of new premiums for life insurance companies 25
Figure 12: Over half of superannuation assets were invested in equities during 2007 26
Figure 13: Superannuation and pension/annuity products generated rapid income growth in 2007 28
Figure 14: Life offices received the largest share of superannuation premiums in the June quarter of 2007 31
Figure 15: The top three life insurance companies dominated new business premiums in 2007 34
Figure 16: AMP was the market leader for new superannuation business in 2007 35
Figure 17: Colonial/CBA was the leading life insurer for new ordinary life insurance business premiums in 2007 36
Figure 18: The top three life offices held the majority of Australian fund assets in 2007 37