Adviser terminology should be simplified to help the public understand the profession’s role, New Zealand’s Ministry of Business, Innovation and Employment has been told.

In a submission to the ministry’s review of financial advice, the American Income Life Insurance Company says in the insurance sector, “the personalised/class advice distinction is not helpful”.

“The title ‘insurance agent’ or ‘insurance broker’ would seem a suitable replacement title to ‘registered financial adviser’, because it is the title most widely recognised and appropriate for someone selling insurance policies,” the submission says.

It says while there is always an element of advice in selling a life insurance policy, the term adviser is not an accurate description.

Nor does “salesperson” provide an accurate description of life advisers.

“There may be a place for an ‘independent insurance agent’ title for brokers who can canvass a representative range of products from multiple underwriters and are paid a fee for the recommendation,” the submission says.

“But mostly, insurance agents will not be independent and will be involved in introducing and servicing clients for a single underwriter or small group of underwriters, which pay commission or a salary.”

In its submission, Suncorp Life calls for a distinction between sales and advice.

“We believe ‘financial advice’ should be limited to situations where an appropriately qualified adviser is providing a consumer with choice-driven advice,” it says.

“This requires an objective assessment of the comparative benefits of the financial products being discussed with that consumer, and full disclosure of any limitations on the products the adviser is able or willing to discuss.”

Suncorp argues sales-only advisers should be limited to offering products made or distributed by their employer.

“However, salespersons should also be able to provide limited advice to consumers in relation to the products being sold. This is particularly relevant in our direct business – we find most AA Life customers’ requirements are straightforward, but AA Life’s sales process does incorporate important elements of advice.”