The risk of being under-insured is often talked about, but we find that it is often better to illustrate these risks using "war stories" or real-life examples.  When I first became licensed to provide financial advice in 2001, our lecturer shared this story with us.

An elderly client went to a financial adviser for advice on growing his investment portfolio. The adviser provided the financial advice and for many years was successful in helping the client grow his portfolio, meeting his client's goals and wishes.  However, the adviser apparently failed to inquire about the client's general insurance situation and to discuss the risks of being underinsured. The elderly client was retired and had paid his home off and had no other debt.  However, a few years passed and then his house was unfortunately destroyed by a fire started by an electrical fault.

It turns out that this elderly gentleman had not insured his home and when this occurred, he turned to his financial adviser for assistance.  The adviser has no choice but to advise the client that he would have to sell his investment portfolio to rebuild his home totally depleting his investment base and his plans to be a self-funded retiree. The client blamed the adviser for not enquiring about his general insurance circumstances.

So, for this reason, when we go through our fact-finder process it can be a very tedious process - read about why we use a comprehensive fact-finder here. However, it is essential that you check the factfinder in detail and sign off on the contents so that we have a solid starting point on which to base our advice and to avoid these sorts of war stories from occurring. 

If you have any questions just email us on wealth@primarius.net.au and we shall be more than happy to discuss any concerns or next actions with you.