moneyblog

National Adviser Quotemonster Competition Winner

Thank you to all of those who came and visited us on the Quotemonster stand at the recent Financial Advice NZ Conference in Rotorua. We had a great response to our 'Take a Selfie with the Dinosaur' competition and the winner has since been announced.

A huge congratulations to Jacqui Robertson who was the winner and she selected the Samsung Galaxy Note 9 as her prize.

 

 

Latest Goodreturns Article

My latest piece, on trauma cover sum insured setting, is available on goodreturns at this link.

New Financial Advice Code

The new, slimmer, fitter, Financial Advice Code is quite an update on the consultation document we saw last. The much more focused style, using plainer language, and pitched at the level of principles makes it a much more accessible document. That is ideal. The financial advice industry can spend a lot of time arguing over how to meet these principles, but the document should be readable by clients, and allow them to use it to judge whether the service they are getting meets the Code.

The broad approach to treating clients fairly, and acting in their interests brings in wider business practice, not just advice given. This approach is present in several of the standards, but show up especially well in standards one, two, and four. That fits well with the current conversation about conduct, especially some practices highlighted by the Australian Royal Commission.

There is quite a lot of detail to unpack in each section. One worth spending time on is the subject of conflicts of interest. Here the entire wording is 'standard' not 'commentary' and there is a direct quote from the relevant section of the law. Along with all the debate around the law, MBIE's long review, and their recent comments on commission, we should see clearly the role of commission in this standard, and the importance of avoiding conflicts where possible, and managing them where it is now. That connects really well with the next standard, which is headlined as dealing with client understanding, but under that heading then correctly identifies that explaining the risks and consequences of scope limitation as the main task in meeting that standard.

I was delighted by the use of an insurance example, but disappointed by the detail in the example. Apologies to Code Working Group members that may feel this is nitpicking, but my compliance consultant and I went over this one, and … the example is flawed. It states that a comparison is excluded, but then goes on to state that there ARE things in the current policy that MAY NOT BE covered under the new policy, thereby implying that the old policy has been reviewed and, worse, the adviser is uncertain of the cover being offered under the new policy being recommended. Surely, if no comparison is being done, this wording should be the other way around, along the lines of, “It is possible that the new policy may not provide cover that is provided under the old policy but, because no comparison has been completed, such circumstances, if any, have not been identified.” I also note that the example doesn’t include any comment on what limitations on the product range, if any, that apply, being the first bullet point under the Code Standard – another major omission, I suspect, noting that this point is explicitly covered in the bank term deposit example provided under Standard 5. I note that Katrina Shanks and Simon Hassan picked up the same point as you can reference at this link.

Clearly a great deal of discussion has focused on the shift in competence requirements, dealt with in standards 9 through 12. However, given the, now extended, timetable for implementation in conjunction with the reduced requirement, and the transition period, there is plenty of time to meet the required standard. It is compliance with the first eight Code standards, and particularly standards three, four, and five, that should be the focus. More on those soon.

A more detailed reflection on the draft is available to Chatswood clients to contribute to the work they may be doing in formulating their contribution to the consultation process.

 

 

NZFSG launch new quote tool

New Zealand Financial Services Group has launched a new quote tool to integrate with MyCRM. Advisers will be able to quote and pass the details from the quotes into the CRM for further work. Covering an extensive range of life company products and options the tool joins a number of existing tools for advisers: IRESS, Strategy, and of course, Quotemonster all provide quoting.

At this point it makes me wonder at the distant past where the prices of insurance (along with the policy documents) were sometimes considered a closely-held secret. Today prices are widely known in the market, freely on Lifedirect's website, and several others, and insurers often make them available on their own websites. Most banks now have public quote tools, and all share their policy documents freely.

Insurance and fee-based remuneration

The International Association of Insurance Supervisors feels that commission is probably an integral part of insurance advice. Like most of the people I know, I think the same way. But fee-based remuneration is bound to get a bit of attention due to the new, draft Financial Advice Code. I shall write more on that later today. But quite a few advisers already see a role for fees as a part of a balanced remuneration strategy. If you would like to explore that world, please drop me a line. I am aiming to get a few of us together for lunch and ideas sharing.

Activity levels and sales

I love to get talking with advisers about how they engage in marketing, because this is the area where our work is most similar: finding people with problems that need to be solved. I was privileged to have three of those conversations over the last week.

The core of sales is, of course, activity. One of the best conversations was about how to shift up a gear in terms of activity. It reminded me of the very early stages of working on sales strategy with my business coach. The rule stronger than iron, which absolutely cannot be broken, is that when you need to step up one activity - you have to reduce another. After all, last week you had 168 hours, and this week you will have the same.

The starting point for allocating the right amount of time to what you want to do, is to figure out what you're spending it on now, reduce some other tasks, and increase this one. Once you have the time allocation right - and I personally work on about 45 hours a week for work and related stuff - then you can start to figure out how to make it work best.

Dying to be loved on social media

Apparently more than 250 people have died while taking selfies in dangerous locations, worldwide. Of course, sadly, tourists manage to kill themselves in all sorts of misadventures - everything from failing to understand warning signs to driving on the wrong side of the road. It is sad, but it is worth remembering - sometimes the best thing to do is to care less about the photos, and more about experiencing the place and time you are in.

Update: sale of OnePath Life to CIGNA

Christine Laverty, Senior Manager, Adviser Distribution, at OnePath has issued the following statement to update us on the sale process:

 

Sale of OnePath Life (NZ) Limited to Cigna New Zealand

Hi Everyone, as you know we recently announced that ANZ Bank New Zealand Ltd had agreed to sell its OnePath Life (NZ) Ltd insurance business to Cigna Corporation.

I’m incredibly excited about the opportunity this represents to you - our valued Advisers, our Industry as a whole and our OnePath team who have all been offered roles with Cigna. A great outcome!

You may be interested in knowing that Cigna Corporation is currently ranked 61st in the Fortune 500, operating in 30 countries. Their New Zealand business (Cigna NZ) is a leading life insurance company that has operated in New Zealand for 100 years, so you can be rest assured you and clients are in safe hands.

In New Zealand, Cigna is looking forward to the opportunity to diversify their distribution network and is committed to investing and growing our Adviser channel.

We recently held a small series of Adviser feedback sessions with Gail Costa CEO of Cigna and some of her key management team. For those of you who joined us, thank you very much, your insights were invaluable and greatly appreciated by the Cigna team. We’ll be seeking even more feedback and ideas in the future but if in the interim, there’s anything you’d like to contribute, please drop me a line, I’d love to hear from you.

Keeping you & your clients up-to-date

We’re absolutely committed to keeping you up-to-date on the progress of the transaction, and making the transition as easy as possible for you and your clients.

As well as these updates we’re working on a number of FAQs which will provide you with all the information you need to know. We’ll send these to you well before the change of ownership takes place.

We’ll also be contacting your clients closer to the time of the sale being completed, to advise them of the change in ownership of OnePath to Cigna NZ and that OnePath remains the underwriter of their policies. We’ll also reassure them that, while the ownership of their insurer is changing – there will be no change to the terms and conditions of their policy as a result of the sale.

Rest assured, we’ll provide you with a copy of any client communications before your clients receive them.

We’re here to help

In the meantime, it’s business as usual as we work through the details of the sale, however if you have any questions, concerns or feedback please don’t hesitate to contact your Regional Sales Manager or myself who will be happy to help.

Regards,

Christine Laverty
Senior Manager - Adviser Distribution, OnePath

 

Business Owners’ Increased Use of Technology Creates New Gateways for Cyber-Criminals

As digital regeneration of business gathers pace, cyber attack risks increase.

'Connected technologies like artificial intelligence, drones, robotics or wearable sensors have the potential to be game-changers. But business owners beware, connected technologies also increase the chances of a cyber attack because they give cyber-criminals new access points if not properly protected. Research shows that 91 percent of business owners use one of these technologies, but 48 percent are unconcerned they will increase the likelihood of a cyber-attack.'

Click here to read more. Once upon a time business premises in the real-world had to be significantly hardened due to the presence of cash in almost every shop, office, and factory. Today, that risk has shifted away (excepting high cash shops, and certain types of activity like bars) towards scams, phishing, ransomware, and more.

Code Working Group: new draft Code available for review and consultation

The new draft Code has just been released for consultation:

Read more about the consultation, including the draft code and link to the online survey.

Consultation closes on Friday, 9 November 2018.

Selected details from MBIE's media release:

11 October 2018

Consultation is now open on a draft code of professional conduct for people who provide financial advice to consumers.

Code Working Group chair Angus Dale-Jones says the Group has been working to create a workable and robust code that will help ensure the availability and quality of financial advice.

“Our role in developing the Code is to set minimum standards of ethical behaviour, conduct and client care, and competence, knowledge and skill that will apply to anyone who gives financial advice to a retail client,” says Mr Dale-Jones.

“Earlier this year we consulted on the key concepts and high-level approach, which gave us a clear indication of what people wanted to see in the Code. As part of this consultation we also conducted a survey of consumers’ experiences with financial advice, which provided some useful insights on what consumers expect and how a Code of Conduct could improve outcomes for consumers.

“We received a lot of feedback on the need to set robust and achievable competence standards, and have taken this feedback on board. The draft Code proposes to set competence equivalent to the learning outcomes in the New Zealand Certificate in Financial Services (Level 5), approved by the New Zealand Qualifications Authority in 2014.

“We have also taken a principles-based approach to ensure the Code is flexible and works for all the different types of businesses that provide financial advice, including small firms.

“We’re now seeking feedback on the draft Code, and want to hear from people about what they think of the proposed standards and how they will work in practice.

“We want to encourage feedback from all parties who will be affected by the Code, including anyone who is representative of the financial advice industry as well as consumers of financial advice. We will be holding a live chat session during the consultation period and people can also submit feedback via our online submission form,” says Mr Dale-Jones.

The Code is technology-neutral and will apply to robo-advice, as well as financial advice given by people. It sets out 12 proposed standards and supporting commentary. It includes requirements to treat clients fairly and act in their interests, act with integrity, manage conflicts of interest, take steps to ensure the client understands the advice, give advice that is suitable for the client and meet standards of competence, knowledge and skill.

The Code will sit within a wider regulatory regime that will include statutory duties, disclosure requirements and licensing. These changes are being introduced through the Financial Services Legislation Amendment Bill.

 

Paul Kalanathi on excellence

Paul Kalanathi, a neurosurgeon, and author of a famous book about his journey with cancer that eventually killed him, writes about excellence and values. Here is a brief segment on consequences and a commitment to professionalism:

"Paul what happens if I cut two millimeters deeper right here?" [senior surgeon]

Neuroanatomy slides whirred through my head. "Double vision?" [Kalanathi]

"No" he said. "Locked-in syndrome." Another two millimeters, and the patient would be completely paralyzed, save for the ability to blink. He didn't look up from the microscope. "And I know this because the third time I did this operation, that's exactly what happened."

Neurosurgery requires a commitment to one's own excellence and a commitment to another's identity.

Look at that last sentence again.

Fortunately, financial advisers, insurance staff, and management consultants, rarely have quite those extreme consequences on their hands. There are financial consequences to what we do, and they can be quite large. So in some degree all professional advice involves a commitment to one's own excellence and a commitment to another's identity. We have to work hard to make sure our skills are good enough that they serve other people well. That entails practice, critical self-evaluation, and an ability to empathise with the person you are serving sufficiently to place their requirements above whatever is going on for us at the time.

 

 

Mental Health Awareness Week 2018

This week is Mental Health Awareness Week and the them this year is 'Let nature in, strengthen your wellbeing – Mā te taiao kia whakapakari tōu oranga!'

Click here to find out more from the Mental Health Foundation.

Cyber Smart Week 2018

This week is Cyber Smart Week which runs from the 8th - 12th of October. The theme this year is 'Protect you online self'.

Here are some quick tips from Cert NZ (NZ's official cyber safety investigation service) for keeping yourself safe online.

How likely is death in a plane crash?

Of course, it depends. The main factors are whether you fly on commercial airlines, or military transports, or choose a wingsuit and jump off a cliff. If you chose the first option, it's pretty safe:

 

I still remember the "passenger accidental death benefit" rider that used to be offered by some insurers. In fact, flying on a commercial airline is one of the safest things you can do. Riding your own motorbike one of the more dangerous.

Reflecting the communities we serve

The Association of British Insurers has hosted a Dive In event in Edinburgh recently to highlight diversity and inclusion in the insurance industry. There are lots of good resources to be found at this website. Below is one, a few minutes with a partner of a major law firm talking about the importance of having a team that reflects the wide range of clients that they seek to serve.

 

Joe Average Insurance Advice

I personally dislike averages. It reminds me of the story about three economists who went to the archery range. The first one fired an arrow and missed the target a metre to the left. The second shot their arrow and missed a metre to the right, then suddenly the third, shouted "bullseye". All advisers are different, with different stories about what got them into the business, how they like to work, their successes and failures, and more. I like hearing them and learning more about the business through every related experience. Of course there are similarities. Group enough of them together and you have types. They don't do justice to the people, but the boundaries can be drawn.

In the world of insurance advice, one type is the small insurance advice business. Suburban office, only one adviser, maybe two, and an administrator. Sometimes their office is allied with, say, an accountant, finance broker, or real estate agent, but more often than not - it is stand alone. They do not tend to stray often outside the insurance area, preferring referral relationships rather than trying to offer multiple lines of business themselves. If they do offer another service, it will usually be just one of either mortgages, some personal lines fire and general, or no-advice KiwiSaver placement.

To the extent that the businesses are similar, the challenges are also similar. They main ones being growth, scale, resilience, and succession. Each of these is connected. A larger business is more resilient and can afford to hire specialists, with more staff, more succession options are available. Growth is needed to create options for all these challenges. Even if an owner has no desire to run a team, expand into new areas, or bring in outside investors, they usually want their income to rise above the rate at which costs rise. So ultimately the challenge of how to grow underpins all of these common business issues. Growth usually entails pain. You have to experience enough discomfort to engage in the learning, the investment, and the risk-taking required in order to grow. Unearned growth is either luck or inflation. It is worth being suspicious of both - because 'easy come, easy go'.

 

Partners Life appoints Chief Legal, Risk and Conduct Officer

Congratulations to Rebecca Sellers who has been appointed as Chief Legal, Risk and Conduct Officer at Partners Life. Read more here. 

The internet is still really young

Looking at this post from Max Roser I could not help but notice this particular statistic:

"On any day in the last 5 years there were on average 640,000 people online for the first time.³ This was 27,000 every hour."

I don't know what your first thoughts are when you read that (concern for their security? Excited for their new discovery?) but I like to think that the best is yet to come. Also, in spite of the great obsession of the world with big data right now - there is plenty of time for small data. After all, most personal services are delivered locally, by a complex amalgam of people and systems. Since it is still the early days of the internet, why not have a think about how you could build your business online?

Insurance replacement business - disciplinary actions

Advisers have been disciplined for failures to observe replacement business guidance for insurance, if they are AFAs, and in this case, in a QFE. Link. Reading the article I noted that it was the QFE itself that made the referral. Also, that they failures were mainly record-keeping issues. These are significant, but the comments of the disciplinary committee about harm are important too.

FSC Event: The Future of Tax

Last chance to register for the FSC event - The Future of Tax: Insights from the Tax Working Group. Click here to find out more.