AA Life insurance and SBS Life and Standalone Trauma are now researched by QPR on Quotemonster.Only those with access to research will be able to review the details. Got to www.quotemonster.co.nz to login and check out the comparison. Follow Quality Product Research Limited on LinkedIn to get notifications of updates and changes in your news feed.
Paul Goldsmith, Commerce and Consumer Affairs Minister, has released an Issues Paper on the Financial Advisers Act for consultation today. Consultation on the Issues Paper closes on the 22nd of July and a second document will be released towards the end of the year recommending possible changes to the regulatory regime.
Russell Hutchinson will be writing "The Insurance Adviser's Guide to the Financial Advisers Act Review" shortly - keep an eye out for that.
Alan Lakey at CI Expert (a UK-based research business) is keen on value-based research - and doesn't like what he calls "Condition Counting". We agree, and it is the direction the Australian market wants to move in, which is why we weight conditions using published claims experience. We call it value-based research - and you can get it on every major product on sale in New Zealand at www.quotemonster.co.nz
Recently this story was on TV One's show Seven Sharp. The show featured two different stories of amputees Penny Gifkin and Blair Marriott.
Blair lost his leg after being hit by a reckless driver in a stolen car while riding his motorbike. Penny lost both of her legs and several fingers on her left hand after she woke one morning vomiting and was rushed to intensive care then to be diagnosed with meningococcal disease.
As Blair's situation was an accident his surgery and prosthetics were fully funded by ACC. Penny on the other hand is not entitled to the same prosthetics as it was due to a medical issue. Because Penny works home help was cut, she doesn't qualify for things like an access ramp, equipment to make things easier and her prosthetic legs were the basic of basic due to the limited funding.
If Penny had insurance there is a chance (depending on the type she had) that she would have been covered for these expenses.
TPD cover with a good partial feature or Trauma cover with a good loss of limbs feature would have been sufficient. Product quality does count though - not every TPD and Trauma product would have covered her.
The FMA and MBIE are running joint workshops on the Financial Advisers Act review process. These are aimed at financial advisers (AFA, RFA, and QFEA) but I am sure industry people can join too.
Auckland 24 June
Christchurch 25 June
Wellington 1 July
I encourage as many advisers as possible to either attend or participate in the review process in some way - a submission in writing, for example, at the appropriate time. Participating in the discussion, keeping Code Standard One in view, will be the best way to ensure an optimum outcome from the review process.
The FMA has asked for the removal of a number of foreign firms from the Financial Services Providers Register and warned them. The concern is that a non-resident company may be using a New Zealand registration as a way of claiming supervision under a respected regime - when in fact as an offshore company they are not regulated here. You can read more detail at this link.
Interestingly, a higher proportion of Baby Boomers spend more than 20 hours per week consuming online content than either Millennials or Generation X users. Across other time brackets results are largely similar; however, more Gen-Xers and Millennials spent about 5-10 hours consuming online content.
Why did the Canterbury Earthquake claims take so long to settle? Is a series of blog posts from Kiwiblog covering in some detail the complexity of the process and issues that are unique to the event and New Zealand.
A line has recently been drawn in the sand with the release of the Trowbridge Report.
There are those who believe the existence of commissions categorises advisers as nothing more than salespeople and prevents us from being recognised as a profession. Then there are those that believe commissions are an essential component to prevent a worsening of Australia’s underinsurance problem and represent fair pay for fair work.
However, those that seem to support fee for service as the only way forward seem to hold their view zealously. Some go so far as to say that ethics and commissions cannot co-exist and that the very existence of commissions creates a conflict of interest.
Conflicts of interest occur in almost every decision in our waking lives. Personally, my biggest conflict of interest is how much time I let my children watch TV just so I can have 5 minutes more peace and quiet.
But when it comes to my clients, when somebody walks through my door the process is always the same: understand what it is they need and want, educating them, providing them with solutions to consider which meet those needs and wants, and then acting on their informed decisions.
My job is to help people; I do not sell products. What I “sell” is my time, my expertise and my integrity.
I will provide service to any client who seeks my help.
If I were to generalise fee for service proponents, I would say that they restrict their services to a small niche of high net worth individuals who can afford their fees or they only suit a client looking to include investment-based strategies, which subsidises the cost of the risk advice.
Their business model excludes many everyday Australians, which perpetuates the image that financial planning is not affordable nor accessible.
I believe that choosing a commission-based model can be more honourable in doing the right thing by the client.
Yes, I can lower the premiums on a client’s policy by 25 per cent to 30 per cent for the life of the policy, but in order to cover my costs, I would need to charge a fee.
However, that fee would be more than the discount the client would receive. How would that place them in a better position? How is that putting the client first?
If I charge a fee and a client’s application is not successful, or the outcome is unacceptable to them, how would the client feel about paying for not receiving the outcome they desire when it is the only service they have engaged me to provide?.
By opting for a commission, my client can be confident that they do not pay a cent, unless they are happy with their cover and the offer made by the insurer.
To offer my services without guarantee of reward until my client is satisfied for is, for me, the mark of putting my clients' needs ahead of my own.
The general public recently baulked at the idea of having to potentially pay a GP a co-payment of $6 when they visited the doctor, despite the purpose of the funds being to support the research and advancements into treating diseases that presently destroy the lives of individuals and their families.
It was feared that patients would put off seeing their doctors and have worse health outcomes as a result.
Now if that is true, how can I justify charging a fee significantly higher than $6 knowing that my clients may put off a scheduled review of their cover to take into account changes in their debts and liabilities, or when their cash flow is tight after the birth of a child, or to review an existing exclusion.
The outcome for my client would be far worse.
Regardless of the remuneration method we choose for ourselves we all have the same obligations under the law to act in the best interests of our clients.
I take issue with anyone who uses their business model to denigrate someone who chooses an alternative business model and to infer that the advice received is somehow inferior, tainted or unprofessional.
I can hear you say, 'I have heard it all before: you all say that you put your client first, but then why are there all these scandals in the media that all involve commissions. The only way to ensure integrity is to remove commissions'.
To me, this is like calling for the removal of all cars since they tempt people to drive too fast, or to cut in, and that everyone should be required to take the bus.
For those of you that hold this view, consider this: perhaps your belief that an adviser being ethical regardless of the method by which they choose to be paid is something you can't comprehend, because it says more about your own shortcomings than the advisers around you? That does not give you the right to assume and judge the motives and actions of your peers.
For those advisers that say they have personally witnessed wrongdoings by advisers who have been driven by nothing more than commissions, have you reported them? Or did you decide that the responsibility was not yours, that it would be too much of a hassle? Once again, I challenge you to consider: where do your morals stand if you prioritise protecting your image of not being a whistleblower over the wellbeing of another human being.
I think we could all agree that there are people out there doing the wrong thing and that this prevents us from being viewed as a profession.
There will always be people with poor ethics or who make poor decisions in every industry. If we want to be viewed as a profession, we should mimic the responses of the most respected professions.
There are scandals involving doctors inappropriately touching their patients or lawyers misappropriating funds, but we don't change their remuneration; we remove and deal with the offender.
We should take the same approach. It is not the remuneration issue of a system that is the problem, but the quality of its participants. If advisers or insurers behave unethically, then they should be removed.
At the end of the day, our industry has a long way to go, but mudslinging does not help our reputation. If you choose to focus on the negative issues then that’s all people hear. It is all they will ever know.
Follow the remuneration business model that works for you, but for goodness' sake, don’t preach and breed mistrust in your clients based on the way another adviser chooses to be paid.
If you do, then it is you who is part of the problem, you who is hurting our industry, you who is preventing trust in the wider community and preventing us from being recognised as professionals. Commissions are simply a vehicle which deserve their place.
A billion paid in claims every year, for the last four years, by insurers that are members of the FSC (that doesn't include all the fire and general insurers, of course, the Canterbury Earthquake being a much, much, bigger number).
Everyone in this industry should talk about that number, and talk about the good that it does. That's $1 billion paid out to people who have lost a partner, a parent, a business partner, a key person, or lost their ability to work, or suffered a critical illness. This is big money. It should be bigger, and yes, under-insurance does exist, but this is important: this money was funded by premiums paid when things were good, and the payments were made when things went bad.
Every time you read a comment on a breathless article about how wicked and nasty insurance companies and insurance advisers are you can start your come-back with that claims number.
Here's a compelling exchange, versions of which I have heard myself from discussions with financial advisers, or the managers of advice services businesses:
The first question in that process is also, ‘What are you trying to accomplish?’ And again, so many people will say, ‘I want to sell more.’ And we say, ‘Okay, well what’s your plan for doing that?’ And they say, ‘I bought a CRM. That’s my plan.’
There is a useful article at this link which walks through, essentially, these issues:
define your sales process
follow the process rigorously
measure the points of leakage or abandonment
review the process
When you do that it means you can then improve it to reduce losses through the process. It also means you will have a better understanding of your requirements when you go shopping for a CRM. Or it may turn out that you don't need a fabulously expensive industry-customised CRM, you can use a cheaper, more standard, version.
We are excited to say that Quotemonster is getting faster. A lot faster.
As we have seen such a large increase in the number of Quotemonster users and we are continuously adding new companies, products and options available on the site we saw an increase in the time it was taking the dinosaur to crunch the numbers.
For the last few months we have been working away at building a new pricing engine to decrease the time it takes to do a quote and it is finally to a stage we are happy with.
We have added a new tab ‘NEW QM” to the top of the Quotemonster site which allows you to test the new pricing platform. Since it is still in the testing stages it does not yet have full functionality. You are not yet able to access saved client quotes.
We would love your feedback – please go in and check it out and send us any comments. Once we are completely happy with the new system and have full functionality we will replace the existing Quotemonster.
Try out the new pricing engine by logging in here and then clicking the yellow tab shown below.