In his recent discussion with Corin Dann at the Financial Services Council Conference (an interview you can find on Podcast here) Grant Robertson mentioned in passing the 'crane index' as an indicator of economic activity. Or at least construction activity. For those of us in Auckland, we have seen a lot of cranes recently, and now you can get a more detailed view of exactly how many cranes are operating by following the fascinating RLB Crane Index for Q1 2018 here.
“Proud of my first on-the-record speech… which is why I am not going to read it, you can go and read it, and I will talk about something else”
Orr proceeded to talk about the global economy, some of the big issues, and the role of financial services companies. That included a powerfully succinct description of what almost every financial organisation does in some way:
“Identify a risk – ooh, look at that - price a risk – ooh can’t afford that – and then allocates the risk – then the right person takes on the risk or manages it… without those we have gaps – unidentified risks, risks that are not properly priced, and therefore not efficiently managed. So, we get ups and downs, surprises, and shocks: like wars, crashes, and environmental issues like global warming.”
Orr’s big worry list included the reducing returns to labour, about concentrations of companies (fewer larger businesses) and those that have large intellectual property entitlements – hard to compete away and so on. He then moved on to a principal and agent concept discussion – as part of the thesis on the short-termism. Most people are focused on short-term incentives, and that creates externalities – like those listed above. He pointed out mis-pricing water resources and 'calling it the dairy industry'. Laurence Kubiak explained that more technically:
“We have great factor endowment for agriculture… but this is our problem zone for climate change – we rely on those industries”
All of that was the platform for moving to a conversation about conduct issues. Naomi Ballantyne supported the need for conduct regulation that set rules for
"some things that you have to demonstrate… including your value proposition for your longest held customer, how you look after your lowest paid employee… how we support people to speak up when they see conduct problems.”
“I don’t know how we regulate for long-termism, but I know that we can ask companies to report on more issues and over a long-term…”
This got spontaneous applause, but Adrian Orr felt it was not thunderous enough, and asked us to applaud again, and he proceeded to endorse the comments. Although later he did add that insurers shouldn’t be offering overseas trips as incentives. Taken together, Naomi Ballantyne’s comments, and Adrian Orr’s give four suggested corners to conduct regulation:
Look after legacy – that’s the value proposition for the longest held customer
Look after the lowly – that the support you offer to your lowest paid employee
Listen to conduct questions – wherever they come from, and often service staff and customers who ‘don’t understand’ the business may see more clearly than people soaked in the business
Incentives matter – and excessive incentives should not be used – as they have conduct implications
I am sure more can be added, for my money, these two would come in:
Be certain of suitability – don’t let people buy the wrong thing, but carefully allow room between conduct and financial advice – the two are different
"I have been trying to make insurance famous for the last twenty years in Australia"
Damien Mu, CEO of Australia and New Zealand...before reflecting on the exposure created by the Australian Royal Commission, and then on how the current performance of the industry is something of a burning platform, and plunging positively into the conduct conversation.
Rob Everett, Chief Executive of the FMA, reflecting on the recent thematic reviews by the FMA and current work with the RBNZ, in contrast to the Australian Royal Commission said they were focused.
"...less on trying to find a rare, but dramatic, failures. Instead more focus on what happens day by day"
Rob added, tellingly, that it is what your staff do when they are not being watched which shows the extent to which your organisation is committed to good conduct. Rob's speech on conduct obligations was balanced and interesting. It is difficult to strike the right tone when there are a variety of levels of participation and engagement in the conduct conversation. His talk reminded me to explore the interplay between what conduct means as distinct from personalised financial advice, as both often intersect at the point of suitability assessment.
"We're at half-time and we're at nil all"
Rob Flannagan, Chair of the Financial Services Council, making a rather self-effacing statement about the value of the just-launched FSC Code of Conduct. In fact the decision to develop the Code as a central activity in the redevelopment of the FSC is a great example of leadership, not fully acknowledged in a score line of 'nil all'. However, Rob was making the point that the Code has to be followed up by development of guidance, training, and monitoring. That is something I know is happening, having spent some time on replacement business recently.
Eduard Liebenberger is the Head of Digital at Jade Software and is a technologist through and through! Eduard is on a mission to create better digital experiences. He's passionate about driving AI adoption and leveraging this general purpose technology to free up intellectual capital from mundane and highly repetitive tasks. In other words, allowing highly trained people to focus on intellectually challenging tasks rather than wasting their time on clear-cut decisions.
The fourth workshop in the insurance stream at the FSC Conference is a case study in advice automation. What strategies will revolutionise customer engagement? How will technology change the delivery of financial advice? How willing are we to trust advice systems? We explore putting the client first in a world where technology, regulators and advice come together.
Panel participants include:
Edward Liebenburger, Head of Digital at Jade Software Craig Beveridge, Customer Centered Software Design at Jade Software
Susan Taylor is a panelist with us for the customer engagement session in the insurance stream at the FSC conference on Thursday afternoon.
Susan Taylor is the Chief Executive Officer of Financial Services Complaints Ltd (FSCL), an approved dispute resolution scheme. FSCL has over 6,800 financial service providers, including many fund managers, financial advisers, and trustee companies, as scheme participants. Susan has more than 25 years’ experience in dispute resolution in the financial services industry and has presented at financial industry and consumer conferences both in New Zealand and overseas.
Susan is a lawyer and, prior to joining FSCL, was the Deputy Banking Ombudsman.
Panelist in the Customer Engagement session at the FSC Conference on Thursday, Jenée Tibshraeny is a financial journalist for interest.co.nz. Targeting both a consumer and industry audience, she focuses much of her reporting on insurance, banking and KiwiSaver. There are a small number of really good financial journalists in the country, and Jenée is one of them.
Jenée was a finalist in the Business Journalist of the Year and Best Business Feature Writer categories in the 2018 Voyager Media Awards. She has previously won awards sponsored by the New Zealand Shareholders' Association and Insurance Council of New Zealand.
Prior to specialising in financial journalism, Jenée worked as a reporter for Newstalk ZB and The Nation political current affairs show.
In her spare time, Jenée enjoys hiking, playing tennis and making embarrassing attempts at being a surfer.
Gareth is panelist in the insurance stream discussion "Connecting better to consumers"on Thursday at the FSC Conference.
Gareth is a seasoned human-centred design practitioner with 20 years of leadership evenly spread across Auckland and Wellington, problem-solving and opportunity-creating, and public and private sector clients. His weekly work involves creating shared experiences for people through facilitating sprints, Sandbox events, and co-design workshops.
Gareth is a firm believer that the value an organisation creates is directly proportional to the experiences it offers to its people and customers.
Gareth leads PwC's Wellington Experience Centre, which helps organisations to pivot, transforming around customers — offering empathetic, positive, fit-for-purpose experiences that drive satisfaction, efficiency, and mutually beneficial outcomes.
Gareth has a background in architecture, accelerated learning, advertising, digital, and facilitation — and invests his weekends in photography, sketching, cricket, adventure, and eating.