moneyblog

Difference between marketing and sales

Marketing is declarative while sales is interrogative.

That means I have to stand up and say something. There's the courage to do that and the content of what is said. 

What we have to say, why it is important - my experience is that the better these things are, the less I have to worry about the courage. In fact, when I find something interesting or exciting enough, I can't keep away from the keyboard, or the whiteboard, and just have to share it in the meeting. The excitement and the energy take care of the whole process. 

But then when someone is interested enough to pay attention, the change of gear is needed. I need to be curious about them. Why are they interested? What is the point of connection between what they are trying to achieve and what I am trying to achieve? What would they like to do next? And so on. 

Thanks to Fred Dodds for the first line of this piece. 

Acquisition strategy issues for financial advisers

What's the goal with your acquisition strategy? If you're shopping only for scale, and care about nothing else, then its as simple as a checklist:

• Have funding organised
• Find targets or deal sources
• Get deals done
• Manage transfers

...and hey-presto, you have a value shift. If you are trying to do something a little bit more interesting, like acquire new skills, a complementary service line, some intellectual property, or even IT capability then your ability to assess opportunities must be more rigorous and organised. Some better intelligence about what is available is probably needed. 

300,000 lifetime page views on the blog

Just passed 300,000 lifetime page views on the blog. Thank you for turning up and reading what me, and these days, my team, can offer by way of insurance news. We appreciate your reading. We also very much appreciate when you write (glad both when it is praise or criticism). I shall make my traditional offer at this point: anyone who is keen to write about insurance, or create new insurance content, I am very keen to meet and talk about how we can collaborate. 

The truth behind back pains

Back pain is the leading cause of disability in most countries. Doctors often prescribe addictive pain relief as it is the simpler to prescribe medications and order tests than telling patients it is unlikely to resolve their back pain. Doctors willingness to prescribe pain relief is why back pain is a major reason for people getting addicted to opioids.

Americans spend $88b USD annually to treat back and neck pain, while the best treatment for most back pain is non-medical. Cigna found that 87% of clients who had surgery were still in so much pain two years post-surgery that they need additional treatment. Click here to read more. Many of these medical interventions have a dubious track record for success. 

We might speculate that in combination, non-specific pain, medical willingness to try something - anything - and long-term income protection could be either immensely valuable, or dangerous to long-term health, or perhaps, at different stages, both. 

Icebreakers for financial advisers

Bryce Sanders at ThinkAdvisor has some pointers for discussing the role of a financial adviser. Sanders says that most people don't know what advisers really do, and the essence of the discussion should be that: 

• You help keep your clients on track
• You help clients save money
• You act as something of a therapist as well as a life coach in financial matters
• You share the pain

Click here to read more

Partners Life professional development sessions for advisers

Partners Life are committed to offering professional development opportunities to advisers.

Tauranga Date: Tuesday 18th February Time: 9.00am - 11.00am Location: Trinity Wharf 51 Dive Crescent Tauranga	Hamilton Date: Tuesday 18th February Time: 2.00pm - 4.00pm Location: Waikato Stadium Gate 5, 128 Seddon Road Hamilton
Auckland North Date: Wednesday 19th February Time: 9.00am - 11.00am Location: Bruce Mason Centre 1 The Promenade Takapuna	Auckland South Date: Thursday 20th February Time: 9.00am - 11.00am Location: Ellerslie Event Centre 80 Ascot Avenue Remuera
Napier Date: Monday 24th February Time: 9.00am - 11.00am Location: Mission Estate 198 Church Road Taradale	Palmerston North Date: Tuesday 25th February Time: 9.00am - 11.00am Location: Coachman Hotel 140 Fitzherbert Avenue Palmerston North
New Plymouth Date: Wednesday 26th February Time: 9.00am - 11.00am Location: Devon Hotel 390 Devon Street East Strandon	Dunedin Date: Tuesday 3rd March Time: 9.00am - 11.00am Location: Scenic Hotel Southern Cross 118 High Street Dunedin
Invercargill Date: Tuesday 3rd March Time: 2.00pm - 4.00pm Location: BNZ Partners Centre Level 1, 84 Esk Street Invercargill	Christchurch Date: Wednesday 4th March Time: 9.00am - 11.00am Location: Addington Event Centre 75 Jack Hinton Drive Christchurch
Wellington Date: Thursday 5th March Time: 10.00am - 12.00pm Location: QT Hotel 90 Cable Street Te Aro	Nelson Date: Friday 6th March Time: 10.00am - 12.00pm Location: Rutherford Hotel 27 Nile Street W Trafalgar Square
Queenstown Date: Wednesday 11th March Time: 11.00am - 1.00pm Location: BNZ Partners Centre 11 Rees Street Queenstown

Click here to RSVP

Asteron Life: Coronavirus

Asteron Life have announced that they have been closely monitoring the coronavirus 2019-nCoV outbreak. Based on this they have requested more information for any new and existing applicants regarding any travel to or from mainland China since 1 December 2019. Stating 'Our underwriters will be reviewing these applications on a case by case basis and, once the timeframe has been established, will be liaising with the adviser on any necessary disclosure updates'.

Asteron Life will also be updating AsteronConnect to include the following question: “Since December 2019, have you or anyone you reside with travelled to, from or through (i.e. transit stop) China or, have you been in contact with anyone who has been diagnosed with the coronavirus?"

Three draft laws affecting financial services progressing through the house...

Parliament recommenced this week with first reading being completed on 12 Feb for three Bills relevant to the financial services sector:

• Financial Markets (Conduct of Institutions) Amendment Bill completed first reading, referred to the Finance and Expenditure Committee with report back due by 23 June 2020. (see more details in the blog post below).
• Fair Trading Amendment Bill read for the first time, referred to the Economic Development, Science and Innovation Committee with report back due by 12 August 2020.
• Financial Market Infrastructures Bill read a first time, referred to the Finance and Expenditure Committee with report back due by 12 August 2020.

Dates for closure of submissions on each are yet to be announced, but the likelihood of enactment before the election can potentially be gauged from the report back dates.

Consultation on the legislation being proposed for insurance contract changes is expected later this year.

My compliance guru, Rob Dowler, advises me that he has completed drafting his submission on the Conduct Bill some time ago while awaiting the call for submissions. He advises that his key submission points will be:

• Why is a “conduct licence” being introduced rather than simply legislating requiring compliance with the proposed conduct requirements?
• Why restrict the application of the legislation to licensed banks, insurers and non-bank finance companies? Why not capture all financial service providers? In fact, why not capture all commercial enterprises?

Good points. I know that quite a few industries share some of the information asymmetry that makes financial services a sector where the utmost good faith needs to be shown when dealing with customers: many technology companies offer similarly intangible services that have a lot of hidden complexity and are not fully understood by consumers. 

Partners Life: Chief Underwriter

Partners Life have announced that Clayton Gardner will return to the role of Chief Underwriter after spending several years as Chief Technical Underwriter. 

Naomi writes 'I am personally delighted that Clayton will once again be the public face of underwriting at Partners Life, and I am sure the many advisers who have had the pleasure of dealing with Clayton over the years will be equally delighted. 
As one of Partners Life’s founding employees, Clayton has demonstrated a loyalty and commitment to the company which is second to none, and his agreement to step back into the Chief Underwriter role is further evidence of this commitment.'

Conduct of Financial Institutions

The Bill passed its first reading in the house. I am grateful to the FSC for this summary of key points from the proceedings in the house. Link to the draft law is below as well. 

Financial Markets (Conduct of Institutions) Amendment Bill Legislation

Key points in the introduction to the House:

The Bill seeks to address the regulatory gap as there is currently no explicit legislative mandate for the regulation of the general conduct of financial institutions. The Bill is intentionally fast tracked to protect consumers and to maintain confidence.

• New conduct regime requiring licensed entities and intermediaries to have policies, processes, systems, and controls in place to ensure they're considering consumers' interests and treating them fairly in all aspects of their business.
• Requires banks, insurers, and non-bank deposit takers to be licenced by the FMA in respect of their general conduct (with ongoing supervision), and licensing gives consumers confidence that licensed entities have been checked and meet the appropriate standards of conduct. Licensing will provide the FMA with a full range of tools to monitor, supervise, and enforce the new regime.
• Where more detailed obligations are required, regulations can provide more guidance. A principles approach is intended to enable institutions to determine their own policy systems and controls.
• Gives a regulation making power relating to incentives as a mechanism through which sales incentives based on volume and value targets will be prohibited. This prohibition applies not just to licensed entities but also to all intermediaries. Includes any and all incentives, whether monetary, such as commissions, bonuses, or other non-monetary rewards. This approach was taken as conflicted remuneration and incentives are seen as one of the biggest issues driving poor outcomes for consumers in the financial sector. It is intended that this prohibition on target-based incentives will address the fact that targets create an increasingly strong incentive to sell and therefore can encourage the person making the sale to prioritise their own interests over those of the customer. This prohibition still allows people to be remunerated for sales, but removes the particularly problematic target-based remuneration.

National Response: Not support the Bill (in current form).

• Duplication with FSLA.
• Note quoted Chapman Tripp.
• Expressed concerns with the blanket regulation making power in relation to incentives and who they apply to without further scrutiny by government.
• Argued that there are better and less onerous ways of ensuring an obligation to ensure a customer is not going to be harmed simply by the existence of incentives, when incentives are essentially part of a sales business.

AIA: offer extension and commission deal

AIA have launched a few offers to start 2020 and these include no fee for AIA Vitality for 12 months, 5 x Airpoints, multi-benefit discount up to 15% and additional commission for using the Eapp.

Click here to view details. Download AIA Offers

It's complicated... it nearly always is

Financial services is a complicated sector, and many simple things are trickier, on closer inspection, than they first appear. Novice consumer advocates are often surprised to find that short-form insurance costs more than fully underwritten cover. Consumers astonished to find that much 'direct' insurance is more expensive than the stuff where commission is paid. Others are amazed that the industry is allowed to discriminate - just the kind that we call it underwriting, enabling us to price different risks appropriately.

I could go on and on.

I try to remember that I won't know everything relevant, that my one insight into a problem might be a useful starting point, but is unlikely to capture everything about a situation - because it's complicated. A value chain rarely responds exactly as we expect. 

(Prompted by the articles on commission and the rise in the number of articles which proffer advisers as 'the solution' - whether it is the low interest rate environment, the large number of people without a Will, or even, just without insurance.)

Valuation modifiers

Although fluid, there are a set of modifiers that we use when assessing an adviser’s client base to determine the valuation range. The use of these modifying factors allows us to determine a realistic value of an adviser business client base.

Although there are many more factors that could affect valuation, they do not commonly do so. Of course, you may feel that a factor not listed is particularly important to you - in which case, it will become a criterion in your process. Also, this list is applicable to buying some or all of a client base in the current environment. Buying a Financial Advice Provider - or buying in to one - in a year's time will require consideration of a much broader set.

If you would like find out about our valuation service please express your interest to  Jerusalem.Hibru@chatswood.co.nz

Day of week of procedure and 30 day mortality for elective surgery: retrospective analysis of hospital episode statistics

The objective of this study was to assess the association between mortality and the day of elective surgical procedure. The conclusion suggests a higher risk of death for patients who have elective surgical procedures carried out later in the working week and at the weekend, than those who have it done earlier in the week. 

Minister Faafoi addresses advisers at the FSC Getting in Shape event

Minister Faafoi underlined the reasons for changes to financial advice law, citing mainly examples of the importance of advice for investment clients, especially those in KiwiSaver. 

Faafoi also commented on the consultation on fees and levies currently running. 

Advice was acknowledged as being central to customers achieving their goals, with MBIE research being referenced on the value consumers get from advice. 

 

 

 

US: methods to ensure adviser business feasibility

Zoe Garcia-Amaya has stated in her white paper that digitisation and automation will present advisers with new growth opportunities and will drive industry change. Garcia-Amaya elaborates that advisers will need to offer personalised services, digitise their value chain as well as ensuring that clients clearly understand the adviser’s value proposition to ensure continuous success. Click here to read more

The emphasis added is mine. Advisers often think of insurers offering these services, and assume competition with their core offer. But why shouldn't you offer a digital advice service? 

Fighting obesity and saving lives

With a growing issue of child obesity, the Chilean Government implemented several preventative measures in 2016. The government:

• Banned advertising unhealthy foods to children
• Prohibited unhealthy foods being sold in and around schools
• Included bold labels on packaging

The new regime increased consumer awareness, ensured that Chile reduced the number of premature deaths that occurred each year as a result of obesity as well as ensuring that national healthcare costs wouldn’t skyrocket as a result the increased rate of obesity.

I am not sure if Chile's policy decisions are the right ones, but it is a challenge to us to consider what we need to do. New Zealand has a problem with obesity. Compared to Chile, our situation is much worse. Chile is about the 60th most obese country with an average BMI of 26.8, compared to New Zealand at 28th most obese country with an average BMI of 27.9. Although obesity is listed as only the fifth largest cause of deaths by risk factor (see below) it is also strongly correlated with high blood pressure and high blood sugar - often diet being a common cause of all three. 

Click here to read more

Preparing for upcoming regulatory changes, getting the transitional licence application done

Transitional licence applications have been opened since 25 November 2019. If you haven’t already applied, there is still time to do so. By 29 June 2020, all financial advisers must have their own or must have joined a FAP that has been issued a transitional licence by the FMA.

If you do not wish to join a FAP, you must:

1. Register your intention on the FSPR website
2. Apply for your licence on the FMA website

Click here to read the two useful fact sheets about the upcoming changes.

If you have series of entities and advisers we suggest that you make a list of all of them and note next to each whether they will give financial advice, what contracts they have with product providers and with your business (or multiple entities as applicable) and work out which ones need transitional licences and which do not. If you get stuck, get help - you need to get this done urgently. 

Wellington InsurTech Meetup brought to you by Deloitte and JRNY

'Yin and Yang - Insurer/Insurtech Collaboration for Better Customer Outcomes' is a meet up being held in Wellington on the 12th of March. Click here to register.

Good to see: actively managing exclusions and loadings

nib has announced that from February they will pro-actively manage exclusions and loadings: 

We’re taking proactive steps by reviewing existing members policies’ exclusions and loadings

For nib, our purpose is our members’ better health. Up until now, nib has relied on our members or their adviser to seek a review of any exclusions or loadings that have been applied to their policy. Starting February 2020, nib is changing our business process to proactively contact members who have special terms on their policies to encourage them to request a review if their health has improved, to ensure they are getting the best value from their health insurance.

Members who are eligible for an exclusion or loading review will be contacted by nib. We will offer them the opportunity to provide updated test results and disclose any new information relevant to their assessment.

Our underwriting team will seek confirmation of whether relevant symptoms still exist and whether the member has been treatment free for the period required. As part of the review, we will also be referring any members that could benefit from our nib Wellness Programs.

If you have any questions please don’t hesitate to contact our Adviser Partner Manager team.

Any other insurers that are taking this approach, I would love to hear from you.