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National's Super Policy Change

The spread of views on this ranges from:

"Hah!-U-turn!" - from commentators on the left, through, "Invest in New Zealand" - a very common, if faulty, idea, right up to "Allow individual accounts" - which is a great idea - just that its a solution to a very different problem to the one that supposedly called the 'Cullen-fund' into being in the first place.

An interesting synopsis is given over here. However, I disagree with the recommendation to go 100% NZ on asset allocation. Anyone heard of the benefits of diversification out there?


RED HERRING

The ASB 'bias' story is rumbling on - and now we know why. It's about an employment dispute. I know nothing about Warwick Pyne's employment issues with the ASB, and wouldn't comment on them if I did. My question to the Sunday Star Times is this: why don't you look at the split of ASB Bank Investments funds under management? You'll find a big emphasis on conservative funds. So the bias claim doesn't play out.


Consumer Talks Non-Bank Mortgage Borrowing

I like this report generally, entitled "Turning your back on the bank". Go to www.consumer.org.nz but you'll need a login (someone at work must have one, and if they don't they should).

The opening few paragraphs give Sovereign, ASB, and New Zealand Home Loans plenty of good plugs. But their product - all essentially the Go homeloan is good. It then goes on to hand out some good advice. They recommend using a broker 'accredited with the NZMBA' - so they must see some value in the professional standards that the NZMBA requires of its members. I'm interested - would a member like to tell us more?

Relevant links:

www.nzmba.co.nz

www.consumer.org/banks

www.interest.co.nz


Remember This Guy?

Alan Rafe, formerly of Tower, Sovereign, and Prudential back here in NZ, is now President of Berkley Life in the Phillipines. I think they must have got Alan's Mum to write the caption though (see picture).

PeopleIw_anniv_amr01 that have worked in the Phillipines (ask Ernie Uganecz) know that this can be both very rewarding and very tough, as a consequence: we hope Alan has a lot of fun, and makes a lot of money! Best wishes Alan.


Licensed Brokers Abound

Clearly the LBA felt there was sufficient evidence to terminate their relationship with Garry Patterson, and quite aside from the specifics of his case, it may not be a bad move for them, because many a wag in the industry has unfairly made the LBA acronym stand for three different words. Quickly I would like to add that I am sure this has generally been in fun, and only because the opportunity presented itself (much the same way as a major law firm was referred to as "Simply Gruesome", even by clients that respect and pay for their advice).

Anyway, in this instance it seems that the LBA has placed itself firmly on the side of the angels. Garry is aggrieved. Whatever the story what I find interesting now is whether there is a path for his rehabilitation - or will he be condemned for ever?

Moving away from Garry's case in particular; in general there will need to be processes to allow for a broker to make a genuine commercial mistake, tidy up his act, demonstrate a change in process, and be re-admitted to the congregation of the just. Perhaps a 'suspended' category - for both membership of professional organisations and agencies would be helpful. As regulation, compliance standards, and professional association standards are likely to rise over the coming years there will likely be more cases. If we have a process licensed brokers (rather than something else) will abound.


Diplock's Speech - The Case For Action?

Call me hard of thinking, but Jane Diplock's speech did everything except explain why risk only insurance contracts needed to be brought under the Securities Act. She talked about how, and how easy it would be, but not the answer to the critical why? Anyway... rather than be critical and not constructive, I'll list a few reasons why it might be helpful, and we'll see where we get to... ahem...

  • Consumers choosing insurance would be helped by the clear, concise, and easy to use assessment of risks that fill the pages of Investment Statements rather than the excessively confusing and frustratingly difficult rating system (AA, A-, or B, or C...)
  • In future there would be no more vast hordes of consumers that have lost money through unpaid claims because of a rash of life company bankruptcies in the past few years.

No seriously, there would be some benefits in change.

  • Greater disclosure on the part of the company of its own well-being could be useful to advisers in trying to help their clients select a stronger company.
  • Formal adviser disclosure regime would be good. Most advisers already comply with this because of the sale of investments, so it would be easy to apply as well.

Perhaps we should get even more serious about this. If the logic of extending the Securities Act to risk only insurance is because these are long term financial instruments - and many of the components to decisionmaking are similar - then maybe there should be other such arrangements included (Home Equity Release schemes perhaps?) and we should have a review of the Securities Act to make sure is going to do justice to them all.


Losing My Bet

A Reuters Poll of experts has it that there will be no increase in interest rates for the enxt six months - after which they will fall. So I look to be forking out for lunch in June, and the extension will start soon after that - and we mean it about forking out - Consumer has a report that the cost of tradespeople is still rising. But maybe if housing cools off, their rates will too.


Phil's Blog!

Nice to see the trend of financial services commentators talking in a relaxed form is growing. Veteran Financial Services publisher of Tarawera Publishing, the man that really built online financial publishing in New Zealand with www.goodreturns.co.nz its... Philip Macalister. He now has "Phil's Blog".

It's well worth a look. Especially because, you can imagine, that a person like Phil will hear and see so many more things that he could talk about 'informally' than he could actually write about as a journalist, formally.

I'd like to see a few more people in our industry take up blogging. So if anyone is keen, here is a brief guide to how:

1) Look at a few blogs. I think one of the best exponents of the art is David Farrar at www.kiwiblog.co.nz - his is generally social comment, politics, and personal. He gets lots of traffic, and its conversational because he allows comments.

2) Start making comments on posts, and start emailing stuff to current bloggers. That way you can start experimenting with your writing without the commitment to writing a blog every day or week.

3) Pick a subject, and a 'blog' engine. There are lots around. Typepad offers a good one - technical knowledge required is basically zero. If you can use hotmail, you can use a blog engine.