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Golf

Golf. Even non-golfers must have a passing knowledge of the game in order to get by in business especially financial services - such is the extent of this affliction amongst the commercial community. It has much the same relationship to business that coffee does - it is almost synonymous with the doing of business in some circles. At times the extent of the affliction is such that commerce is merely a cover for the true purpose of gatherings - the indulgence in golf.

During the early nineties some brave medical staff explored the attractiveness of crack cocaine. It provides a relatively safe, vivid and yet shortlived 'high'. Surely golf has some similarity to this. Even in my limited exposure to the game, tantalisingly, occasionally, one can hit a good ball. That shortlived high. But then one must hunt for it again. The crack analogy applies perhaps especially to the devotees of a particular form of the golf addiction. I refer of course to the testosterone charged pursuit of the longest drive.

"He can hit a big ball" is uttered in hushed tones in the restrooms of the towers of high finance - and it is indeed a complement. This is not the pursuit of just the alpha-male silverbacked primates of the financial jungle. It does, in fact, require considerable accuracy and finesse. Timing, stance, strength - yes - but ability more than anything else is required. Personally, I am hopeless at it. My first drive trickled onto the fairway in front of a large crowd. It has improved only a little since. However one seriously long driver is Mike Maloney. Mike is one of the founders of the New Zealand Long Drive Association. Can you hit a big ball? email him mike.maloney@nzlda.co.nz


More on Saving

Extending on the theme we started in the post a day or two ago on saving (see below) this article by the folk at Fundsource highlights one of the few useful tools from a behavioural point of view. Basically, think hard about how much you should save - and you'll soon be worried that you are not saving enough. Fear is a motivator. Not a thoroughly pleasant one to use - but heh, insurance advisers for example, are not so squeamish. There are, however, other tools to use, and work on behaviour modification approaches - learning new habits, and how to show them off, is all part of the new approach to communication with savings clients.


Real Estate Companies Vs. Banks

Events are important in financial services sales. In our every day lives most people outside the industry are profoundly disinterested in most retail financial products. Bank accounts, loans, insurance - these should all simply function with as little requirement for intervention or worry as possible. But at certain times in our lives this changes. These are two of the biggest.

1. Buying a house = I suddenly want a home loan

2. Get a big loan = I am suddenly worried about paying it back, and buy some insurance

The banks re focused on the second of these -  having figured out that they can sell lots of incurance is a big relief at a time when home loan margins are under constant pressure. The problem is that the prior event - buying the house - is not something the bank is very involved in. Real Estate firms are there first. Mortgage brokers with their affinity for the market and ability to make a variety of referral deals with real estate firms are usually closer to real estate people than the banks. But the worry for both brokers and bankers is that real estate companies will become better at lending their own money.

This prospect is very real. The picture is complicated. There are a variety of other, less significant, but still important factors - refinancing is the majority of the market, for example - and banks have lots of transactional business with clients that keeps them close. So the battle will be evenly matched. Yet the prospect that real estate companies will sell lots more loans than they presently do seems, well, very real.


Fun with Interest Rates

Remember how we were told during the election campaign that we could not have tax cuts because interest rates would rise? Well, it appears the betting is on that they will rise, and quite a bit, in the next six months. So much for thinking we were at the top of the cycle. Regular readers will know, as I said to Campbell this time last year, the housing market looks like a bit of a bubble, and rates wil have to rise further faster. I lost that bet - but now it looks like just a question of timing. One might wonder why the rate increases were not carried out sooner, and perhaps if an additional quarter percent had been applied in April as many expected then we would not have inflation above 3% today, and forecast to hit 3.9% in the next six months.


Saving

An interest in why people do or do not save should be the constant companion of anyone who cares about the financial services industry. In this story Diana Clement reports on how petrol price rises are pushing family budgets to th limit - and links that with the absence of savings. While an increase in the Government's net worth to the tune of an extra $14.5 billion perhaps indicates there is more to tax than petrol as a cause of the hole in the budget's of kiwis... let us put that to one side.

Back to saving. This is vital. Savers usually have the approach that the budget contains an item - saving, and it's given priority over many others. Unsuccessful savers rarely budget and look to save what's left - and usually find there is none. Whatever the 'prior' expense is. Petrol, or perfume. Food, or Frappucino.

I have a mate who sold superannuation plans who struck a man in his late thirties with five children on a manual worker's salary (wife worked part-time, but also nothing amazing) who had just about cleared his mortgage, the kids were well looked after, and he was on track to afford a comfortable retirement. His secret was making saving a priority.

That's why when we look at promoting saving and investment creating tools which manage a behavioural shift is far more important than credibility or detailed risk management assessments. Of course - you can contact me for further information about these!


Mary Holm

Good advice to those bullied into apartments from Mary Holm. If you were pushed into it, don't go ahead. The role of a salesperson is to help people make a decision - but... duress is not the feeling that should accompany large purchase or the start of a new investment direction. There are limits. As the housing market may be over-reaching them, so may sales practices.