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Commissions Strategy

PLAN's member survey is out and their members, apparently, love them. Overwhelmingly, in the categories selected by PLAN, the results show that 90% members either consider PLAN "Excellent" or "Good". Even in the typically troubled area of commission payments only 6% of members consider timeliness, for example, to be "Poor".

Managers of administrative areas in life companies will want to study the results closely as commissions and systems areas are usually fraught with opportunities to disappoint, and bereft of opportunities to astound - in short they are hygiene factors, where performance can only be OK, or substandard (you are doing something very wrong if the commission arrives before it should after all, so 'super-timeliness' is usually had to achieve).

But it does make you think: The strategy basics of commissions should be these:

1) Straightforward calculation - so advisers can pretty near do the math in their heads.
2) Speed - if its ready to pay it is paid - daily.
3) Simplicity of structure - too many options, codes, and accounts and mistakes are bound to occur.
4) Separation of adviser management records from payment records - the data is different, and commission systems masquerading as CRMs are destined to fail all their customers
5) Good audit trail
6) Good statements and reporting systems open to advisers


What a game...

The amazing run chase by Oram, which so nearly snatched victory, following the surprising defeat of England in the game prior, has the poms very, very worried.

I am unused to people being scared of our cricket team. At the height of the match-fixing controversy it was truly said "No one ever paid us to lose a game" - We normally do that for free.

And yet here we are, on the strength of one win and a loss, suddenly all scary, here are some of the comments to prove it:
"The lowest I've seen"
"It is a mental problem"
"You can't defend the way we have batted" (...and we can surely sympathise with that one).

For more on England's woes: link.



Online Payments

The recent news that Microsoft is back looking at Online Payments is not surprisng. The company needs new areas of operation to diversify its profit base away from Office and Windows. They look askance at the core of online payments - use of credit cards - and wonder that such a mechanism can be so strong. Ah, the power of a pre-existing network.

There are a variety of challenges. For all that credit cards are expensive, and foist a particular financial transaction on a person as well as merely acting as a payment mechanism, they have succeeded because these firms were prepared to take considerable commercial risks to finance transactions that are often repudiated, and have the advantages of incumbency.

But the reign of the cards is not certain. They are expensive. administratively intense, consumers do not always like the necessity of the credit contract, and as a consequence of all this they have effective minimum transaction levels far above what many users would like.

The technical problems of authentication, security, and transmission are within easy grasp of being solved - that will need to be allied with smart product development, a straightforward approach to the nature of the contracts with clients, and support from several initial online markets - probably including a number of banks.

I hope the financial services industry looks kindly on new payments plays. This kind of product could help all sorts of people - and fuel the next web-based economic boom - as many more transactions become economic.


Trevor Matthews

An actuary (Trevor Matthews) known to many of you has got himself in a little hot water with the use of the term "nigger in the woodpile" during a Q&A session with staff. After a staff member complained Trevor responded with a full and frank explanation and apology. Link to the Guardian for the full story.

Some companies have had major inflection points where a public comment has torn down the brand structure and destabilised the business - there was a UK jewellery chain a few years ago - there has been some suggestion that this is just such a moment - but I don't think so. Unlike cases such as Mel Gibson's the apology was immediate and straightforward.

Few other commentators have picked up on the issue that the comment actually referred to the burying of a change in the company pension scheme definitions which would reduce benefits. This remains the item that is 'not in clear view', and yet the one which will be of more interest to staff in the medium term.


Convergence

Those hoping that KiwiSaver will gradually become more like the Australian regime will be cheered by this early indicator: Portable Super Planned. From The New Zealand Herald. The story also idenntifies a number of tax issues that will get some work.

Meanwhile, The Press warns of a 'compliance train smash' because of the short timeframe to implement KiwiSaver. Link.


Bubbles

How to spot a bubble: the return on your investment is increasingly predicated on being able to seel the asset at a greater price to someone else, as opposed to the value of the income derived from it.

If housing is struggling to return 4% in some places that would make you stop and pause, at least briefly, for thought. But "Investment Plates" where there is no annual income from the product and the value of the plate is based solely on 'scarcity' (in a market where 14,000 new plates are issued each year). Would surely make you just stop.

Inv. Plates.


Labour & Green Supporters Float CGT on Houses

This article over at DPF's blog fingers Labour supporters floating the idea of CGT on houses as a solution to high relative house pricess - the tax status of housing is emphatically not the problem. The problem is restrictive zoning and land use laws (think resource management act) which prevents the modest additional land that would be required to solve the problem being released at reasonable cost.

A recent review of Green's tax policy indicates that they have not backed up public statements about not applying any CGT to owner occupied housing in their formal submissions.

While there are some reasonable economic rationales for taxing capital gains like income, these can only make any sense in a review that would also see income tax rates at roughly half current levels - somehow I don't think that's what they have in mind.

Link.