Mandatory 40% improvements will be applied to all products. Scrappleface as ever.
Employers are complaining, the unions want more money, fund managers and systems not quite ready - but so far - condition normal. A standard public policy initiative. It will likely be alright on the night.
It could be worse, it could be Japan. The Post Office there appears to have lost 50 million accounts. I kid you not - in fact it may bring down the government.
The launch of KiwiSaver is being watched around the world. I have received emails from the UK 'wishing you well for next week's launch'. Amazing! Like we are all a happy band marching together in lock step to create this brave new savings world!
I remember Roger Perry saying almost two years ago that 'savings and investment would have its time in the sun'. So it is. It's unusual for the industry to have such blanket coverage. But the coverage has not been our doing - its a consequence of government policy. Reminding us - even those of us that dislike intervention - that governments can cause quite a splash.
Speaking of time in the sun: Mary Holm has become the financial services industry new star of the small screen and radio - popping up all over the place to preach the good news. It is great to see. Her message has been simple: it's free money, get in and do it. But with a solid grounding in common sense as ever.
Perhaps, for once, the media has chosen the educational and positive message over the raucous voice raised in criticism, such as Gareth Morgan's. However true his critical comments may be they have left them to one side. Doubtless his message will have a turn as well. I fully expect it. There will surely be queue of media at his door all the sooner if there are widespread administrative problems. A few well-publicised or systematic cases of lost contributions would certainly be big news. There will surely be some KiwiSaver failures. It will be right and proper to find them and expose them.
In the meantime I shall phone three managers for about the third time each trying to get a copy of their investment statement - it seems there are some problems with readiness!
However, the investment statements will emerge. What has not yet emerged is a coherent approach to providing advice around KiwiSaver. Whatever anyone says, most clients will need advice. This is probably the greatest area of readiness missing - and it was almost wilfully shorn out of the policy. Well, advisers will just have to get on and build themselves in as best they can. Issuing invoices for advice isn't so hard, so maybe now is the time to get used to doing it.
What does 'naked imaging' have to do with commissions?
Well, we've just seen the non-story that 'strip scanners' will not be used at Auckland Airport. It's wise not to speculate on just how good an image these scanners will provide - but before you hit the outrage button just think for a moment about seeing the passengers on an everyday flight to Wellington naked. You wouldn't want to, now would you? If you are the kind of airport security guard that needs a bit of titillation you would wander over to Whitcoulls and buy what you need.
Stay with me, Okay, this really is a post about commission.
However, it's the nature of the story that interests us. Some journo with fingerless gloves and a 'problem-thinker' type chuckle has heard about these scanners and with nothing
better to do phoned up Auckland Airport and got the PR department to deny it. Now he has a story.
How many times have we heard recently of someone saying commissions will be cut, just so that they can phone up a company and get them to deny it - or not - as the case may be. I recall Tony Boucher at Asteron getting asked a couple of years back. ASB has definitely been asked about mortgage commissions a couple of times recently. ANZ has turned the whole approach around and floated the idea of reducing commissions to improve its terms of trade with advisers.
Life companies had better start looking hard at the issue. It's not that commissions as such are so very very high. Although they are high. What's really stuffed things recently is that everyone gets high commissions. I remember when ING's move to offer a flat 'cash and carry' 150% commission was considered bold. Well today, everyone who has given Newpark or one of the other aggregators an agency has effectively given the market 'cash and carry' commission rate, and is likely paying more than 150% to do so. Once upon a time adviser segmentation was easy - write more, earn more. But today, adviser segmentation is much harder. That's largely because we have made it harder ourselves.
Now the trick, with pressures like accounting standards changes, tax changes, and so forth is that we need to look at focusing our adviser offers a lot better. But which rules to change? How to raise the issue without being shot down? For that you need some innovative ways of having the conversation - sending signals to different sections of the market.
Here's a tip - you'll probably need more subtlety than the writer of the 'naked imaging' scanners story.
Even Scotlands socialist Scottish National Party is to relax planning standards to allow more housing to be built to relieve shortages and help take the heat out of their housing market. Maybe something we should consider here.
Stuck in the middle of this article about general insurance-related claims and how they may be related to global warming - was an important little note about the effect that changing economic conditions could have on life insurers. Vance Arkinstall notes the connection between much new life insurance business and mortgages, and then draws a line over to a possibly cooling market for home loans. Quite right too.
Because I know you missed out on Friday, I couldn't help but pass on this Mark Steyn column on humourless Canadians. I know a few who have escaped the gulag and broken free to share their humour with us. We can only assume they are a tiny, persecuted, minority. Link.
If you were hoping for much new in the way of investment product this year you had better look to boutique managers. The bigger firms will have their hands full post-KiwiSaver. There will be plenty of tidying up to do which should keep most of them quiet until 2008. Actually making all the investment work will ripple out to marketing and distribution teams as the battle gets going in earnest to win the most profitable segments of the KiwiSaver market.
Can a corporate become an APB? It is a significant question. Initial readings of the documentation suggest that they cannot - as we suspected - but the language remains ever so slightly equivocal. Consider this:
"While businesses are unlikely to be approved professional bodies, they will still be able to retain responsibility for their competency setting and monitoring provided that at a minimum they match the APB standards".
Later section in the document (from page 37 onwards) go into a lot more detail about the concerns the ministry considered in this debate. I commend these sections of the document to you.
Chatswood, with Phillip Matthews, and Bell Gully are jointly running a project on Corporate Adviser Regulation - but more detail is available only to members of the project.
The NBR in an omnibus attack on restrictions on doing business, including allusions to the Orwellian use of language dismisses regulation of financial advisers thus:
"All this will do is add more compliance to a sector where the few problems that arise are easily sorted or exposed."
(From their "Insight" email). While it certainly echos the conclusions of the task force ("An industry not in crisis") there are probably few who agree that it could have been left entirely alone. So the question is one of scope - which given the structure of the co-regulatory approach is still emerging.
The Herald has focused on the idea that Bank staff may have to become registered financial advisers. Well, they might - but then again they appear to have missed the corporate membership angle. We are aware that a number of banks have looked at this issue and may be surprised by the present turn of events - which may make it more important for them to look at the issue of a specifically corporate approach to regulation. Link.