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Comprehending Policies

A little while ago I compared a policy issued in the 1970s with one issued in 2012. In an unfair comparison, the older, simpler, contract contained only a little more than 700 words. The new one was a booklet - in total there were 100,000 words to contend with, more than a typical romance novel, only with no hope of relief from the tedium.

Of course, most of those words were irrelevant, said the company. But that's actually my point. 

But even confining ourselves to directly comparable sections the document is typically thousands of words. It is a worrying trend. It's also one which could be tackled, immediately, with some creative solutions to writing and organising the policy document.

If we continue down the current path it is certain to end in scandal, criticism, a loss of consumer confidence, and legal and regulatory action.

I think it would be better to act first.


The holiday season is only part way through, but if you're back at
work already then the quiet time is great for planning.

Each year we plan, and my view is that often the best thing about
planning is how it pushes us to get better data about the market to
prove or disprove our assumptions.

Although I'm technically on holiday I will start to go through the
planning file to look at our last four quarters of industry review
reports, upcoming regulatory events, pricing, commissions, and product
scenarios and see what we can make of the prospects for 2013.

Getting Good Advice on Increasing Revenue in Life Insurance Sales is like...

Black gold - or striking oil - as in: it's pretty rare. Everyone seems to want to talk about compliance. I know, I have run two workshops in the last month with a heavy compliance focus.

But when you sit down and do your business planning for 2013 you will usually be asking yourself how to have a better year than last year. That usually means how to make a growth number. Maybe you'd be happy with 10% better, maybe you're trying to double or quadruple the size of your business. Wherever your goal is set - are you going to achieve it on your own? with only the information you had last year? Or will you need to try something new?

We think you should try something new.

Come along and get some new ideas and input at Summer School. I am working with Strategi to deliver a two-day course packed with all our best ideas for generating more revenue and profit for your business. You can learn from them and from your course colleagues.

More details can be found here.


Professionalism - Why Complying AFAs are Unhappy

Complying AFAs are unhappy. The latest survey by the FMA shows that - it also shows some fundamental misunderstanding of the regulatory regime by some AFAs, but on the advice of a higher authority we are encouraged first to "seek to understand, rather than to be understood."

So why are complying AFAs unhappy?

Let's examine first of all why they aren't unhappy: they aren't unhappy to be regulated.

Most of the small group of people that are currently AFAs were already operating to a high standard. A few are struggling, but most wrote good plans, focused on their customer, didn't lie, cheat, or steal, and they often held higher qualifications before the new rules than the level five qualification they were told to go and get.

This is where the grumpiness begins: in my picture book of words one of the definitions of nagging is being told to do something you are already doing. That's how a good number of AFAs feel. But this is a minor complaint.

Next up is that they see themselves as custodians of the industry. Long before the Securities Commission got rebranded, restaffed, and newly housed, these people have been exploring what professionalism means through their industry, their practice, and have very often staked their livelihood on the outcome. 

Some AFAs are thinking they have had a bigger stake in the industry, for far longer, than the johnny-come-lately regulator.

They also feel that in comparison with, say, RFAs, their regulatory regime is tough. Not unfairly tough on them, but unfairly easy on RFAs, or doctors, or teachers, too for example.

Finally, in consequence of that, they are customers of the FMA. Yes customers. Not in the sense that inmates at Mount Eden are sometimes referred to as customers, but genuine customers. A key goal of the FMA's is to help improve confidence in the financial system.

Recent events show that for whatever reason the bad stuff is still happening - and that damages client confidence in complying AFAs - it's not their fault; they think it was the FMA's job to stop it, and they are free with their criticism.

Once again I would underline that not all of this is justified, or not entirely justified. We stand at a fork in the road, so to speak, where the FMA, and the large majority of complying financial advisers, product manufacturers, and others can move ahead and little by little things will get better and better. I believe this is the clear intention of all concerned. It is only by error or misunderstanding that we shall take the other path where an adversarial dynamic emerges and becomes fixed. But errors and misunderstandings are easy to come by.

Insurance Prudential Supervision Amendment Bill

Insurance (Prudential Supervision) Amendment Bill

The Insurance (Prudential Supervision) Amendment Bill (the Bill) was introduced on 6 November 2012. The Bill will amend the Act in areas that are technical and generally minor in nature. The changes are intended to reduce unnecessary compliance costs or to improve operational aspects of the new insurance prudential regime.

From the Reserve Bank Newsletter

Quotemonster Statistics

Here are the latest weekly statistics from Quotemonster:

  • The average amount of life cover quoted in the last 7 days: $473,303
  • The average amount of trauma cover quoted in the last 7 days: $150,554
  • The highest Annualised premium quoted in the last 7 days: $28,535.00
  •  The average amount of time the monster takes to quote in last 7 days: 8.78 seconds

Paying for Healthcare in Retirement

Another retirement cost, another report that shows most New Zealanders are unaware and unprepared. This is a bit of a theme.

Please do click through to the article and grab some of the excellent data included in this. My hat is off to www.scoop.co.nz because they provide an excellent 'wire service' by reproducing these releases in full when there is lots of data like this. Also well done to Southern Cross for commissioning this kind of research.