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Australia: Lowest Adviser Numbers Since 2015

Research done in Australia shows that “2019 saw the industry shed a huge 4,378 advisers (15.6 percent) throughout the year.” Other key points the report highlighted are:

  • Three out of five advisers are now privately (meaning individually) licensed
  • ‘Micro-licensees’ (10 advisers or less) have grown to more than 21 percent of the market
  • 30 percent of the entire industry has been on the move (ceased or switched) in some form or another in 2019

It looks like Australia has come around to the idea of flexibility in licensing. Click here to read more. 

Managing your debt after dying

A Tenancy Tribunal case recently illustrated that death is not entirely an escape from debt - at least, not for the estate. A tenancy ends three weeks after a landlord is given notice of a tenant's death, but during those three weeks payment is required.

Payments that the estate will need to take care before distributing assets to beneficiaries include power bills, credit card repayments, mortgage repayments, taxes, while a student loan may be written off. If the estate cannot afford to cover all debt, the burden is not passed on to family.

Click here to read more

Thank you to all the advisers we saw in the recent Getting in Shape seminars

I really appreciate seeing so many advisers at the recent Getting in Shape seminars run by the FSC. It was great for us to see you. For those we had a chance to talk with - it was especially good to have conversations about advice process, valuations, transitional licensing, and all those good things. There is no one-size fits all approach to compliance, as I think the panel discussions showed. 

Special thanks to the advisers that gave up their time and shared generously their experience of preparing their businesses for the new regime: Peter Rickards, Tim Fairbrother, Peter Leitch, Camilla Gribble, Anand Srinivasan, John Bolton, Brendon Neal, Peter Cave, Kieran Sutherland, Paula Jones, Fiona Keenan, Mike Tonks, and Richard Thomas. 

I also very much appreciate the work of the FSC and Financial Advice New Zealand in setting up the roadshow and providing great content. Richard Klipin, David Bishop, Naomi Simpson, Katrina Shanks, Andrew Gunn, and all the folks back in the offices that didn't come on tour but helped to make it a success too. 

Mark Banicevich, thanks for stepping up on the Wednesday and being the master of ceremonies. 

The photo below is from the Dunedin event on Wednesday. 

Photo 3

HFANZ: Older New Zealanders retaining health insurance to combat DHB uncertainty

From the Health Funds Association:

More New Zealanders over 65 are holding on to their private health insurance, which the Health Funds Association (HFANZ) says is due to uncertainty over access to public-funded healthcare such as elective surgery.   

Releasing its latest statistics for the December 2019 quarter today, HFANZ chief executive Roger Styles said the total number of lives covered was 1.411 million, up 2800, or 0.2 percent, for the quarter and up 8600 (0.6 percent) for the year to the end of December.

Working-age people still accounted for most of the health insurance uptake, but he said growth in the over-65 age group was significant. That older age bracket with health insurance grew by 2200, or 1.3 percent, last year to 167,000 – around 22 percent of the 65+ population.

“2019 was not a great year for DHBs, with industrial action and other difficulties resulting in a reduction for the first time in over a decade in the number of New Zealanders having elective surgery. Even though the growth in jobs and population has slowed, health insurance numbers are growing because the over-65s see the real benefit of retaining their health insurance for prompt access to treatment when they need it,” Mr Styles said.  

“Not only will they get faster access to treatment, but health insurance also provides increasing options to access treatments and drugs not funded or provided in the public sector.”

Mr Styles said claims paid were $363 million for the quarter, an increase of 5.2 percent on the December 2018 quarter. Claims paid for the year to December 31, 2019 totalled $1.379 billion, up 5.8 percent or $80 million on the previous calendar year.

Premium income for the quarter was up $12 million on the September quarter to $439 million. Annually, premium income rose $145 million or 9.3 percent to $1.695 billion.


Licensing questions: crunch time

A great question from a financial adviser wondering about their licence structure illustrates the dangers of thinking that corporate structure must be reflected in license structure. This adviser has different companies to handle the commissions and fees payable for different groups of clients that arise from different lead sources. That all makes sense. The challenge comes when you have a group of advisers that work across all three different sources of business. It may cause customer confusion to licence each business separately, and have advisers work for each FAP, so the FMA may not be happy with that solution. But license structure can be different to corporate structure. One solution is to have one advice-giving entity, which serves all these different customer groups. There are several different solutions for dealing with the money (either in fees, commissions, or ownership). 

Difference between marketing and sales

Marketing is declarative while sales is interrogative.

That means I have to stand up and say something. There's the courage to do that and the content of what is said. 

What we have to say, why it is important - my experience is that the better these things are, the less I have to worry about the courage. In fact, when I find something interesting or exciting enough, I can't keep away from the keyboard, or the whiteboard, and just have to share it in the meeting. The excitement and the energy take care of the whole process. 

But then when someone is interested enough to pay attention, the change of gear is needed. I need to be curious about them. Why are they interested? What is the point of connection between what they are trying to achieve and what I am trying to achieve? What would they like to do next? And so on. 

Thanks to Fred Dodds for the first line of this piece. 

Acquisition strategy issues for financial advisers

What's the goal with your acquisition strategy? If you're shopping only for scale, and care about nothing else, then its as simple as a checklist:

  • Have funding organised
  • Find targets or deal sources
  • Get deals done
  • Manage transfers

...and hey-presto, you have a value shift. If you are trying to do something a little bit more interesting, like acquire new skills, a complementary service line, some intellectual property, or even IT capability then your ability to assess opportunities must be more rigorous and organised. Some better intelligence about what is available is probably needed. 

300,000 lifetime page views on the blog

Just passed 300,000 lifetime page views on the blog. Thank you for turning up and reading what me, and these days, my team, can offer by way of insurance news. We appreciate your reading. We also very much appreciate when you write (glad both when it is praise or criticism). I shall make my traditional offer at this point: anyone who is keen to write about insurance, or create new insurance content, I am very keen to meet and talk about how we can collaborate. 

The truth behind back pains

Back pain is the leading cause of disability in most countries. Doctors often prescribe addictive pain relief as it is the simpler to prescribe medications and order tests than telling patients it is unlikely to resolve their back pain. Doctors willingness to prescribe pain relief is why back pain is a major reason for people getting addicted to opioids.

Americans spend $88b USD annually to treat back and neck pain, while the best treatment for most back pain is non-medical. Cigna found that 87% of clients who had surgery were still in so much pain two years post-surgery that they need additional treatment. Click here to read more. Many of these medical interventions have a dubious track record for success. 

We might speculate that in combination, non-specific pain, medical willingness to try something - anything - and long-term income protection could be either immensely valuable, or dangerous to long-term health, or perhaps, at different stages, both.