Financial Advice conference recipient of Government funding, and more daily news

It was announced that MBIE’s $10 million Domestic Events Fund was set up to support events. Financial Advice NZ has been named as one of the 200 recipients.  The funding was granted to Financial Advice NZ for their 2020 Bounce conference.

“The $10 million Government fund was set up to support the events industry despite the disruption of Covid-19.

Financial Advice NZ received funding for its conference this year, which is set up as a series of roadshow events across the country. The events can be attended online or in-person. The association will decide this weekend whether to go ahead with an in-person Auckland event.”

Katrina Shanks has said that the funding is fantastic and would allow them to have certainty.

“Financial Advice NZ chief executive Katrina Shanks said the funding would allow the association to have some certainty as it worked with the events company delivering its conference this year.

“It’s fantastic for them. It’s yet another industry that’s had a huge hit from Covid.” Click here to read more

In other news:

AMP: AMP announced that it is considering selling all, or some, of its assets, various stories, but this one in the AFR is recent

Partners Life: Expressions of interest is now open for the September 2020 New Adviser Training Course

RBNZ: Same objectives, different challenges


Client outraged after life insurance premium doubles, and more daily news

A couple that took out a life insurance policy with AMP over 30 years ago is outraged that their monthly premiums have doubled from $165.90 to $296.50. They were informed of the changes in a notification letter that stated that their policy would be cancelled as a result of a missed payment.

“An elderly Havelock North couple feel "scammed" after their life insurance premiums are set to almost double, despite signing a contract for life more than 30 years ago.

Hilton and Trish Kyle took out a life insurance policy with AMP in November 1988, with a monthly payment of $165.90.

But Hilton, 69, said they received a letter stating failure to pay a missed payment would see their policy cancelled.

The letter also stated that their premiums will increase to $296.50 per month.”

The couple had set up an automatic payment system, and so when receiving the letter, the couple voiced their disapproval. AMP Life’s investigation found that there was an error in the automated mail system.

“"They are taking advantage of us. It makes us feel terrible," he said.

"We've had an automated payment set up with ANZ for the 32 years.

"We were gobsmacked to be treated like this from AMP. These buggers need to be exposed."

An AMP Life spokeswoman apologies for any distress the letter may have caused the Kyle's and said an automated mail system caused the issue.

"We have investigated this issue and it appears to be a mistake driven from an automated letter," she said.”

Regardless of the investigation findings, the couple have until 5 September 2020 to pay to stop the policy cancellation.

“The couple, who have until September 5 to pay their outstanding premium charge before policy cancellation, say they would stay with AMP if the premiums were reverted back to their original monthly totals.”  Click here to read more

In other news

Hybrid model helps online firm fill gap in KiwiSaver

Nib: Episode 4 of the nib to hold webinar series focusing on intelligent underwriting

FSC: Professional Advice Knowledge Hub now available to view information on FSLAA regulation changes, webinars and research and other resources

Financial Advice: Bring in the Experts: Rhiannon McKinnon to discuss the "State of the Investor Nation" report


FSC looking for industry insights for new study, and more daily news

The FSC is seeking participants in a survey that relates to the three-part study Money & You. The survey is working to gather data on the views of those in the professional advice industry on the challenges faced within the industry and how New Zealanders can be better served. The survey is designed to take 12 -15 minutes to complete. The results will be published later in the year. The first part of the study was focused on the feelings and knowledge of money of New Zealanders and the second component of the study worked to understand the relationship New Zealanders have with money.

Click here to participate in the survey

AMP: AMP management overhaul keeps its risks “on the downside”

Kiwibank: Kiwibank claims negative OCR is unnecessary

Fidelity Life: new September Sharecare challenge is to achieve a minimum of 20 Green Days for a chance to win a subscription for a ‘Delight Gift Box’ from I AM Co

Fidelity Life: new September Sharecare challenge to track your sleep for at least two weeks to go into the draw to win a $250 Wallace Cotton voucher


Industry reacts to disclosure regulation draft, and more daily news

The submissions on disclosure regulations have been released by MBIE. Although the response was largely positive, some concerns were raised about the disclosure requirements set to come into place on 15 March 2021.
 
AMP highlighted the risk of repetition without addressing issues currently being undervalued by consumers. To ensure value is added AMP suggested that disclosures need to be simple and brief, something AMP doesn’t believe has been achieved by the current draft.

“AMP said there was a risk that the disclosure would end up being repetitive and not address the issue of long, impenetrable disclosures not currently being valued by consumers.

 

“For benefits to be delivered to New Zealand consumers it is essential for disclosures to be simple, meaningful, very brief and unobtrusive. We do not consider that these aims would be met with the regulations as drafted.”

 

Under the new rules, advisers are required to disclose any commissions or incentives they receive that a reasonable client might think might materially influence their advice.”

While Financial Advice said that a reasonable person wouldn’t have a good grasp of identifying conflicts of interest within the industry and that the regulation could be strengthened by having higher standards in place. Financial Advice highlighted that there are many references to ‘incentives’ so including a definition and reference to ‘disincentives’ would be valuable. 

“But Financial Advice NZ said a reasonable client would not expect to have a good grasp of identifying conflicts of interest in the sector.

 

“The regulation could be strengthened by having a higher standard, such as – ‘any interest of A, P, or any other person connected with the giving of the advice that has the potential to influence the advice given by A’.

 

“There are various references to ‘incentives’. We recommend including in the regulation a definition and reference to ‘disincentives’ as well. For example, a reduction of commission rates for low volumes could escape the disclosure regime. Disincentives is an area that is often overlooked and should be drawn attention to, so FAPs and advisers cannot avoid their disclosure obligations by saying ‘this disincentive is not technically an incentive’.”” 

AIA stated that there should be further clarification on was is “practicable” for advisers to include and highlighted that this would cause significant issues for financial advice providers. Although AIA doesn’t see this as an issue as they are prepared to invest in the appropriate systems to aid advisers. 

“AIA said there should be more detail on when it was considered “practicable” for advisers to include in their disclosure the amount of fees payable by a client connected to the advice recommendation.

 

“This is a significant issue for financial advice providers. For AIA NZ, significant system investments will be required to provide estimates. While AIA NZ anticipates making this investment, we are concerned that other providers may choose not to do so, and instead elect not to provide estimates on the basis that it is not practicable to do so. This is an undesirable outcome for consumers which we consider could be avoided by better articulating the circumstances when providers may elect not to provide estimates.” Click here to read more

In other news

FSC: Generations Conference will no longer take place

Kepa: Kepa Compliance Officer’s Course was held in partnership with Rosewill Consulting  

Fidelity Life: Fidelity Life were announced as finalists in Best ICT Team Culture category in the 2020 CIO Awards

Fidelity Life: new applications are encouraged to be done through e-App

Fidelity Life: options for alteration requests are:

·       emailing signed alteration requests to admin.services@fidelitylife.co.nz

·       email from the individual policy owner’s email address

·       Mailing to Customer Care, Fidelity Life, PO Box 37-275, Parnell, Auckland 1151


nib financial growths amid COVID-19, and more daily news

nib New Zealand announced that the 12 months to June 30 2020 has been an overall successful year for the insurer. nib experienced a 10.2% growth in revenue to NZ$253.1 million while also prioritising their efforts to support members and the community through COVID-19 related relief and other initiatives. The underwriting results also increased 11.2% to a total of NZ$25.9 million.

“nib New Zealand today announced an improved operating performance for the 12 months to 30 June 2020 (FY20) lifting membership, revenue and earnings.

nib New Zealand premium revenue grew 10.2% to NZ$253.1 million while underwriting result was NZ$25.9 million, up 11.2%. The FY20 underwriting result includes a NZ$9.0 million COVID-19 deferred claims provision for an expected claims catch-up in healthcare treatment deferred during the peak of the COVID-19 that is expected to occur in FY21.

nib New Zealand Chief Executive Officer, Rob Hennin, said nib performed well in FY20, reporting good financial results alongside its strong focus on supporting members and the community throughout COVID-19.

“Helping our Kiwi members stay safe and healthy throughout the COVID-19 pandemic has been a priority, which is why we moved quickly to implement an extensive support package,” Mr Hennin said.”

As part of their member support initiative nib has provided COVID-19 financial hardship support to over 2,000 members, premium relief and suspension options to over 5,000 members, extended cover for COVID-19 related treatments, expanded GP and specialist consultations through telehealth, and extended treatment pre-approvals.

““To date, we’ve provided more than 2,000 Kiwis members with access to financial hardship support, including premium relief and suspension options, postponed premium increases for over 50,000 members and extended coverage for COVID-19 related treatment across all levels of hospital cover, at no extra cost.

In addition, we expanded cover for consultations with GPs and specialists through telehealth, ensuring members could continue to see their medical practitioner during severe lockdown restrictions. We also extended treatment pre-approval from three to six months, meaning over 1,000 members did not have to reapply for surgery approval if they experienced delays in accessing hospital treatment."

In partnership with nib foundation, nib has donated $1 million to Lifeline Aotearoa and Clearhead as part of their community support initiatives.

"Further, we made a $1 million donation, together with nib foundation, to Lifeline Aotearoa and Clearhead, helping support our communities and the ongoing mental health needs of New Zealanders,” he said." Click here to read more

In other news:

Nib: Episode 4 of nib’s webinar series is set to stream September 2 2020 at 11:30am 

AMP: AMP makes top-level changes amid allegations

Asteron Life: Asteron Life profit drops

RBNZ: RBNZ to lead Asia-Pacific Central Banks working group

Financial Advice: Economic update by Economist Tony Alexander


Ditching the life insurance business appears to be just the start of a long process for AMP

David Chaplin of investmentnews.co.nz reports that the Just-appointed AMP Capital chief, Boe Pahari has resigned along with AMP chair, David Murray, following intense pressure over a sexual harassment incident. The scandal has also claimed AMP director, John Fraser, who resigned at the same time. More details at this link https://investmentnews.co.nz/investment-news/pahari-murray-gone-as-amp-capital-scandal-bites-back/


Importance of focusing on replacement business, and more daily news

Engagement in replacement business has been a focal point of regulators in previous years and the introduction of the new regime will mean that advice on policy replacement will be closely monitored. During an FSC Get in Shape webinar Steven Burgess from Compliance Refinery highlighted that the FMA has identified replacement business as an area that has the highest risk associated with it.

“Advisers engaging in replacement business have been under intense scrutiny from regulators over the past several years, and the new financial advice regime will ensure that close attention is paid to the details when replacing a customer’s existing policy.

As part of the FSC’s ‘Get in Shape’ programme for advisers, Steven Burgess, of Compliance Refinery, says the FMA has determined replacement business as an area ridden with potential risk. He says advisers will have to be extremely thorough in explaining the benefits, and, most importantly, the potential negative impacts of replacing a policy, and it will no longer do to simply quote a cheaper price.

“Replacement business is an area the FMA has determined as an area of ‘highest risk,’ and rightly so,” Burgess said.”

Steve suggests that advisers focus on providing comprehensive advice to clients. This means first understanding the different product offerings to ensure clients make informed decisions.

““That’s an area that advisers should be focusing on a lot more. It is much higher risk to potential customers, and it’s an area where you really need to be providing comprehensive advice to clients. You can’t limit the scope of that advice.”

“You need to make strong comparisons between what the old product was, and what the new product would be,” he explained.

“It’s really important that you get right down into the actual product details, so you can outline it and say “this is what you used to have, and these are the differences between that and what I’m recommending.” The more detailed the better, because these are the areas where the client can come back and tell you that they don’t have some sort of benefit or cover that they used to have, because they didn’t understand those differences.”

Burgess says that at the heart of it, advisers need to be extremely sophisticated in their understanding of various insurance products. He says risk is an area in which customers are usually the least knowledgeable, and it’s the adviser’s job to clearly lay out the risks specific to them.” Click here to read more

In other news:

Financial Advice: the Money Week event at the Base in Hamilton has been cancelled as a result of lockdown

Fidelity Life: Fidelity Life adds to board

AMP: Shake-up at AMP


Southern Cross study finds Millennials and Gen Z less happier, and more daily news

The Southern Cross Futures Report 2020 has found that Millennials and Gen Z are unhappy with several aspects of their lives including friendships, social lives and wellbeing. The study revealed the number of dissatisfied Millennials and Gen Z participants outweighed the dissatisfied participants in other generations.

“Nearly half of young adults are dissatisfied with their friendships, social lives and overall wellbeing, a survey has found.

The Southern Cross Healthy Futures Report 2020 looked at the mental health of Kiwis aged 18 to 29. Fifty one per cent of them were concerned about being lonely compared with 38 per cent of the average adult population.”

The study also revealed that suicide, cost of living, access to mental health services, and violence were issues concerning Millennials and Gen Z. Dr Stephen Child, Southern Cross chief medical officer credits exposure to unrealistic lifestyles in the media as being a contributing factor to dissatisfaction, with people comparing their reality to their expectations that are influenced by what is portrayed in the media.

“The issues weighing most heavily on young millennials and Gen Zers’ minds were suicide, the cost of living, access to mental health services, and violence, the study conducted by Colmar Brunton on behalf of Southern Cross revealed.

Southern Cross chief medical officer Dr Stephen Child said the level of happiness people felt was often related to how closely their reality matched their expectations.

“If people’s expectations are higher than their reality, they can be unhappy. Generally, advertising, television, music videos over the last 30 to 40 years have all been selling and projecting expectations that are unreal.”” Click here to read more

In other news:

FMA: KiwiSaver statements starting to help members take action

Fidelity Life: Not All Hope Gone – Millennials Can Bounce Back Amid COVIDUpheaval, Says Top Advisor

AMP: AMP predicts profit drop


Fidelity Life moves 3000 policies to the cloud and more daily news

The first phase of Fidelity Life’s technological update is now completed. The $25 million change is part of Fidelity Life’s digitisation process that will ensure 3000 policies are relocated to the cloud.

“New Zealand's largest locally-owned insurer, Fidelity Life, has completed the first phase of its $25 million technology transformation, migrating of 3000 policies to a Microsoft Dynamics 365 cloud platform.  

The project, which was nicknamed ‘Watson’ for the innovative spirit of Fidelity Life founders Gordon and Shirley Watson, underpins the company’s five-year transformation strategy, built on the idea of "reimagining life insurance for New Zealanders".”

Project Watson is in collaboration with Datacom, Theta, DX Labs and Microsoft. In the past 12 months Fidelity Life has worked to update different aspects of the business to accommodate the implementation of Project Watson.

“The project has been delivered with the assistance of partners Datacom, Theta and DX Labs as well as Microsoft.

Fidelity Life chief technology officer Dan Wilkinson said the strategy required a high degree of ambition and innovation, and a traditional approach wouldn't cut it. 

Over the past 12 months we’ve focused on bringing our people along via fundamental improvements to the entire technology ecosystem, such as a new virtual desktop solution which enabled a seamless transition to remote working during the Covid-19 lockdown," he said.”

The transformation is designed to ensure sustainable growth is achieved as well as improving the support offered to advisers and partners.

“Fidelity Life’s transformation was all about delivering sustainable growth. 

“Project Watson will drive innovation, productivity, resilience and improved support for our advisers and partners," Wilkinson said. 

"Most importantly, though, it will allow us to develop simpler, more flexible products and deliver good outcomes for our customers."” Click here to read more

In other news

Kloogh victim despondent protections not in place

AMP: 'Retirees' stick with KiwiSaver, AMP says

RBNZ: Transparency And Disclosure Critical To COVID-19 Response