Deep dive into client base valuations - and a comment on risk

We worked alongside Kurt Owen of Base to offer advisers insight into the factors considered when determining the value of an adviser’s client base and overall business. Click here to understand what does into an accountant’s valuation of a client base with input from a life insurance expert.

Please bear in mind that this is a framework presentation and the material in the presentation is illustrative only. The market has received some substantial shocks, and with new draft conduct law on the horizon, which appears to establish a framework that could ban commission, there are substantial risks in the medium term outlook. 

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AFR on AMP - orphan policyholders and fee-for-no-service

The AFR has this lengthy piece placing the recent announcement of a cut in adviser business BOLR in the context of AMP's recent history. Including ASIC's investigation into the charging of fees for no service. It is worth a read - a subject I am bound to return to in the upcoming quarterly review in September. Along with the fee strategies of advisers and the recent boost to direct. 


Southern Cross Commission Changes

Several advisers have phoned or written to express dismay at the changes to service commissions by Southern Cross. The primary concern has been for the ability to provide effective service to customers under the new model. Secondary concerns have been the impact on adviser business valuations, which would appear to be significant. As it happens, I will be running a valuation seminar on the seventh of August, I shall cover the issues of service commission changes and agency agreement terms in more detail at that session. 


Thoughts on Susan Edmund’s Starting out Starting over

Susan Edmund’s Starting out Starting over is made up of different chapters that are dedicated to the different stages of a single woman’s life. Edmunds’ ability to simply relate finance to the lives of single women works to capture and hold the attention of readers. When beginning the book, I was a little worried that I would be left feeling overwhelmed, but Edmunds tackles the broad and complex topic of finance in a manner that is easy to follow, thought-provoking and entertaining. Her ability to address issues relating to debt, home purchases and other investments, love, insurance, and retirement worked well to offer readers a complete guide. Focusing on areas that are generally major events in any person’s life helped to put a lot of things into perspective.

A theme that ran throughout the book was the incorporation of case studies. All case studies worked to further illustrate a point that Edmunds was trying to get across to readers. Although the points were easy to understand, the use of cases studies made the book more personable. I found that aspects of the characters described throughout the book either related to people I know or myself. Although alarming at times, these case studies helped me to objectively assess my tendencies and experiences and to quietly evaluate the tendencies, current situations, and past experiences of women close to me. Upon completion of the book, I felt that the case studies served a dual. The first was to illustrate points made, and the second was to help readers examine their situation, experiences, and habits. I believe the use of case studies is a well-thought-out and a well-designed approach.

Another aspect that I found highly effective was the simple exercises that readers could complete. Through the integration of activities, I was able to use the material that I was reading to critically evaluate my situation and my mindset. Although difficult at times, this aspect of the book is what I found to be most helpful. Having these questions throughout the book meant that I was able to honestly answer without fear of judgment.

To conclude, Susan Edmund’s Starting out Starting over is an informative book that helped me to better understand finance and to be brutally honest with myself. I was able to better understand financial elements that are key to having a successful financial standing. Edmunds straight-forward approach worked well to get her points across in a manner that leaves readers aware and hopeful.

Review by Jerusalem Hibru. Image of Susan Edmunds, supplied.



Susan edmunds

 

 


Context, history, framework

Let's not reinvent the wheel. In order to first challenge what exists, I must first try to understand it - at least as context. Preferably as part of a tradition of development in our field, which is the provision of excellent risk management within the scope of personal life and associated risks. Building on what we have enables me to make better decisions about what is required. Seth Godin has an excellent piece on this. That's one reason why I am looking forward to some extra reading time over the coming holidays. Anyone with recommendations for holiday reading that is connected to the financial services sector, I am keen to hear from you. 


New Zealand's First International Fraud Film Festival

This recent announcement from the FMA states that in November Auckland will be hosting the first Fraud Film Festival in the country. The festival is timed to coincide with November’s Fraud Awareness Week. Click here to read the press release. Here are what we consider to be the top 10 movies about finance:

  1. The Wolf of Wall Street
  2. Wall Street
  3. Inside Job
  4. Too Big to Fail
  5. The Big Short
  6. Trading Places
  7. Glengarry Glen Ross
  8. The Bonfire of the Vanities
  9. Margin Call
  10. The Corporation

We could do a book festival too: The Coffee Trader by David Liss is a masterpiece. There are many others, of course. 


The Value of Cities and The Meaning of Digital Connection

Take a look at this video by Ed Glaeser in which he talks about the value of cities. They are engines of learning, efficient, green, and generate incredible returns to the people that live in them. Paradoxically, in the digital age, the benefits to being close to other people are overwhelming. Digital media acts more as a complement to that, often encouraging face-to-face engagement, or by making it more efficient, rather than replacing it as many assume. You may also like the book.


Being Mortal, by Atul Gawande

Atul Gawande has a new book, "Being Mortal" which is both horrible, and brilliant. One reviewer described it as his best book yet. That depends on your criteria, but it may be right. This is what it is all about: 

You will die, but early death is so rare in modern society. Most deaths are the product of old age or long illness - which very often means the same thing. Under such circumstances people become separated from their home, their loved ones, and their purpose in life by increasingly invasive medical interventions. These can either be nursing home care or treatments of such dubious value that they may be no more than lottery tickets offering a few more days or weeks of life, but at a cost which substantially subtracts from the quality of the actual time remaining. 

It is a grim read. It is also a very engaging book, well written, and on a subject that we must all confront at some point - as a friend or relative and for ourselves. For those involved in the insurance industry we must often consider such issues and help clients to think about them too there is a lot to commend this book. You can learn more at this link


Recent Work Reading

The Visual Display of Quantitative Information by Edward R Tufte. 'The Da Vinci of data' was the judgement of one reviewer. This is an incredible book. Described as one of the top 100 technical books you must read. If you like that sort of thing of course. It is the best book I read this last month and beat out books in fiction and art categories - a rare feat.

It includes the groundbreaking work of people producing info-graphics long before the term was coined. The famous chart of Napoleon's disastrous campaign in Russia is included, sparklines, and a well worked set of principles for data display. Measuring data ink as a proportion of space, and measuring the 'lie factor' of charts are both extraordinary discoveries which render measurable what you have long suspected about poor graphics in mainstream news.

The reason for the read is that we are exploring new ways to present the ratings data from the Quality Product Research database in reports.