moneyblog

Regulation, remediation, and digital advice process

There is a connection between regulation, remediation of clients that may have received poor or insufficient advice, and digital advice process. Good digital services, either no-advice or advice can be a powerful way to resolve the challenges of meeting conduct expectations and allowing the remediation of past advice without requiring a lot of in-person meetings. That can help advice businesses that have not been able to get a client to engage in a face-to-face review meeting for years, and allow the cost-effective engagement with clients that may have received no advice. If you want to know how, I've been putting together a guide to the principles, so drop me a line. 

New Zealand: a world leader in...

...house prices: link. 

Risk and return: an international comparison of term deposit rates

Check out David Chaston's comparison of international term deposit rates alongside the presence or absence of deposit insurance protection. Link. 

Can the world eradicate another disease?

Our world in data asks whether it is possible to eradicate another major disease: 

 

 

Wouldn't that be good? To find out more, click here.

There is a media disconnect, reporting creates a crazy impression of risk

Does the news reflect what we die from? In short, the answer is 'no'. The chart below shows US news media, but once you've had a smile at that one, you can check out the performance of media in the UK too (at this link). Reflection on the last year or two will tell you the same applies to us too, so no room for being smug.

If you're struggling to find terrorism in the chart showing actual causes of death, that's because it is less than 0.01% of the total of deaths in the United States. So with 35% of the reporting, it is over-reported by a rate of 3500 to 1 incidence. 

I understand the need to report what is shocking and unusual, but I also think that at the end of every article about terrorism and homicide there should be some context. Sooner or later, media has to accept some responsibility for skewing the priorities of their readers. 

Risking everything: how New Zealanders view risk, what they are doing about it

The FSC launched "Risking Everything" this morning 

There is relatively little insurance consumer research done in New Zealand. Much of it is of a low quality. The Massey work on underinsurance, by messrs Matthews, Birks, and Naylor, commissioned by the FSC, and this new research, also commissioned by the FSC have to rate as perhaps two of the most important studies. About three years ago we had some really useful work done in income protection - also done under the auspices of the FSC. 

But back to this work. In this case the research is entirely consumer focused, and draws on attitudes towards risk, and the extent of preparedness to face an event. It feels more relevant to me, as the answers to these questions are firmly rooted in the consumer's own perception, rather than concepts that the industry thinks about - like measuring under-insurance against our own models of what people 'should' have. 

These are my personal highlights: 

• "Those surveyed identified global risks, natural disasters, loss of income/increase of expenses and illness or death when they were asked to consider
  types of risk. However, when thinking about these risks, 1 in 3 of those who identified them don’t tend to think about how these risks might affect
  them and 43% of respondents often forget about them if they do." That rings true, when I think of the attitudes of people not in the industry
• "The risk of losing their income is not even considered by most New Zealanders." - Is that self-deception? Is that a purposeful decision because they are unaware that a solution exists?
• "Two-thirds of those surveyed thought that there was a moderate to high risk of major financial problems should a significant event happen such
  as serious injury or being unable to work" - which is a powerful point of self-reflection. So, if you are brave enough to stand on the street and ask questions (as the film crew below did) then two-thirds of people will admit that they probably have a problem that needs solving. There's a need, and an openness. 
• "I dislike having to think about these financial impacts" - now that's an honest response, who does like thinking about it?
• "Respondents aged 45-54 and those with a large family (three or more children at home) were less likely to think about financial risk" I bet that's just because they are so busy, but as the researchers found out, if you do ask, you get some good answers. 
• There is also a lack of knowledge about what to do: "I’m not really sure how I should manage these potential impacts" or should I say, these people are all but asking for advice
• Winder financial planning issues are identified, with 40% knowing that they do not have the financial resources to manage for three months without their income. 
• Yet with all that latent need, only 38% of respondents have an insurance policy, and only 8% looked into buying one in the last two years (this number excludes those that might have reviewed their cover.

There is a wealth of information. You can download the report from this Download Financial Services Council - Risking Everything - June 2019, the FSC's media release is Download FSCMediaRelease KiwisGambleonFinancialRiskFInalJune102019, and there are some cool vox pops below. Do check it out.

 

The worlds most deadly animals

So this connects to the issue of what people are scared of versus actual risks. Like the excessive concern about terrorism or air travel, compared to the complacency with which people treat heart disease and colon cancer risk. How does it play out with the world's most dangerous animals?

A total of 1.5 million people were killed by animals in 2015. Similar to the 2014 findings, mosquitoes continue to be the deadliest animals; killing 830,000 people in 2015 through various diseases such as malaria, dengue fever, yellow fever, and encephalitis. Humans, responsible for 37.4% of all animal kills documented, maintain the second place spot, well ahead of snakes, scorpions, and sharks. 

Click here to read more 

Stats NZ: How wealthy am I?

Stats NZ have released a new online tool which compares Kiwi's wealth to other New Zealanders. This is a great tool either for advisers providing contextual information to clients in financial plans, or for marketing and sales managers contemplating how realistic their client personae can be made. You can try it out at this link. https://www.stats.govt.nz/experimental/how-wealthy-am-i

By using the tool’s filters, your household can compare how much you own in assets and how much you owe in debt in relation to households like yours. The balance after taking away your debt from your assets is your household’s net worth. You can also compare how much your household earns to other similar households.

“Using this tool, you could create a graph comparing your household’s net worth with other households. For example, if you live with your partner and children, you could compare your assets and debt with other households with children,” labour market and households senior manager Jason Attewell said.

Click here to access the tool.

ACC reveals billion dollar fall-related claims data

Apparently falling over is the most common way Kiwi's injure themselves. In 2018 ACC spent $1.1 billion on fall-related claims. The number is claims increased to 785,063 up from the 781,122 received the previous year. Click here to read more. Any kind of information like this reminds me that while avoiding the risk is a great place to start (wear sensible shoes, think safety first, use a grab rail, get fitter) there is no way I would want that as my only strategy. Some mitigation and then financial risk transfer is definitely in the picture. 

 

Australia: APRA and ASIC release new life claims data

The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) (the agencies) have published data on life insurance claims and claims related disputes for the period 1 January 2017 to 30 June 2017. Click here to read more.  Below are some of their findings - well worth a detailed review.