Antibiotic resistance threat to economic stability

Used to treat countless individuals undergoing differing medical treatments, antibiotics can be classified as something that we take for granted. The influx of antimicrobial resistance is amplifying concerns globally. The spread of Candida auris and super-resistant gonorrhoea exemplifies the horrifying reality of antimicrobial resistance. The increased antimicrobial resistance could potentially kill 10 million people over the next thirty years – a 700,000 increase on current deaths directly related to antimicrobial resistance.

As a response to the growing threat, a UN commission has recommended an immediate and well-co-ordinated action plan be implemented and exercised to ensure that we avoid a catastrophic event that would result in dire economic outcomes that the World Bank believes could be equivalent to the global financial crisis of 2008-09.

Although pharmaceutical companies have failed in the past to conjure solutions for pressing medical issues, developments relating to antibiotics have been poor. To restrict antimicrobial resistance doctors often refrain from commonly using novel antibiotics. Novel antibiotics are seen as the last resort and are only used for short periods of time. Unlike other medicines, the price of antibiotics is often set low, giving pharmaceutical companies very minimal motivation to develop their current products further; this has the negative implication of discouraging investors from approaching and potentially working alongside antibiotic firms.

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Robo-advice vision: overlooking the insurance dimension

An article from NZ Herald explains that the concept of robo-advice is on the books for 2018. The FMA made an announcement after receiving 49 submissions with the majority of these in favour of robo-advice. Interesting to read the list of companies that the NZHerald note submitted on the law. This isn't the full list, just the ones the Herald picks out to mention, probably based on their familiarity with the brand names:

'The consultation period, which ran from June 21 to July 19, included submissions from: Cigna Life Insurance, Delta Insurance NZ, Fidelity Life Assurance, the Institute of Financial Advisers, the Insurance Council of NZ (ICNZ), Medical Assurance Society of NZ, Partners Life, Southern Cross Medical Society, as well as major retail banks ANZ, ASB, Westpac NZ, fintech start-ups and law firms.'

Look at that list again - seven of the organisations mentioned are insurers or insurance-focused. Yet this article exclusively covers the funds management sector, excluding insurance, probably because it is written by an investment-focused adviser. Readers should not make the same mistake - insurers in New Zealand are very interested in robo-advice. But moving past that, a number of useful points are made. One is about fee transparency - and the connection to improved requirements for the advice process under the draft new Financial Services Legislation Amendment Bill are important. Robo advice services should be subject to the same rules as human advice services, although specific regulatory requirements will differ, because the nature of engagement with the services, and how they are run differs.

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National Adviser Conference: The Monster and You

I had a good day yesterday hanging out with the team from Quotemonster and IDS and a lot of advisers who came by the stand to say hello. It was a good day. Congratulations also to all the award winners, with a special mention to Philip Macalsiter, Anand Srinivasan, and Andries van Graan for theirs. 

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IFA Webinars

The IFA have four webinars coming up in May and June. The topics include:

  • Advice and solutions for multi owner businesses
  • Medical claims – policy limitations and interpretation 
  • Non-disclosure - the problems and possible solutions
  • Buy and Sell Deeds for multi owner businesses

Click here to find out more and to register.


Adviser Numbers to Halve - but will anyone notice?

Goodreturns has a piece on the likely number of advisers halving as a result of the proposed law change. That prompts several questions. 

From what? The number of RFAs is genuinely hard to work out. The register is a mess 17,000 plus entries and rising. Because it is so simple (and relatively inexpensive) to register, lots of people do it. Most of these entries do not represent a person that gives advice. As quotemonster provides a useful free service to most RFAs that sell insurance we have a lot registered, but we have spent a lot of time weeding out 'dead' accounts, and we continue to see plenty of new registrations. Few will become successful advisers. 

Do they all give advice? A significant number of people register as advisers and yet do not give advice. If you run a business which is, in fact, sales-only, there was still an advantage to register, as it reduced the risk and consequences should the person accidentally give advice. If RFA numbers fall that does not immediately mean that the number of advisers - meaning people actually giving advice - will fall. 

How productive are they? It seems clear to us that most life insurance business is handled by the top 2,000 advisers, of which some 200 or so are AFAs. I expect the pattern to be little different for general insurance and home loans. A fall in the number of advisers does not equate to a fall in advice being given. 

To what? Although the category 'RFA' will disappear, the people no longer in that category may appear in others. They may become FAs, or FARs, or they may sell but not give advice, as well as leaving the industry. 

Of course, I am concerned that the new regime will result in a reduction in the number of advisers, and share that with Michael Dowling. The interesting thing about the likely reduction in RFAs participating will be the answers to the questions above. But the presence of the questions also tells us something about the current regime.