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End this ridiculous war on selling

Financial advisers are about to become collateral damage in the latest round of successive governments' war against our right to think for ourselves.

Friday, May 11th 2012, 10:30AM 11 Comments

by Niko Kloeten

In continuing the centuries-old tradition of populist appeal against salespeople, the government has come up with section 71 of the Financial Markets Conduct Bill, which as currently written would make it very difficult for financial advisers to do their job of prospecting for new clients.

However, it makes perfect sense if you, like most New Zealand politicians, believe people are too stupid to make their own decisions and therefore need to have their choices kept to a minimum.

Viewed in this light, the Bill protects people going about their daily lives from financial advisers lurking in nearby bushes, waiting to leap out and beat them around the head with "unsolicited" offers of financial products.  

This includes KiwiSaver; if the government made it any more difficult to discuss its own savings scheme it would have to get the orange election guy to tell us about it.

One wonders how the regulators think advisers came across their "current and former clients", who are seemingly impervious to the advisers' mind-control abilites and therefore deemed safe to be "approached". 

A more charitable view is that this is an unintended consequence of a part of the legislation that is aimed at door-to-door salesmen and telemarketers.

This brings up two questions. Firstly, when has there ever been a government-imposed bureaucratic regulation that didn't have unintended consequences?  Secondly, what's wrong with door-to-door salesmen and telemarketers anyway?

They offer a service and although it's not always a popular one there's obviously a market for it, otherwise companies wouldn't spend all that money doing it.  Two words for those who don't like telemarketing: caller ID.  Door-to-door salesmen can also be dispatched with two words, albeit usually less polite ones.

If politicians were really serious about protecting us from unwanted door-knockers they would apply the same rules to themselves; I'd much rather talk to a guy selling vacuum cleaners than some slimeball in a suit telling me how he's going to use my own money to bribe me into voting for him.

The upshot of all this is that financial advisers, who have already been told by regulators what products they can advise on, now face the prospect of being told by regulators who they can and can't talk to.  Surely this contravenes the right to freedom of association under the Bill of Rights Act?

But as pointed out by IFA president Nigel Tate, the real victims would be the New Zealand public, who are underinsured and financially illiterate and likely to remain so unless "offered" a cold hard dose of financial reality.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« KiwiSaver rot runs deeper than defaultsBNZ scheme may bring bank sales issue to a head »

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Comments from our readers

On 11 May 2012 at 11:13 am denis said:
"what's wrong with door-to-door salesmen and telemarketers anyway?"

If you are having trouble breaking the ice at a social gathering anywhere in NZ, just say the above - and then sit back and enjoy the stories.

What you will hear will be a complete absence of respect or affection for the organisations that do it.

I would never be rude to the person at my door or on the phone - they are probably being exploited as well.

My wife has even been known to give them a brief pep-talk, convincing them that they are talented enough to find a better, more dignified way to make a living.

The only info I get from them is the name of the organisation they represent and then I make a mental note never to go anywhere near them, ever.

On this one, the politicians have read the mood of the nation correctly. To get a favourable outcome for financial advisers, the approach must be to acknowledge the problem - not deny it.
On 11 May 2012 at 2:45 pm Anon said:
Denis, I started my career in life insurance sales by cold calling prospects on the telephone and by door-to-door. Over time I have gained a large number of clients and handled many claims on behalf of my clients (mainly income protection) from my efforts. Without me calling on those prospects, many families would have suffered extreme financial hardship.

I regard what I do as a dignified way to make a living.
On 11 May 2012 at 2:48 pm Ray said:
Denis, we get it, you're the 1 in 20 grump telemarketers who like to call names after they've hung up. For me, someone working as a telemarketer is infinitely more respectable than someone tapping the tax-payer for a handout every Thursday.

The worst thing about your comment is that you're avoiding the real issue being discussed, the poor, and likely worsening level of financial education in NZ is not going to be made better by this proposal, but far worse.
On 11 May 2012 at 5:18 pm denis said:
This is the nub of the problem, you see. Life Insurance does not need to be sold that way now.

The insurance salesman that went from door to door used to be part of the landscape. There *was* dignity in that approach - because the ways of getting your message "out there" were so limited.

I was referring to the people that phone about shonky property investments and open the call by saying "hiya buddy, how's your day been?".

Or the people that knock on my door telling me about some unfathomable new phone/mobile/broadband package from someone I've never heard of. But they don't have any documentation - and the decision must be made now.

Or the tragic people selling Kirby vacuum cleaners who have a look of desperation as they try to keep upbeat as they go through their vapid, cheerless patter for the 50th time in as many minutes.

These organisations are openly exploiting vulnerable people and they are trying to rip me off. They are not doing it to educate me on telecommunications, property investment or vacuum cleaning from the 1930s.

They have decided that it is safer to go door-to-door because they can rip people off in relative safety. If they set up a shop or a stall - people can find them, see.

What is worse, they're doing it on *their* terms, right when I am in the middle of watching Spongebob i.e. "me time" - in my own house.

And the worst of all - I picked up the phone one evening and it was John Banks - a *recorded message* telling me how great he is. Good grief.

The more the life insurance industry argues that this sort of thing is OK, the more they put themselves in this illustrious company.
On 12 May 2012 at 2:11 am patrick said:
remember me I got in trouble with the FMA for my KiwiSaver selling tactics. can't knock on doors, can't approach people on the street or outside Winz. I signed up 4000 people on KiwiSaver and made them better off. one year later and I'm still on the dole. thanks FMA
On 14 May 2012 at 2:56 pm Mike said:
It is perferrable to seek highly qualified referrals from existing clients anyway, so, personally, I don't give a rat's about this law. However, it is just bloody stupid. Do we need a (yet another)statute/regulation to protect Denis's delicate feelings? Bah.
On 15 May 2012 at 9:23 am Roger said:
Having been a salesperson for 15 years, taking 10 years out and about to move back into sales to escape the mind numbing boredom of a "Real Job" I am very concerned that nanny state wants to minimise sales opportunities. All the top performing sales people get the majority of their clients from door to door techniques, whether business to business or house to house. Face to face is what its all about, regardless of industry! The likes of the privacy act, real estate agents act 2008 and financial services industry regulations are why most of our top entrepreneurs and sales people no longer work in NZ. Although not planning a forage back into the financial advise industry I was disappointed to see Patrick being picked on for his initiative.
On 15 May 2012 at 3:35 pm Kev said:
Why are you still on the dole Patrick? Stop feeling sorry for yourself, step up, back yourself and sell insurance door to door - or do you need to be giving away free money to make it work?
On 16 May 2012 at 9:59 am w k said:
Sales can be done in many ways - cold calls, referrals, door knocking, advertisements, exhibitions, etc. As long as they are done in an honest and non-aggressive manner, why bother? Let's face it, the bottomline in any business is profit. I have known MDRT members who adopt different methods - works for some, but not others.

Just in case some of you are not aware, some lawyers are making house-calls, unheard of 10-15 years ago. Is that a problem? I do not think for once they are lowering their professional standards, that's innovation and they are hungrier, therefore, fully deserved the business.

We can't and shouldn't dictate how others should operate their business as long as they are making an honest living, but be thankful, we can choose our clients.
On 22 May 2012 at 2:06 pm Jimmy said:
I'm with Denis on this one. But I think we need to be clear about exactly what the issue is.

Telemarketing and door-to-door sales is an invasion of privacy to many people, myself included.

Personally, I don't favour blanket bans - an opt-in "do not call" register can work well, much like the one Australia set up in 2007.

No surprises that the Direct Marketing Association was particularly vocal in opposing the introduction, somehow associating it with 'free speech'.

You mentioned that CallerID exists - yes it does. I have been automatically screening Unlisted Numbers to VM for some time now.

I would greatly appreciate not having to have ALL inbound calls as opt-in.

Anon, I appreciate you helping out the many families in dire financial hardship - but you'd still be able to do that with a "Do not call" register. Typically it's only the high net worth individuals who sign up to this list, so you're still free to cold-call most of the poor and financially disadvantaged citizens of this land.
On 1 June 2012 at 3:32 pm Bruce Puddle said:
RFAs CAN RELAX. I wrote to the Minister complaining and got a reply from him, (Craig Foss) and he says, I quote "Clause 71 of the bill does NOT apply to - life, income protection and medical insurance. It only applies to the narrower set of financial products - equity securities, debt securities, managed investment schemes and derivatives and only where disclosure is required under the Bill. These financial products are defined in clause 8 and 9 of the Bill"
It's a pity that the article above doesn't point this out and was therefore overly alarmist at least as far as risk products are concerned.
Commenting is closed

 

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