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Changing channels

A former Tower adviser and member of Newpark is establishing a new group – The Advisor Channel – to take on the present encumbents.

Friday, June 3rd 2011, 12:35PM 30 Comments

by Benn Bathgate

Mehernosh Kotwal says the group is guided by one question, "What would I want from a group that's earning 20, 30% off me, what do I want them to do for me?"

Using that question he has launched the new group with the aim of taking on rivals such as Newpark and TNP head on.

"I would like to make us the biggest group in New Zealand. That is what my goal is," he said.

Kotwal believes his new group will be enticing for advisers as he aims to offer more, and charge less than the other groups.

"The difference compared to other groups is all they do is charge advisers for everything. I'm putting the money back with the brokers, reinvesting it back with them."

"For example, I give members free application processing."

As well as free application processing, The Advisor Channel offers member advisers pre-qualified leads (once the adviser writes $10,000 worth of business), telephone answering services, Business Development Credits, a free Professional Compliance Audit conducted by Barry Read (once $30,000 worth of business has been written), marketing programmes to generate leads and access to a website with personalised pages to promote each member.

Kotwal is critical of some of the other groups, especially around charging for leads.

"Why does a broker need to pay me for leads because if he or she writes business I'm earning anyway."

He says a point of differentiation is that The Advisor Channel won't be charging fees for application processing and providing phone answering services.

 "What we're saying is work with us and we'll be giving something back to you."

Kotwal says he may limit the number of advisers who can join the group to ensure that it can continually give good service.

 

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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Comments from our readers

On 3 June 2011 at 1:32 pm Not Surprised! said:
I'm surprised that Mehernosh has decided to try and be a dealer group but from what he is offering it sounds more like a Managing Agency.
By processing applications, answering phones, supplying leads it sound more like a managing agency to me. So if I don’t need leads, don’t need an answer service, don’t need application processing and I am already compliant this group will give me what? Nothing?
Sounds like this group is targeting small advisers who need a whole lot of help just to survive because they can’t afford to buy leads, pay for someone to answer their phone (why not themselves), post in a prop and follow it up. That sounds like the cream of the crop. I’m not sure the insurance companies will be welcoming this group with open arms.
Not all providers support groups like this so if the free leads go to non supporting company where are you going to get the income to survive.
It’s not easy running a dealer group, why do you think there have been mergers with some of the smaller ones?
Good luck to anyone who joins up with this group because I think you will need it.
On 4 June 2011 at 2:34 pm Interested Adviser said:
Good on you Mehernosh for giving it a go.It sounds to me as if you have jumped out of a group, (Newpark) who haven't given you or the other advisers in it, much back by way of value.
I have belonged to another dealer group in NZ who has given me an immense amount of value back. They have helped me build my business and value by way of education, mentoring and business development. To me and I suspect many advisers in the market, value is not about lead generation and free phone answering.
I am building a professional financial services practice and I want support from my Dealer Group in the areas of how to grow and build a better business, how to build value in my business, how to run a better compliant business.
I am getting exactly that from my Dealer Group.
Yes some and I repeat, some of their services cost me, but if I wasn't getting the value for those services I wouldn't be paying for them. I have experienced growth in my business of just over 60% in the last two years,I have brought 8 new advisers into the industry and my practice and I put that down to two things, 1: the services provided to me and my team by my Dealer Group, and 2: my commitment to implement the plans and coaching they have given me.
Do I see value in my Dealer Group, absolutely, thanks TNP, you guys are awesome.
Mehernosh, I accept the fact that my dealer group makes a margin on the business I produce, but I also realise that my growth of 60% comes from the help that the group have given me by giving me access to people like Dr Dave McMillan, Tina Jarvis, Jeff Page and Rick Garnham. This team is the best in the market, they deserve to get their margin.
On 6 June 2011 at 3:34 am Brett said:
Sounds a lot like sour grapes from NOT SURPRISED (who is this?)!! Good on Mehernosh for having a go. Personally I am very happy with TNP who offer an excellent value proposition but its great to know that someone else is willing to put their hand up.
On 7 June 2011 at 4:22 pm Adviser Blue said:
In the main dealer groups don't do a lot for you unless you are willing to pay for the additional services they offer. Their seminars contain a big plug on additional services or products they want to sell you. Seminars and forums are nothing but a chance to flog you more services. Basically they take a huge chunk of change and you don't profit much. Its a good scam really.
On 8 June 2011 at 7:20 am Jeff said:
Adviser Blue has no idea what the full service dealer groups do for their members.
On 8 June 2011 at 2:22 pm Interested Adviser said:
I am v interetsed in joining this group as i am also not getting any value for being part of Newpark and have been thinking about leaving for months on end.
where is the website and when do you plan on starting it Meh?
On 8 June 2011 at 2:51 pm Mehernosh said:
Hi, Interested Advisor. Our contact number is 0508 4 ADVISOR.

We have already started
On 8 June 2011 at 3:27 pm Mehernosh said:
I agree with Jeff, Brett and the earlier Interested Adviser (4th June comment).Dealer groups such as TNP add a lot of value to Advisor businesses and if an advisor is getting the best value from their group they should not move. Groups like TNP do charge for services, however they also give a very high level of service for them as well. The Advisor Channel is here to fill up the vacuum between such groups whose services are required but may be out of the reach of some advisors and groups who offer nothing.
On 9 June 2011 at 11:00 am Scott said:
Well I'm a member of Newpark and I have found them to be superb at offering exceptional value... particularly as it costs nothing to join, they don't take a clip of my commission and their services are free.

There is no doubt that competition in any market place breeds innovation etc... all good. Though I doubt you will be able to compete with adviser groups like Newpark that are well financed and 500+ advisers strong.

In fact I was surprised that you suggest groups like NEWPARK dont offer much for advisers. What a load of rubbish!

As far as I can see, nothing costs with Newpark. In fact everything provided BY Newpark is free. And if a service or product is supplied by a third party, then Newpark is consistently able to give advisers a decent discount, or even physically subsidise them.

Newpark provides free weekly and fortnightly training and study groups to help brokers who wish to attend.

Top commissions are paid by all providers and advisers are paid their full commission.

Development days are free with Newpark(including the lunches and other food etc). Plus there is excellent support if you need help or ask for support.

There is even a superb lead generation program that provides well qualified leads for advisors who want them.

Newpark advisors obviously pay the lead generation company for the leads they want and can specify the criteria and areas they want the leads in. Obviously brokers who want these leads can buy them at a very reasonable price of $45 +gst. But Newpark puts no margin on them and has even employed a full time staff member purely to administer these leads. So the lead program is costing Newpark a lot of money, in a effort to help US as Newpark advisors. I buy what I need, as do others. This is fantastic as a good source of leads is the toughest challenge that most brokers face. And I must say they have been getting better and better qualified too. Advisers with Newpark can also receive free medical cover


Unlike all other dealer groups including TNP (even yours Mehernosh), Newpark does not even charge for their conference. The only conference expenses brokers pay for are our own accommodation. And based on the last couple I went to there were some very expensive keynote speakers and I suspect the venues were costly for Newpark. Great conferences actually.

As a dealer group they have negotiated cheaper services for you for CRMs like Xplan and Kenny and others, Plus discounted adviser tools like Strategy or RMS In Control, to name but a few. There is bloody good (and significantly cheaper) Professional Indemnity cover and they even have it sorted so we life brokers can wrap up our clients with Newpark Fire & general, Investment advice (for Non AFAs), Newpark Mortgage Broking etc etc. So as an advisor you can wrap up your client with a full offering and protect your client base, yet you can focus on the life side and have Newparks sort thos other areas for you AND pay you a commission on them.

Bloody great offering. So you certainly cant say they do nothing for brokers.

Mehernos, your reason for leaving is your own... and just because you cant see value in what others offer is no reason to imply they are no good.

If you think you can do better then all power to you. But it will be a very hard trail to follow

On 9 June 2011 at 11:49 am Andrew said:
I believe that the group I belong to provides me with great value! It costs me nothing to belong and I have no contract with them.

They provide me with support groups of other advisers in my area (free), they supply me with Health Insurance (Free). They offer new adviser training for any new advisers I bring on (free). They offer a mentor programme if I need it with other successful advisers in the group (free).

They discounted all the regulation costs that we all went through last year and they may it easy for us to follow with an education pathway (that was taken up by other groups it was so successful).

They provide me with a referral relationship that I can earn money from for Domestic Fire and General, Commercial Fire and General, Mortgages and investments. These relationships then ring fence my clients so I don’t worry that I will lose my risk business. Not only free to use but I earn a referral fee from this so they are helping me make money!

They even offer me the opportunity to purchase pre qualified leads at cost! If I don’t want them I don’t have to have them.

So, I’m trying to work out how my membership of the Newpark Group can be seen as anything other than a positive thing for me.

Thanks Newpark for all that you have helped me with, cheers.
On 9 June 2011 at 2:19 pm Kevin said:
I find Newpark good value for money. They leave me alone to get on with it, I get to kick around with some great advisers and the support services are there should I want them...
On 9 June 2011 at 3:04 pm Mehernosh said:
I think the management and some of the top advisors of Newpark have totally lost the plot. Nowhere have we ever mentioned anything about Newpark or that its services are not good and they should stop being paranoid and defensive. I think that Newpark should stop feeling guilty if they are doing what they say and get on with their lives rather than try and rubbish other groups, especially when some of the people writing negative comments about us could (i assume) most probably be their own shareholders / directors and hence could have their own personal vested financial interests which could get affected if Advisors leave them.

The Advisor Channel has nothing to do with any particular group or groups and is promoting its own offering.
On 10 June 2011 at 10:39 am Craig said:
How about this for an idea ... why doesn't someone just open a dealer group that works on thin margins say 7.5% and all they offer the broker/advisor is the best commission terms or at least equivalent to Newpark or TNP - that way we would get the the remaining 22.5% of commission in our pockets. Based on $10 million of API that $750,000 in revenue - all the person would need is a great PA and could work from home... sounds like a great gig for someone who is looking to retire. As a TNP member all I joined for was the improved terms - the rest of the stuff is largely worthless to our practice. Go on someone have ago we would join you in a heartbeat.
On 10 June 2011 at 12:00 pm Jim Dowsett said:
Interesting to read the comments on the various groups represented here. Certainly some friction building up around the current dealer group offerings. I know others who are looking to cut their ties to all of these groups as they are disenchanted. I belong to SHARE and can with hand on heart say that no one clips the ticket on my production. Every member of SHARE is treated in exactly the the same manner - no hidden commissions, backhanders or any other nonsense. Our dealings are completely transparent and every member is kept up to date. What's more important is that I OWN a share in the business as does every other SHARE shareholder. So, no one is using my production to create an entity that can be flogged off at some point down the track where a very few people reap the benefits of the work that I have put in. I believe that this is the end game of these other groups while taking a nice slice of the pie on the way through. Check out SHARE's offering. It won't suit everyone and we are selective so not everyone who wants to join has been able to. But if you want to belong to a group where you really do own a share of the business, earn absolutely top dollar, where no one clips your ticket, has the most compliant processes available, has a brilliant succession plan and has a valuable future then you may be intereted. Let me know.
On 10 June 2011 at 1:52 pm Mike said:
This is getting beyond a joke - this ramble has simply turned into an advertising forum for the Groups.

My suspicion is that the heads of each of these groups - Jeff Page, Darren Gannon, Bronwyn Shanks, etc, etc - are simply asking their supportive advisers to extoll the virtues of their respective group.

The heads are probably even drafting the comments for their pet advisers to put on the blog.

Come on guys - get real.

Good on you Mehernosh - hope it goes well for you, but I suspect you've missed the boat.
On 10 June 2011 at 1:53 pm Jim Dowsett said:
Just a quick thought around Scott's comment on being a member of Newpark. I understand that he believes that Newpark supplies everything for free (apart from paid leads) and doen't receive anything from the buisness he puts through them. And apparently their conference is free as well? Really, where does he think the funds come from to run Newpark and all of it's activities, staff and owner's salary etc. The Tooth Fairy? Perhaps Newpark are doing this out of the kindness of their hearts? Time to wake up and smell the roses! Of course they're clipping the ticket on his production. Perhaps Scott should find out what Newpark actually does earn on his production in order to supply these FREE services. Also, what will he get from Newpark when the owners eventually flog the whole thing off to another party? I'm really keen to have some feedback on this.
On 10 June 2011 at 2:09 pm comrade said:
Jim - SHARE don't clip your ticket? How do they make money? They use you to get paid overiders from the insurance companies. Which then pay for those overiders by charging clients more.

Hopefully you disclose all this to clients.
On 10 June 2011 at 8:18 pm billy the broker said:
To Andrew from Newpark I am glad you RELY on your group you are with and your relationship doesn't go TIMBER down the track. If this is the Andrew who I think it is you may have missed the point, and good for you selling this to Joe Schmo out there who are non the wiser(being on the board and all that jazz).There are many good things about Newpark....you ask what are they. Well if you don't write GAZILLIONS of premium you can spread you clients across companies and still get paid well. There are no premium qualifications and you don't get harassed if you are not writing up a storm. They do open doors to new companies if you wish to use them and cheaper benefits with some work related covers/insurance. But lets not be stupid they are 500 plus strong so to negotiate that kind of deal I'm sure they click that( just another group scheme), seen it before will see again.Now to Scott(another board member I feel) I hope you are WISE with your ASSETS.....again you make some good points and paint a great picture.No wonder you get paid all the commission on offer... the others don't but that is not a problem as I explained before. So question to you two?? Why do you make obvious non truths in your statements to mislead the public?? You know people read this blog and we are all not stupid. But I could be wrong and I may have the wrong people....so if so apologies to you great guys.But I digress covering my behind.
There is one thing that was missed when people who are/were connected to Newpark when the compliance/education pathway thing was happening earlier last year, when they were pushing for all members to be full AFA qualified (remember that boys??). And virtually everyone signed a contract with Newpark that on completion they had to stay with the group for another year afterwards or pay back the difference of discount of the education pathway(also if you didn't complete it you had to pay too). who wins here boys! Then holy cow the goal posts change , cock up with first exams, done back to front(joke).Then goal (you got it) change again instead of pushing for full AFA it becomes apparent that brokers do not have to do this and can hang in there if they wish to have RFA STATUS!!Guess what!! Newpark backs off and lets you know that if you wish to be AFA you can do it of your own back(and good on the brokers who did/are doing this).Then work groups are set up and the odd speaker and a bit of scaremongering, and you think WTF is going on here. Lets be honest in the early stages Darren may have got it wrong! And the contract that people signed was a bit of a no no eh lads(CLICKETY CLICK). Initial cost they had to pay a $1000 at the beginning for this stuff then they find out all they had to fork out was for disputes resolution scheme and FSP register, does tend to leave a bit of a bad taste in the mouths who have been misled by those who they thought they knew what they were doing at the time.No offer of a refund either, now that would have been a good gesture to admit a mistake!No wonder some people get a bit disgruntled and want to move ofF and give it a go, so good on this fellow...he has a hard road to hoe...but the lad has nuts. Again good luck. Remember though if you get it right, people do use people for their gain and and that is the lesson.
On 10 June 2011 at 9:07 pm Bronwyn Shanks said:
Mike - understandable that you suspect Jeff, Darren and I have used this forum to extol the virtues of our respective groups and in fact drafted our advisers comments - this is categorically not the case for SHARE and I suspect that like myself, Jeff, Darren and other dealer group managers are much more interested in working with advisers than scripting their comments for this blog! Yes - I'm tickled pink to see Jim has added his own very favourable comments about SHARE (without any prompting to do so) but its also commendable that Scott, Kevin, Andrew and others have stepped up to champion their respective groups. Although we're all very different we're all very consistent in our commitment to meeting the varied needs of our adviser members.

Merhernosh has made a bold assertion that he will be "offering more and charging less." Having an intimate understanding of the financial workings of various dealer group models I wish him much luck with his very ambitious endeavours! Comments in the market suggest he has not yet secured terms with a number of providers so it seems there is some way to go before The Advisor Channel will warrant any further interest...
On 11 June 2011 at 8:51 am Nor Surprised said:
Several of the people who have commented seem to think that those people who are supporting their groups (and good on them for doing so) have their heads in the sand about how the groups get paid. I’m sure everyone understands what happens there.

They were just saying, I’m sure, that a lot of the money received by these groups goes back to the members via services. They don’t come free, someone has to pay for them.

And comrade, do you really think that the over ride increases the cost of the insurance? So would that mean that my clients should get a cheaper premium because I’m not in a group? Wake up.

Also Craig, if it was that easy to start up a dealer group then why don’t you do it? Let’s see how Mehernosh is going in a few months. Now that would be a good follow up article.
On 13 June 2011 at 9:39 am Jim Dowsett said:
Hi Comrade. Thanks for your question. I think that there is a level of misunderstanding here that I need to clarify. SHARE doesn't clip my ticket because I am a member and owner of SHARE. Yes SHARE receives overides just as the other groups do. Difference is I know exactly what they are and I recieve my share of the proceeds according to my production. No one else clips the ticket on my business. We all pay exactly the same fees to run SHARE so it's all fair there. If and when SHARE is sold then I will recive my fair share of the full value from the sale. It's totally transparent and it's totally different to all of the other groups but there you go, it's why I chose to join SHARE. Mike, sorry to burst your conspiracy bubble but I made these comments off my own bat. I just don't think that a lot of the advisers that belong to these other groups really undestand what is at stake in the end game and how much these groups are actually clipping off their hard won sales.
On 13 June 2011 at 10:05 am Jim Dowsett said:
Hi Comrade. Thanks for your question. I think that there is a level of misunderstanding here that I need to clarify. SHARE doesn't clip my ticket because I am a member and owner of SHARE. Yes SHARE receives overides just as the other groups do. Difference is I know exactly what they are and I recieve my share of the proceeds according to my production. No one else clips the ticket on my business. We all pay exactly the same fees to run SHARE so it's all fair there. If and when SHARE is sold then I will recive my fair share of the full value from the sale. It's totally transparent and it's totally different to all of the other groups but there you go, it's why I chose to join SHARE. Mike, sorry to burst your conspiracy bubble but I made these comments off my own bat. I just don't think that a lot of the advisers that belong to these other groups really undestand what is at stake in the end game and how much these groups are actually clipping off their hard won sales.
On 13 June 2011 at 3:00 pm Mehernosh said:
It is both sad and amusing to see how some groups are responding to a new group coming into the market. The Advisor Channel is offering some services which no other group is offering and that seems to have upset some group heads.
They seem to be more determined in seeing us fail rather than growing their own business by ridiculing and being negative about us and should concentrate on upping their own game.
Trying to check out with providers on what my contract with them is and putting it up to undermine us? What’s next? Coming to my office and going through my garbage?
That is sad and pathetic behaviour. It seems like some groups have “hijacked” the editorial to promote their own group. There is no perfect group and everyone has their own advantages and disadvantages for the advisor. It is very easy for The Advisor Channel to start writing negative about other groups (and trust me we can write heaps); however we are not here for that.
We are not insecure about our offering as a group and as a result we do not need to point out anything negative about any one or any group. We leave it to the advisor’s judgment on what is best suited for their business growth and trust me most advisors know.
Also the comments by “Not Surprised” are very clear that this person is a group head and is more concerned about my business than his own. We may succeed as a group or we may not. No one can predict the future, but we do know and have now realised how unstable a lot of groups are and the level to which they are willing to go to.
This is a wonderful industry and already established groups should allow and support new blood in terms of competition with different offerings to come into the industry rather than trying to bully and malign them.
Competition is good for the growth of any industry and helps keep a check on what is fair to the advisor and what is not.
After reading all these comments it has strengthened our resolve even more that we will succeed and we haven’t missed the boat.
I would also like to take this opportunity to personally thank those advisors who, in spite of being members of other groups (and continue to be part of them) for the support they have shown. This displays how professional these advisors are and the group they belong to.
On 13 June 2011 at 9:35 pm Jim Dowsett said:
Good luck Mehernosh. All the best and I hope you do well with your plans.
On 15 June 2011 at 7:53 am TA the broker said:
I have thoroughly enjoyed this dealer group banter. Sure some of it appears to be shameless self promotion, but that didn’t stop me following the full blog.

I personally LOVE Craig’s idea of a streamlined version of a dealer group. Stick to aggregation of commissions and flag the rest of the value add proposition. Many of us AFA’s don’t want/need development days, compliance assistance, conferences, discounted CRM tools and all the other benefits that most dealer groups offer.

Don’t get me wrong, dealer groups are fantastic for the industry and of great assistance to many/most advisers. Upon my recent shopping around, I found there offerings to be quite generic. (Despite how they package their fee/override structure and tell you how different they are!).

As a broker I have 6 BDM’s calling on me offering training, compliance guidance, CRM assistance, conference opportunities, development days etc etc

So if someone was to set up a streamlined dealer group, focusing on the core business of commission aggregation, without the duplication of value adds, surely their cost structure and offering would be attractive to some of us! (Not for everyone – but surely a big enough niche to be profitable!)
On 15 June 2011 at 10:04 pm Jim South said:
while all you blokes fight over the best dealer group, i'll carry on working, haven't you got anything better to do...............I don't know like, earn a living instead. There bigger fish to fry than this rubbish. Lets all just wake up a bit eh....
On 16 June 2011 at 12:25 pm Kevin said:
OK bye Jim - this is just about as much fun than selling insurance...makes a nice distraction...
On 17 June 2011 at 11:28 am satish said:
Good luck Mehernosh!
Do it inspite of all the brickbats that are hurled your way.It's always good to see someone stand up and attempt to bring in a point of difference.It won't be easy....but what is easy these days? You have shown spirit.
On 22 June 2011 at 10:41 am shadow said:
Question for you all: With the commission structure in NZ most probably being the highest in the insurance industry in the world, how long do you think the present adviser group model will last?
On 28 June 2011 at 5:22 pm Harry Potter said:
Until they ban commissions I'd say, shadow.
Commenting is closed

 

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