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Partners Life outlines its dealer group strategy

Partners Life managing director Naomi Ballantyne has thrown her support in behind Newpark and at the same time criticised other groups.

Friday, September 13th 2013, 10:21AM 10 Comments

by Philip Macalister

Ballantyne told advisers at the Newpark Development Day in Auckland this week that Partners Life wouldn’t be where it is today without Newpark’s support.

“We would not have this business we have today without Newpark. When you speak we listen.”

Ballantyne outlined Partners Life dealer group strategy. She said when the life company started the dealer groups were battling each other and dying.

“Cannibalising each other's businesses was the growth strategy,” she said.

“There was a very, very significant risk that those groups weren’t going to survive - with the exception of Newpark. Our best solution was to save them from themselves.”

Ballantyne clearly said that Partners was supporting dealer groups as its distribution strategy.

She said life insurance companies “are full of people that think they know how to be brokers”, but in reality they don’t.

“We don’t know how to do your job,” she told advisers. “We don’t know how to manage salespeople. We don’t know how to do your business.”

She even admitted that Partners thought it could run a dealer group when it set up Us Advice.

One of Ballantyne’s key criticisms of the dealer groups is that they were paying away the extra commission life companies paid them to win over advisers.

Her view is that these overrides are paid to the dealer groups so they can grow their businesses and support members and do the things they promised the life companies that they would do.

“We are paying it to [dealer groups] to do the work we would have to do – unsuccessfully.”

Ballantyne said it looked like cannibalisation was starting to happen again as one, unnamed, group was paying out the extra commission to members.

“It is not the right answer for the industry or for you,” she said. “That dealer group is killing itself.”

It means that the group can’t do what it told the life company it would do and the company will end up having to do those things itself. If they have to pay twice like that they will stop paying the commission, she said.

She outlined things that she expected dealer groups to do.

One was that when the head of a dealer group talks to the company that person carried far more weight than an individual adviser.

“When they speak on your behalf have weight behind them,” she said. “When Darren speaks, I pay attention.”

“There are lots of things we have done because the groups have pushed.”

Ballantyne acknowledged the importance and power dealer groups have with life companies.

“There are days when I would very happily throw dealer groups in the rubbish bins,” she quipped.

She also referred to an incident some years ago when one group shifted its loyalty. “There is history where one company wasn’t playing ball and the whole group moved.”

“That’s what hangs over my head each day.”

Dealer groups also provide advisers which camaraderie and support and a platform to share ideas.

“We do love you…but I am a life insurance company and I have to be nice to you. That’s not the same thing as being on the same team.”

She also said dealer groups provide training, business development, support and advice around regulatory issues and groups can access far better deals for members than what members could do individually.

Partners Life supports dealer groups as it is, she says, the best way for independent financial advisers to get support tot grow their businesses.

However dealer groups have to support their members.

It’s all about advisers growing their businesses, not just getting a little bit more money for the business they already have.

Editor's note: You can comment on this story, but any comments are subject to moderation and should be on issues.

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Comments from our readers

On 13 September 2013 at 12:19 pm Dirty Harry said:
Cannibalising each other's businesses was the growth strategy,” she said.

This is a problem across the financial sector, not just dealer groups. Advisers generally do it, and regardless of being 'independent', tied, or dealer group. Some would blame high upfront commissions for that, and they would have a point. Banks do it to each other too; on lending, with both their sometimes ridiculous new-business acquisition practices (think cash, TVs, low rates etc), and their dubious life insurance selling tactics.

We see it with life companies. Whilst some efforts are made at retention, the focus remains solidly on new business. With everything from trips to upfront commissions geared to writing new business - much of which is replacement.

The fact is that much of that "growth" is actually zero-sum to the industry. For a lot of the dollars one company shows as growth, another is reporting as lapses. One would assume that growth-focused companies with less existing business to defend would inherently be making a greater contribution to that.
On 13 September 2013 at 2:00 pm Bay Broker said:
Naomi, I take umbrage at your comment “…dealer groups as it is, she says, the best way for independent financial advisers to get support to grow their businesses”. An independent financial adviser is an adviser that operates free from biases and conflicts of interest. A “conflict of interest” is a situation where an adviser has to make a decision where his own welfare (usually financial) is at odds with that of the client.” No matter how skilled and ethical the individual adviser, they will always be operating with one hand tied behind their back experiencing overt pressure forced upon them by the Dealer Groups (in cohort with insurers).

I am thrilled that Newpeak has supported your growth, but please do not assume others in the advisory community need to follow a similar pathway.
On 13 September 2013 at 5:31 pm Wazza said:
Naomi, well done for once again being prepared to say it like it is. Your understanding of so many aspects of the life insurance industry and the acknowledgement of the importance that groups such as Newpark has is greatly respected by this adviser.
On 13 September 2013 at 8:19 pm Newpark Fan said:
Naomi, thank you for your support of Newpark over the years, the team at Partners Life are truly inspirational. The product, underwriting terms, adviser incentives, investment in the industry speak volumes of your integrity and role you play in making Partners Life and Newpark the number one independent like minded companies in NZ today.
On 14 September 2013 at 9:04 am billy the broker said:
Why are Newpark not acknowledged by Sovereign??
On 16 September 2013 at 2:56 pm SovNet Supporter said:
Dear Billy the broker - I think the answer to your question is SovNet. I am a member of SovNet, and have been for 6 years. They provide me with everything Newpark does, plus the certainty and sureity of an A+ rated insurer. I'm free to write business with other insurers, and I do. But here is the difference - it is my choice, without any overt pressure from anyone. That is independence.
On 18 September 2013 at 1:18 pm Observer said:
@SovNet Supporter - Have Sovereign removed requirements to write at least $45K per year and 85% of that must be placed with Sovereign? If not, how can working under the SovNet umbrella make you independant if you have a requirement to place the majority of your business with them (or do you really believe writing 15% of your business at companies other than Sovereign makes you independant)?

A member of NewPark or any other dealer group for that matter are not forced nor mandated that they must write a fixed % with any particular product provider so are the the truely independat ones? - Just asking.
On 18 September 2013 at 4:39 pm Newpark Fan2 said:
Dear Sovnet Supporter - I question your interpretation of independence given you have a contract that requires you to place a large percentage of your business with one company. So far this week we have placed business with three different companies, one being Sovereign. For the record, that's new business not replacement business. And here is the difference - we have been members of Newpark for a number of years but we don't have a contract. We are free to write business with any insurer, and we do. Are you still sure you are independent?

@billy the broker - it seems you are a little misinformed. FYI, Sovereign do acknowledge Newpark Brokers. Not only do we hold a Sovereign Agency but we even have a BDM who meets with us.
On 23 September 2013 at 11:29 am David Neal said:
Dear Naomi, As a risk adviser I am not seeing much 'business development value' trickling down from the insurance companies via the dealer groups. I am seeing a lot of overheads in the dealer groups that you are supporting. If you really want to support my business development why not pay me directly with what ever conditions you want?
On 24 September 2013 at 4:01 pm Harry Jr said:
I think what Billy the broker means is that Sovereign do not have a contractual agreement in place with Newpark where they guarantee a set commission rate for Newpark advisers and and a override commission for the dealer group, such as other insurers who have those such agreements in place.

I know for a fact that Sovereign is willing to offer agencies to Newpark members however they will need to negotiate terms and have an agreement outside of their relationship with Newpark which is only fair.

The crazy thing is that both Sovereign and Partners Life are great companies, and all this banter about who is better or who is more financially solid is irrelevant if we have taken our clients through a thorough advice process in the first place.

As for Dealer Groups, they can provide a lot of value, especially if you are looking for tools and ideas to improve yourself as an adviser.

In response to which insurer is better or which distribution model is better?Surely it comes down to what is best for the client?

Who am I as an adviser to presume an A+ financial strength rating is more important to a client than having a mortgage repayment monthly benefit that has CPI Claims indexation built in.

As long as we have disclosed to our clients who we can place business with, covered off how we get remunerated, justified why we are recommending a particular insurer over another, and cover off the good and bad points, then we have done our job.

There is nothing long with replacement business as long as you can covey the value to the client and make sure you are not putting your client into a worse position at time of claim.

On another note: If you went into a nutritional supplement store where there are many different products for you to buy, but the retail assistant would only recommend one of the many options on show, and didn't have the knowledge to explain the good points of the other supplements, would you be comfortable buying from that store?

Similarly don't we have an obligation to our clients to give them choice if there is a policy out there that can give them more money in their hand a claim time?

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