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The Dealer Group

Picking up from my previous article where we need to look to set the bar somewhere around where an AFA is practising, so how do you do this and run a business?

Monday, October 8th 2018, 7:00AM

by Jon-Paul Hale

You elicit the support of your industry. Yes, I know there’s plenty of comment that insurer BDM’s don’t do what they used to, and accessing training and development of a formal nature isn’t cheap either.

BDM’s roles have changed, with the market they are more focused on what their company does as the insurers have got more wary of the liability issues that come from stepping too far into an advisers business. And it is more product-focused too. Which should form part of your planning around this stuff which I’ll cover more on that soon enough.

The other area that has had significant change is that of the dealer group. Originally conceived to help smooth out the income with aggregation of commission structures, these businesses have evolved significantly. So much so that the missing role of the insurer BDM’s that gets complained about is now sitting with the dealer group teams. The insurers have smartened up and have started demanding their pound of flesh from the revenues they pay the dealer groups in the form of more general adviser business development.

And lastly, we have a range of training institutions around that provide development and training support for advisers, now under an NZQA framework, making it more significant than that piece of paper issued by the insurers in the past.

I’ve heard the comments about every area of the industry, from complaints about what providers do and don’t do to claims managers talking to rooms of advisers who wouldn’t know a wet claim form from an ethics violation if they hit them in the face.

There’s lots of learning across the industry to do for everyone; the key question is how you can get that delivered explicitly for your needs?

In short, my answer is leverage your dealer group. Oh, you don’t have one?

Right, well, now might be a good time to go looking for one, because if we have learned anything from international markets, it has been that economy of scale with a dealer group has enabled the efficient implementation of the new rules. And yes, Royal Commissions aside, Australia works under a licensed dealer group model.

Insurers will have a place in the direct distribution of product through their advisers; AMP’s been waiting for their tied agency force to come back into vogue for years, it is about to with the new rules. However, don’t expect that to be the panacea of answers either, in the current or the new regulations they too have their challenges. Though they may well be much further down the qualified track than most.

Sovereign has had their SovNet program in the past, and AIA has their own branded sales teams. Partners Life is another with their own team, and then you have the more significant standalone providers where they don’t manufacture the product but are big enough to stand alongside the insurers with branded distribution too.

For you, the smaller independent operator, like myself, we’re going to have to pool our resources if we hope to remain independent and compete with the big boys in our market. Also, one of the few ways to do this is with a partnership arrangement like a dealer group, who is independent of insurers and owning shareholders because owning our businesses is also an important aspect of what we do.

Moreover, to their credit, the Life Time’s and Share’s of the industry have done their bit to bring together advisers in a way that they can own their clients and still operate relatively independently. However, that doesn’t suit everyone either.

Which is why I keep returning to the dealer group model as the likely best way forward for the majority of advisers currently paddling their own boat. I like my one, and as much as being screamingly independent is a desire, you can’t do this alone, you need help and support, in your business and around your business.

When selecting a dealer group, you need to be clear and understand what they do and what you need that they can provide. Have no fear they will get paid for what they do for you, in the same way, your clients pay you for the work you do for them. However, like your advice, that’s not the deciding factor; the deciding factor is the value you both get from the relationship. In saying that not everything is free, some things you will need to stick your hand in your pocket.

So until the next one, where I’ll talk about how do you make this work, if you’re not in a dealer group, go and do some research on who they are and what they do. I’ll be back with some tips on how to go about selecting the one that will fit you the best.

If you are already in a dealer group good, I’m not suggesting a wholesale change and move, as that will make it doubly hard for everyone and create a whole bunch of unnecessary work when we have enough on our plates already, you can tick that box for now and work on the rest.

Tags: Jon-Paul Hale

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BNZ - Mortgage One 8.69 - - -
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China Construction Bank Special - - - -
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Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
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Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
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Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
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Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
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TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
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Westpac 8.64 7.89 7.49 7.25
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Median 8.64 7.29 7.32 6.65

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