Reflections on an Australian venture.......
A few weeks previously, I had been to dinner with Chris Coon and Jim Minto, and all three of us would be heading in new and different directions in 2003. Although I suspect we all knew that we were on the move, the outcome and the consequences were at that time unknown.
Fast forward a decade, Jim is still in Australia and TAL is going great guns, Chris is off and running with Partners taking the NZ market by storm, and yours truly is beavering away on a project to bring new products to the financial protection market in NZ.
Of course, there have been a few changes over the last 10 years which are worth noting.
- the arrival of regulation to the NZ financial markets has still to be fully appreciated, evaluated, and analysed. By the time I arrived at St Kilda Road, Australia was already on track for the introduction of its rules-based environment in March 2004, and a Herculean effort was needed to get AIA over the line. The experience in dealing with the regulators was invaluable, and, having had some exposure to the U.K. regulatory regime as an adviser before emigrating to NZ, the Australian experience confirmed that the over-arching attitude and philosophy of regulators is consistent in all OECD territories. With a few Australian-experienced regulatory officials in place in NZ, the application of the new regulatory framework came as no surprise.
- How effective is this NZ regime?A question which will require more in-depth attention, discussion, and analysis in 2013.
- the prospect of regulation and a good deal of entrepreneurial opportunism saw the rise of the Dealer Groups. Not based on the Australian model where advisers joined to operate under a Dealer Group license, but based on the Aggregation model, with individual advisers enjoying maximum commission terms under the Group heading, retaining their own brand identity, and more importantly, maintaining their direct agency relationship and client ownership structures. As these Groups emerged, product providers, in the face of Sovereign's market domination, found it advantageous to offer over-ride terms in order to attract production, and to create positive response to independent advisers who felt themselves increasingly alienated by Sovereign's distribution strategy. Latterly, a couple of life offices have amended the Dealer Group over-ride terms, and some will have to work harder to display added value for adviser members.
- Will Dealer Groups survive?A question which will only be answered with the passage of time, but which could just as well be tabled at Life Company Board level in the form - "If we removed the Dealer Group over-ride, how much new business would be lost?"
- the GFC, the collapse of the banking system, the crisis in Wall Street and beyond cast grave doubts on the Reagan/Thatcher view on free markets and unrestrained capitalism. Left to its own devices, the so-called and oft-misquoted 'invisible hand' coined by Adam Smith did not operate for the greater good. In reality, the greed factor so revered in the first part of the decade by the Chicago School of Economics, produced a social imbalance hitherto unknown in the modern era. Recent attempts by America, the self-declared champion of global free markets - provided it serves their interests - to place corporate rights above those of nation-state sovereignty are an extension of this attempt to impose economic hegemony on populations both domestic and foreign. It is arguable that such an approach is borne of necessity, such is the accumulated debt now being supported by the U.S. economy, and while falling over the 'fiscal cliff' have been averted, there may be more to come. As the so-called 'great communicator' Ronald Reagan opined in one of his electoral speeches - "You ain't seen nothing yet". His words may yet come back to bite where it hurts.
- Will the financial system survive the effects of series of crises already experienced - and can it survive those crises yet to come? The dogma and ideology of the right has prevailed for the decade under review, and the excesses of fundamentalist economics will be felt by all for years to come.
I'm sure there a hundred other events of equal or greater significance to others in their chosen field(s) of interest, but these seemed to me to be the ongoing issues which have straddled the 10 years since I embarked on the Australian adventure.
Was the extended visit to Australia successful? Well, AIA certainly grew signficantly during my 3 year stint as M.D., and the underlying strategy seems to have produced an even more signficant presence in the market over the Tasman. TAL with Jim still at the helm goes from strength to strength, and Partners is keeping Chris fully occupied as it continues to dominate the industry's new business figures.
So here's to the next decade, may it prove to be as successful as the last 10 years for Jim, Chris, and to all of you out there - best wishes for 2013 and beyond.
Bliadhna Mhath Ùr
The Laird of Albany