THE OFFICIAL MAGAZINE OF THE PROFESSIONAL INSURANCE BROKERS ASSOCIATION

INSIDE THIS ISSUE

The BrokerISSUE 38 AUTUMN 2012

No Commission please, we’re British 5

IMD II 26

Mind the Gap – Closing in on the Gender Directive 22

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MORE PIBA Ad.indd 1 03/09/2012 11:59

Spring 2012 1Autumn 2012 1

LIAM CARBERRYPIBA Chairman

Chairman’s ReportIt’s been a busy summer in PIBA. In June we held seminars around the country with Standard Life, focussed on risks and investments. This was followed with our largest ever CPD bootcamp in July in Portlaoise — there were over 300 members present who obtained 5 hours’ CPD including the 1 hour mandatory ethics module. We will shortly be making this CPD ethics module available in a convenient online form for all members — this is kindly sponsored by Wealth Options.

An enormous amount of work was completed on the Financial Broker project. The website was designed and implemented and key documents have been developed to articulate a modern, fresh image for our business. At the time of writing over 250 Financial Brokers have subscribed to the new system and are helping to fund the national promotion of the profession. We hope life companies will make good on their promises and vigorously join this campaign.

Pensions policy continues to be a key priority for us. We will lobby to maintain marginal tax relief and we are in favour of limited early access that will alleviate current hardships as well as promote pension take up at a younger age. We are also monitoring the Department of Social Protection’s investigation of charges.

Legislation and compliance is never far from the top of our agenda. The PIBA compliance staff assisted hundreds of members with the online accounts deadline in June. As an organisation, PIBA will continue to highlight the inequity and irrationality of having SME Brokers complete audited accounts. Insolvency and authorisations are on our radar; we believe the Central Bank should recognise the times we are in and that many decent business people will face difficulties mostly outside of their control and unrelated to their core Brokerage business. We have re-published our research on the law on bank interference with Financial Broker

clients and we continue our research on the area of cold calling restrictions.

UK and European events occupy more of our time. See our CEO’s article on the UK RDR on page 5. We have met BIBA (general) and AIFA (life) and there is much we can learn from our UK Broker counterparts. We are members of BIPAR and are sending a delegation to Brussels in October to attend the seminar on the IMD II and PRIPs Directive. We are also presenting to Irish MEPs on this and other matters of concern to Irish Brokers and we are meeting the Department of Finance to brief them on your views on IMD / PRIPs before discussions begin in earnest. The key issues at this stage with IMD II are the possible commission ban for independent advice, the potential undermining of commission equivalence on life commission disclosure and the introduction of mandatory commission disclosure for general insurance (between 2018 and 2020). See Elizabeth Smith’s article on page 26 for more details on this topic.

On a lighter note, PIBA is now on Twitter — @PIBABroker. We are also on LinkedIn (PIBABroker) and have an online magazine (technically a blog I am told), also under the PIBABroker brand. We are investing in our communication structures to better serve you, our members.

Finally, at 863 firms, our membership numbers are an outstanding endorsement of PIBA in these straitened times and I want to thank you for this support. As your Chairman, I can guarantee we will continue to work hard to retain and justify the support you give through your membership and participation. I would also like to extend my thanks to the Board, Subcommittees and staff for all their hard work during the last quarter.

Liam CarberryPIBA Chairman

The BROKER

Standard Life Assurance Limited is authorised by the Financial Services Authority in the UK and is regulated by the Central Bank of Ireland for conduct of business rules. Standard Life Assurance Limited is registered in Dublin, Ireland (905495) at 90 St Stephen’s Green, Dublin 2 and Edinburgh, Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH.

Five risk-based funds A family of multi asset funds that are risk-based.

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For more information contact your Standard Life Business Manager or go to www.brokerzone.ie.

Pensions and Investments since 1834standardlife.ie

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Warning: If you invest in these funds you may lose some or all the money you invest.Warning: The value of your investment may go down as well as up.Warning: This investment may be affected by changes in currency exchange rates.

Spring 2012 3Autumn 2012 3

DONAL MILMO-PENNYEditor

Editorial

THE PIBANUMBERHow do you see consumers’

perception of investment conditions changing in the coming three months?

The BROKER

Autumn: shorter evenings, kids back to school, budget, politicians getting noisier, protests on Kildare Street, premiership and rugby back on the television, BBQ looking ‘mowldy’, Olympics over, Tour de France a distant memory (Nicolas Roche we’ll all love you again next year), Croke Park now available for conferences, leaves falling, fires lighting, Guinness tastier, and pensions season...autumn, you’ve got to love it.

My office is in an old Georgian building on Baggot Street. It being summer, we were giving it a good spring clean and in the process took down a decrepit blind in the back office on the ground floor with the idea of using the shutters built into the sash window surrounds instead. The shutters had not been used in many years and it took a little encouragement to tease them out from their glossy white recess. When we finally prised them out, I was surprised to find a substantial tapestry of finely constructed spider webs. It’s not that I was surprised to find an array of detritus to clean up, but more the level of endeavour these spiders had gone to in constructing their intricate architecture... in a place where there are no, or at least a very limited supply of lost flies. If you are starting to ask yourself “What is this lad rambling on about?” bear with me, it’s this: the spiders are very much like many of us Brokers. They are talented, often somewhat misunderstood and hidden from the audience they wish to attract. This was borne out by the research in connection with the Financial Broker project, which showed that half the population either don’t know what we do or, at a fundamental level, don’t get it and hence don’t use us. After several years’ work, this is about to change. By the time you read this the nationwide Financial Broker media campaign will be up and running with slots on RTE radio over the coming three months.

I would like to take the opportunity to thank the hundreds of you who have already signed up to Financial Broker. Without your support it simply would not have been possible to get this project off the ground. With the Broker community behind Financial Broker our colleagues in the life offices are taking notice. Their support and engagement is very welcome: by working together we can greatly enhance the breadth and depth of the campaign and ergo the fruit it will bear.

Financial Broker is here but there has been plenty more going on in our busy office. The summer months have been used to pull PIBA’s broader identity together and refresh it by aligning all communication outlets more closely with the mother ship. We have taken an energetic leap forward into the modern world of Twitter and LinkedIn. This has been done in conjunction with a broader review of our communications strategy encompassing members, media, industry and policy makers.

As ever, if you have any comment or feedback on the magazine, Financial Broker or anything else in the PIBA universe we would love to hear from you.

15.6 %

51.2 %

33.2 %[A] Improving

[B] Staying the same

[C] Deteriorating

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Wealth Options Ad Autumn Edition Outlined.ai 29/08/2012 12:10:12

DIARMUID KELLYChief Executive

PIBA

Autumn 2012 5

The BROKER

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Wealth Options Ad Autumn Edition Outlined.ai 29/08/2012 12:10:12

No Commission Please, We’re BritishRDR commences in the UK in JanuaryThe Retail Distribution Review (RDR) commences in the UK in January 2013. Simultaneously Holland will introduce a ban on complex life products and at the time of writing the EU is debating a ban on commission when “independent advice” is offered (see article on page 26).

RDR AT A GLANCE

• Commission ban on all advised retail pension and investment products.

• Protection (term) excluded.• Minimum competency requirements for advisers. QCF Level 4 (450

recommended hours to study v 720 on the QFA); no grandfathering; CPD – 35 hours per year (21 formal, 14 informal).

• Four types of advice: independent, restricted, simplified and basic. More below.

• Adviser charges to replace commission. These must be the same for similar products to eliminate product/provider bias. These can be facilitated through the policy. More below.

• Renewal / trailer charges can only apply for a defined service. The client can switch these off if facilitated through the policy (or terminate the contract if charged directly). Existing business and automatic increases are exempt. Top ups come under the new structure.

AdviceCommission will be allowed for non advised (execution only) sales and for basic advice. The latter is stakeholder pensions (standard PRSAs here) where charges are capped. Simplified advice is designed for limited services or computer guided sales but guidance issued by the FSA make the obligations onerous and this option may end up redundant.

The main options for UK intermediaries will be independent or restricted. Restricted will look like our limited advice (or MAI) model — you must be clear about the nature of the restricted service but do not have to use the term restricted. The FSA requirement for independent advice looks very onerous. It is like our failed AA model but with the added dimension that you must give whole of market advice in all retail products suitable to the client. You can’t use the term ‘independent’ in your name/trading name or description of your firm unless you give advice on an independent basis (there is a quirk about limited company names). As an added flexibility you can move from the restricted to independent model on a case by case basis but not the other way around. Many experts believe that the restricted model may suit many UK Financial Brokers but there is a strong attachment to the ‘independent’ brand amongst UK intermediaries, many of whom call themselves IFAs (Independent Financial Advisers). This looks like a rerun of our AA v MAI debate ten years ago.

Adviser Charges – Cheques, Laser or Visa?The new UK system will allow the new adviser charge to be facilitated through the policy. In a recent survey 82% of advisers believe that the majority of clients will pay their advice charge through a policy or platform charge.1 Many of you will be asking what is the

difference between that and commission? Well, the charge must be the same for similar products/services and it must be agreed and documented between the adviser and client. Ongoing / recurring charges must be for a specified service (unless defined to be part of the initial advice for regular premium contracts) and can be switched off by the client. Importantly, there can be no factoring of adviser charges in management fees and allocation levels over 100% are banned. Adviser charges must be charged to the policy as they occur and financial products issued with adviser charges will look like the factory gate pricing that was common here in the mid to late nineties. So products charges will look like:

• Allocation: 100% less adviser charges• AMC: Provider charge plus adviser trailer charge.

The Dutch system does not allow for adviser fees to be paid through the policy and must be paid separately by the client.

Shrinkage in adviceOne estimate had the number of advisers contracting by 20% in the two years following RDR. On top of this the number of clients each adviser will actively deal with might contract by one third due to the enhanced regulatory requirements. Taken together this scenario will see almost half of clients become ‘orphans’ and advice will become more and more the preserve of the well off.

Product chargesProduct manufacturers must apply stand alone pricing to direct sales channels to give a level playing field with independent distribution. There is some evidence to suggest that product providers are beefing up margins and not passing on the benefits of removal of commission to the factory gate price. At the very least, it will be many years into the policy before the consumer is at breakeven point comparing pre- and post-RDR structures. This is consistent with the premise that RDR was more about sorting industry problems than providing a benefit for the consumer.

Perception of valueIn a UK survey of those who never used financial advisers, 65% of respondents said their reason for not using the service of a professional financial adviser was that they either had no need for financial advice or felt that they could get the information they needed for free.2 It is clear that financial advice itself will have to be sold. UK and Dutch Brokers who survive the change ahead will give valuable lessons in how Brokers can improve their consumer marketing. These lessons can apply in a commission or fee world since if the consumer values the service, the method of payment is secondary. PIBA will monitor developments in the UK and Holland and brief members on relevant lessons for their businesses.

1 AVIVA UK survey – don’t knows of 16% excluded.2 JP Morgan Study. “Winning propositions: the consumer market post RDR”.

August 2012.

6 Issue 36

Industry Round-Up

The BROKER

6 Issue 38

99% of parents want their children to attend third level educationA recent Standard Life survey of over 1,000 adult respondents revealed that almost all Irish parents (99%) would like their children to attend third level education (university, college, institutes of technology etc.), but almost half (45%) have nothing in place to fund it.

“It’s official, we’re a nation obsessed with education…,” said Sinead Cullen, head of product, Synergy Regular Invest, Standard Life. “We see that as a good thing… We all want our children to have the best opportunities possible — and a third level qualification is a serious advantage in a tough labour market,” she said.

Additional findings: • 75% of parents believe full university fees will

be introduced in the near future• The average monthly parental savings for chil-

dren’s third level education is €167 • Almost half of parents (49%) regret not start-

ing a regular savings policy when their chil-dren were born

• Almost four in ten parents (39%) worry they will have to borrow to fund their children’s edu-cation

• 34% of parents are worried third level won’t be possible

• When parents were asked what was in place to fund their children’s education:

– 45% have nothing in place– 42% have a regular savings plan– 12% have a lump sum/inheritance– 8% an investment property – 3% other means.

“Given the huge desire to provide third level opportunities for their children, it’s remarkable that almost half of parents aren’t saving towards it,” said Cullen. “Family finances are undoubtedly under pressure — but there may be some procrastination too… by those who can afford to save but simply haven’t started.”

“We need to get ‘back to basics’ and saving like our parents did,” said Cullen. “As we can see from the figures, it takes time to save sufficient money to educate our children. Even if parents think they’ll fund much of their children’s education from their future income — it reduces the financial stress involved and it’s psychologically very comforting to see your money growing each month,” she said.

AVERAGE COST OF 3RD LEVEL EDUCATION PER CHILD ANNUAL COST FOUR YEAR COURSELiving at home €7,155 €28,620Living away from home €10,050 €40,200Source: DIT Campus life, cost of living 2012/2013, includes expenses, student contribution charge and rent.

Aviva introduce best in market underwriting limitsAviva have underlined their intention to establish a significant foothold in the term assurance market with new best in market medical underwriting lim-its for term life and specified illness cover. According to Aviva, this will significantly increase the number of applications which are automatically accepted, which is good news for Brokers and clients alike. Aviva’s special offer of a 2.5% discount on market best rates on life and specified illness cover contin-ues. But remember all good things must come to an end, so talk to your customers today about pro-tecting themselves and their families.

All roads lead to the Aviva for May 2013 FAI Junior Cup final showdownFor the first time in the tournament’s 100 year history, next May’s final will be held in the home of Irish football, the Aviva Stadium.

The competition has grown hugely since 1913 and now involves up to 1,000 clubs and their communities across Ireland each year.

Aviva’s involvement is part of its grassroots soccer programme, which includes Club of the Year, Mini Rugby Festivals and Soccer Sisters. Speaking about the announcement, Paul Grimes, Director of General Insurance at Aviva Ireland said “Aviva’s involvement in Irish sport does not end at our sponsorship of the Aviva Stadium; it’s our grassroots programmes like the Aviva FAI Club of the Year which touch communities right across Ireland. That’s why we are delighted to now be supporting the historic FAI Junior Cup, involving close to 1,000 soccer clubs in Ireland all now embarking on the ‘road to the Aviva’. We wish them all the very best of luck!”

Caledonian Life Specified Serious IllnessCaledonian Life has added four new partial pay-ments to our Specified Serious Illness offering. These are:

1. Paralysis of one limb – total and irreversible.

2. Syringomyelia or Syringobulbia – treated by surgery.

3. Severe Crohn’s Disease – with persistent symptoms that have not responded to surgi-cal intestinal resection.

4. Total Colectomy with Permanent Ileostomy (for causes other than Crohn’s Disease).

This brings the total number of partial payments to 17 and, in conjunction with the 44 full pay-ment illnesses Caledonian Life already cover, makes their product a leading option to recom-mend to any of your clients.

ABOVE

Irish international player Sean St Leger and Dublin’s Sheriff YC football club captain Lee Murphy at the announcement of Aviva’s new partnership with the 2013 FAI Junior Cup.

Spring 2012 7

The BROKER

Autumn 2012 7

Standard Life staff donate €50,000 to Jack and Jill FoundationIn just 12 months Standard Life staff have raised €50,000 for the Jack and Jill Foundation, a charity which helps care for children with brain damage at home and provides their families with respite care or the ‘gift of time’ as parents describe it. “Our staff chose Jack and Jill because it does such important and inspiring work,” said Nigel Dunne, Chief Executive, Standard Life. “Parents have peace of mind knowing their sick child is well cared for at home – while they can enjoy things we take for granted, such as a good night’s sleep, a walk, spending time with their other children or simply reading the newspaper,” he said.

“€50,000 means a good night’s sleep for each of our 300 families nationwide or 3,000 paid-for nursing hours for these families, which is fantastic,” said Jonathan Irwin, CEO Jack and Jill. “Considering there’s just over 200 staff at Standard Life, they have raised a very impressive sum per employee. On behalf of our families, we are very grateful for their generosity,” he said.

Standard Life staff raised €50,000 via a range of activities, including running marathons, 10k races, ‘casual wear’ days, mobile phones, cake sales and raffles, with lots more to come.

RIGHT

Emma Barrett, newly appointed Corporate Partnerships Manager at the Irish Cancer Society, receiving a cheque

from Seán Egan, CEO of Aviva Ireland. The cheque represents funds raised by Aviva staff on Daffodil Day 2012. The funds support the Irish Cancer Society’s Night Nursing

and Cancer Information Service Programmes. Aviva has contributed €25,000 to the Irish Cancer Society through

the Daffodil Day campaign in recent years.

Aviva raised over €7,000 on Daffodil Day!

Friends First Life and Serious Illness Claims Stats Now AvailableFriends First paid out over €24 million in Life and Serious Illness Claims in 2011.

www.brokerfirst.ie

Friends First Life Assurance Company Limited is regulated by the Central Bank of Ireland. Terms and conditions apply. SA257, Jun ‘12

Past Claims InformationLife Cover and Specified Illness

Pensions Protection Investments

Total number of claims paid 408

Total amount paid out in claims

€24,789,668

Average age of claimant 66

Average claim amount €61,057

Average plan duration at date of claim

15 years

Gender Age at date of death

Length of policy at date of claim

AmountCategorised cause of death

Female 36 7 years €272,623Respiratory problems

Female 44 2 years €504,564 Cancer

Female 32 4 years €23,202 Cancer

Male 32 9 years €5,822 House fire

Female 51 7 years €30,666Accidental fall

Male 55 11 years €43,257 Heart Attack

LIFE COVER CLAIMS IN 2011

EXAMPLES OF LIFE COVER CLAIMS PAID OUT IN 2011

CAUSES OF LIFE COVER CLAIMS 2011

>70 37.01%

61-70 24.26%

51-60 23.04%

41-50 12.01%

18-40 3.19%

Child 0.49%

TOTAL 100.00%

AGE AT CLAIM PERCENTAGE BREAKDOWN IN 2011

39%

23%

13%

7%

5%

7%

3%

1%

2%

7%

13%

7%

5%

23%

39%

3%1%

2%

Cancer

Cardiac

Respiratory

Misadventure

Stroke / vascular

Sepsis / gastro

Neurological

Renal

Unclassified / Other (Incl Child Benefit)

www.brokerfirst.ie

Friends First Life Assurance Company Limited is regulated by the Central Bank of Ireland. Terms and conditions apply. SA257, Jun‘12

Past Claims InformationLife Cover and Specified Illness

Pensions Protection Investments

Total number of claims paid 81

Total amount paid out in claims

€5,149,598

Average age at date of claim 50

Average claim amount €79,774

Average length of policy at date of claim

11 years

Gender Age at date of claim

Length of policy at date of claim

Amount Illness

Male 38 5 years €270,582 Cancer

Female 39 7 years €241,217 Cancer

Male 49 9 years €276,345 Heart Attack

Female 34 10 years €171,415 MS

Female 55 11 years €152,369 Cancer

Male 54 14 years €262,230 Leukemia

SPECIFIED ILLNESS COVER CLAIMS IN 2011

EXAMPLES OF SPECIFIED ILLNESS COVER CLAIMS PAID OUT IN 2011

CAUSES OF SPECIFIED ILLNESS CLAIMS 2011

>70 1.75%

61-70 22.81%

51-60 31.58%

41-50 24.56%

18-40 15.79%

Child 3.51%

TOTAL 100%

AGE AT CLAIM PERCENTAGE BREAKDOWN IN 2011

68%

19%

4%

9%

4%

19%68%

9%Cancer

Heart

Stroke

Other

With our Self Directed Investment Option, Friends First Conductor Pension and ARF/AMRF customers can access Fixed Term Deposit Accounts from both EBS and KBC Bank. These include fi xed terms from 1 to 5 years, a potential AER of 5.00% (EBS 5 year rate) and limited access to capital during the term.

For full details about the Friends First SDIO and our Conductor Pensionrange of products please contact your Friends First Account Executiveor visit www.brokerfi rst.ie

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Friends First Life Assurance Company Limited is regulated by the Central Bank of Ireland.

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Autumn 2012 9

The BROKER

KAREN GALLAGHERBusiness Development Manager

Friends First

Term ProtectionWhat is the Best Value for your Client?Improvements in mortality rates, amongst other factors, have meant that life assurance premiums have fallen over the past few years. This has made the market very competitive with price being the key factor in deciding where to place your client’s business.

Websites offering premiums back to clients and price discounts have grown in abundance over the last few years, fuelling the cheapest beats all mentality and sometimes resulting in forgoing what could be crucial for the client’s needs.

However, in this race to get the client the cheapest premium have we ensured that we have given the client best value for money?

What is your proposition to your protection clients? Are you an Aldi or a Superquinn?Is your claim to fame that you can source them the cheapest premium in the market? Or are you offering a better service and experience, along with value? If it’s the former, then why would your client not move for cheaper elsewhere? Surely we want to give a more robust proposition to our clients and we can by looking at some of the added value benefits on protection products. We can then propose, not the cheapest, but the best value proposition for your client as they are not necessarily the same thing.

If you look at mortgage protection, which is so price driven, what different propositions can you give your client here?

Friends First offer Dual Life mortgage protection at a minimal additional cost. If you look at an example of a couple both aged 35 looking for €300,000 cover for 25 years, joint life would cost them €29.08 per month compared to dual life at €33.33 per month. So that’s an extra €3 per month for double the cover! €600,000 to be exact. Not the cheapest solution, but a great value solution.

Are you comparing like with like?Another factor to take into account with your client is comparison of the covers and what they will provide your client, both now and into the future.

For example if your client needs convertible term assurance there are various nuances depending on the provider of cover. Some convertible term policies will only allow the client to convert at the end of the term, some will only allow the client to convert to a level term contract, while some, such as Friends First’s, will allow the client to convert from one convertible term product to another at any stage of the plan. Now, how can you compare all of these options at the same price? Yet we do it all the time.

We know that in general policies are not staying on the books for the term they are written for so it is clear that policies with in-built flexibility need to be considered. If a client’s health has dis-improved then their options to move cover are

more limited and so policies with built in options to increase cover without underwriting in the future are becoming more important.

Let’s look at an example of a client that took out a convertible term contract five years ago that has another 15 years to run. At the time they took out the policy they were in good health but could not afford the full cover recommended so they took a lower sum assured. Their financial situation has stabilised and the male life recently had a health scare. They now are anxious to get the cover amount that was originally recommended to them. With some providers in the market this increase will be subject to underwriting unless the client has moved home, drawn down a new mortgage, got married or had a child. However, Friends First’s Guaranteed Increase Option, which is an additional rider available on both our life and specified illness contracts, will allow this client to take an additional 20% more cover every three years WITHOUT UNDERWRITING. This is true guaranteed insurability. Worth a few more Euro a month? Ask any client in this situation and the answer would be of course.

The cheapest price route is one that we may feel we are being forced down. Don’t do the same to your client. If we think about value for money it is not always about the cheapest. Once your client understands the differences in cover, then it makes sense to choose the product that is best value for the cover given and the options available, rather than the cheapest. This also results in a more robust relationship with your client who will be less likely to move their cover for the sake of saving a few Euro.

The BROKER

10 Issue 38

“But you must wager. There is no choice.

You are already committed.”

The BROKER

Pascal’s contribution to Portfolio ConstructionBlaise Pascal, the 17th Century mathematician and philosopher, mused about the existence of God and came up with what is now known as Pascal’s wager. Given that you cannot determine whether God exists through reason, Pascal tried to define whether a person would be better off living life as though God existed or not. He concluded that the wise decision is to wager that God exists, because if He does, you gain eternal life, but if not, you will be no worse off in death than if you had not believed. Pascal’s wager is not a proof: it is merely a conclusion to the possibilities where one is deciding under uncertainty.

The relevance of this largely philosophical debate to investing may seem tenuous at best. However I think there are a number of parallels that can be drawn between the two.

In the same way as Pascal mused about the existence of God, investors face a similar wager in the consideration of their investments. Consider the following:

In the face of uncertainty — like the performance of capital markets — it makes sense to consider the consequences of being wrong. If you gamble on the future and guess correctly you will do extremely well and are likely to end up exceptionally wealthy. If you guess incorrectly you will end up impoverished. If, however, you accept the reality of uncertainty in capital markets and take a more measured approach, you will end up comfortably wealthy whether you guess right or wrong.

The goal in investing should not be simply to get rich: rather it should be — for want of better wording — not to become poor. We can choose to guess which way the markets are going and go all-in, or we can choose to adopt a longer-term, balanced approach. There are two lessons here for investors.

Accommodating uncertainty in your portfolio is an argument for a diversified asset allocation strategy. All-in bets on any single outcome are a fast-track to the poorhouse. They are wonderful until they stop working. An argument in favour of diversification is seemingly uncontroversial, yet it is something I find needs constant reinforcement. I’ll stop short of reiterating the case for diversification again here, but you will find it is a constant theme in most of what I write.

The second lesson relates to attempts to divine the future in order to identify the precise way to allocate a portfolio to maximise returns. Investors (both professional and otherwise) spend an inordinate amount of time trying to forecast, despite the evidence to suggest that it is a complete waste of time. Strategic diversification is built around the principle of proofing your portfolio for different scenarios. You don’t need to predict where markets are going: just prepare for the inevitable swings and ideally take advantage of them.

There will always be some people for whom the possible downside of being very poor is outweighed by the possible upside of being very rich. Though I suspect the majority of investors would feel this poverty gamble isn’t worth the risk, it is never quite that simple.

Pascal’s Wager is firmly rooted in the philosophical tradition of rational argument. In the face of a roaring bull market rational thinking becomes distorted. As Warren Buffett once opined, “Nothing sedates rationality like large doses of effortless money”. It’s not easy to sit on your hands and decide to ignore apparent easy riches.

Investment decision making is an inevitably an emotional process. Capital markets function as a constant mechanism for challenging convictions and staying resolute when those convictions look misplaced is difficult. As investors we need tools to ground our thinking in the inevitable situation where we find our choices being challenged.

We can think about the financial equivalent of Pascal’s Wager as outlined above. However I think we need something more definitive. I have recommended for some time that investors consider the use of Investment Policy Statements. I can’t emphasise enough the importance of this to the investment approach.

The investment world is obsessed with detail, rationalising short term movements in markets, to the point where it is often difficult to see the wood for the trees. Short of ignoring the constant stream of information we are bombarded with, a well constructed Investment Policy Statement should help. It facilitates the codification of broad guidelines for the investment portfolio along with clear restrictions. It places clear limits on the allocation to different assets, documenting of investment goals and clarifying the source and time of the information.

In short, an Investment Policy Statement is an instruction manual with diversification as the primary building block for an investment portfolio. There are many other strands to building a well diversified investment portfolio, but getting the basics right is the first crucial part.

Pascal had his share of critics. Agnostics argued that the right thing to do is not to wager at all. Pascal’s response was this: “But you must wager. There is no choice. You are already committed.” His point was that we are not outside observers of life, but participants. Similarly, with respect to investing, we are all participants, even if only committing money to deposit. Don’t be agnostic, unless it’s in respect of stock market predictions.

Gary Connolly is principal of iCubed, an investment training, research and consulting firm helping IFAs with their investment process. He can be contacted at gary@icubed.ie.

GARY CONNOLLYPrincipal

iCubed

Autumn 2012 11

The Constant Content ChallengeMany Financial Brokers that I talk to recognise the importance of developing a consistent and continuous stream of new content. It plays so many important roles. First of all, it enables you to stay in touch with existing clients by putting interesting insights in front of them. Secondly, it helps you to make existing clients aware of the breadth of the product range that you can advise them about. Thirdly it helps you to establish yourself as a thought leader and someone to be listened to, both among prospective clients and among the wider public. Finally fresh content on your website is a critical component of a Search Engine Optimisation (SEO) strategy.

Know why you’re writingAnd the answer to this is not “to sell”! Consumers don’t want to be bludgeoned with sales messages. They want to be engaged, to be warmed up, to be made aware of why they should deal with you, to view you as a thought leader. This in turn will make them far more open to your sales messages, which will follow at the appropriate time.

Know who your target audience is. Is it local business owners or particular occupations? Who are you actually writing that new website page, blog or email newsletter for? Write for this audience about topics of interest to them. Try to put yourself in their shoes and think about what they will want to read. If your audience finds it interesting, they’ll view you as someone to listen to and will seek out your content; and your advice in relation to their personal finances.

Some Financial Brokers take a short cut, and rather than writing their own content just share out links to other websites through LinkedIn and Twitter. This type of shared content has its place; however I think it can only sit alongside some original content that you are writing yourself. It’s great to share content that is of interest to your audience but they also want to know what you think!

So that’s fairly straightforward...or is it? Many of you will know from bitter experience that developing a constant stream of content takes high levels of structure, commitment and time. While the web has undoubtedly significantly reduced the financial cost of many marketing activities, that cost has shifted to greater demands on your time.

So therein lies the content challenge; giving time to it. Actually there is another challenge too, and that is coming up with the topics to write about! In my humble opinion, these two challenges are intrinsically linked, but the good news is that there are solutions for both of them!

The Time ChallengeI know from talking to some Financial Brokers (and from my

own experience too) that lack of time to update the website or write a newsletter is often just an excuse for a lack of structure. There’s nothing worse than relying on your brain kicking into action every month or whatever the frequency of your communication is, when you’ve no idea what you’re going to write about! So what

happens is that you find something else to do and satisfy yourself that you’re just too busy to write the content.

The way to deal with this is to develop a content calendar for the year. Spend a few hours at the start of the year brainstorming ideas that you’ll write about either as new pages on your website or as newsletter articles. Once you get a few ideas down, the creative juices will start to flow and more topics will come to mind. As potential topics come to mind, both now and at a later stage, drop them into the calendar with a few bullet points of what the article might cover.

Now you’ll have a structure to ensure you don’t lose potential content ideas as you go along and it will also give you a starting point every time you sit down to write that article. You’ll find after a while that you’ve too much content and that you can actually start being selective in what you write about.

The Ideas ChallengeHowever you absolutely need a helping hand to come up with the topics to write about. So here are a few sources that will help prompt some ideas for you.

First of all, listen to your clients. Probe them about areas of interest to them and areas where they would like more information. Are there particular challenges they face in relation to their personal finances where they would like some general advice? If you ask a number of customers, I’m confident that themes will start to emerge for you.

Secondly, keep your content schedule at the back of your mind when you go to a presentation, read the newspapers or indeed just go online. These are all great sources of ideas, which can be used by you as prompts, from which you can develop your thoughts and positions – not to copy and paste other people’s opinions, but rather to set out your viewpoint and flavour on these topics.

In summary, the secret to good content is first of all being organised. Then it’s about keeping your ears open for new content ideas and then capturing these ideas. Finally, it’s about realising that your aim should be to engage your audience through your content. Once you engage them and they realise your expertise and the added value you offer as a thought leader, they will want to talk to you about their wider financial affairs…and their product needs.

StepChange assists financial advisors in the development and delivery of their business growth and marketing plans.www.stepchange.ie.

EAMONN TWOMEYPrincipal

StepChange Ltd.

The BROKER

The BROKER

Now for the first time in Ireland you can offer your clients the Canada Life Approved Retirement Fund with lifelong income benefit which allows your clients to keep control over their investment by providing them with access to their retirement savings with the security of a guaranteed income for their life in retirement.

For more information on this new and unique retirement benefit talk to your Canada Life Broker Consultant today or visit the eCentre, your 24 hour business partner at https://advisorportal.canadalife.ie. Terms and conditions apply.

The new star in pensionsCANADA LIFE APPROVED RETIREMENT FUND WITH LIFELONG INCOME BENEFIT

The guarantee is provided by Canada Life Assurance (Ireland) Limited, which guarantees payment of a specified income for the remainder of the policyholder’s

life, together with a payment on death equal to the amount paid in, less the amounts withdrawn (including any surrender penalties, administration charges

and tax), subject to the terms and conditions of the policy.

Canada Life House, Temple Road, Blackrock, Co. DublinTel: 01 210 2000 Fax: 01 210 2020 Web: www.canadalife.ie

Canada Life Assurance (Ireland) Limited is regulated by the Central Bank of Ireland.

Autumn 2012 13

The BROKER

PIBA Summer CPD BootcampWednesday July 11th 2012, Portlaoise Heritage Hotel. Attended by over 290 delegates.

Tom Comerford (Deputy Financial Services Ombudsman)

PIBA Summer CPD Bootcamp, Portlaoise

Billy Hawkes (Data Protection Commissioner)

Group Shot Group Shot

Elizabeth Smith (PIBA Compliance Manager)

PIBA Summer Bootcamp

14 Issue 38

The BROKER

KENNY MELLORPensions Manager

Irish Life

What do you say to a Client when they ask you: ‘Do Pensions still make Sense?’For most people starting a pension was just something we did when we started working or when we set up our business. It seemed sensible to start putting money by, while we had it, to take care of the years ahead when we wouldn’t have it. However in recent years there has been plenty of debate in the media on issues such as the pensions ‘time bomb’, whether the State pen-sion will be cut back and income tax relief on pensions, just to name a few.

Despite all of the noise and the challenging environment, the critical fact remains — saving for retirement is as important and as sensible as ever. For me, there are nine clear reasons why pen-sions are still the vehicle of choice to help achieve the level of replacement income that is required when you retire.

1. The State pension age has increased recently The impact, if you are aged 50 years or younger, is that you will not now receive the State pension until you reach the age of 68 as opposed to 65 in the past.

2. Possible state pension reductions in the future Demographic changes in Ireland will put pressure on govern-ment finances in the future as the cost of State pensions and healthcare for the elderly increases. Currently in Ireland there are six adults of working age for every one adult over the age of 65, but this ratio is predicted to change to two to one by 2050.

3. Increasing life expectancy for males and females Everyone wants to live as long as possible and while increasing life expectancy is a good thing, it also means that you may need your retirement savings to last for up to 30 years after you finish work.

4. Income tax relief up to 41 per cent still available on personal contributionsYou may be able to receive 20 per cent relief or up to 41 per cent relief on any personal contributions that you make to your pen-sion plan.

5. Retirement lump sumWhen you retire, current legislation allows you to draw down 25 per cent of your retirement pot in the form of a lump sum. The maximum lump sum that can be paid to you is 25 per cent of a maximum allowable pension fund of €2.3 million, i.e. €575,000. The first €200,000 of this €575,000 maximum is paid to you with no tax liability and the remaining balance of €375,000 is currently taxed at 20 per cent.

6. Retirement lump sumShould you require additional life cover to support your depend-ants on your death, you can do this through a product called pension term assurance. Any pension tax reliefs that you are not utilising through your pension contributions can be used against

the cost of the life cover through this product and therefore re-duce the cost to provide this benefit to dependents.

7. ARF options extended to members of defined contribution (DC) company pension schemesMaking the right decision with your pot of money when you re-tire is another critical milestone. Traditionally, annuities were the product of choice for clients — in simple terms, they effectively provide you with an income for life. However, recent changes now allow members of a defined contribution company pension scheme to invest their fund into what is called an approved retire-ment fund (ARF).

8. Inheritance tax planningDeath, unfortunately, will happen to us all. However one of the main benefits of investing through a pension plan is that it offers you a very tax efficient way of passing on assets on death to your dependants.

9. InvestmentsPensions allow for a wide range of investment options to suit the risk appetite of every client including investment in equities, bonds, property, alternative assets and commodities. Plans that allow clients to ‘self-invest’ have grown in popularity in recent years.

For proprietary directors, the key opportunity that a company pension can provide is the ability to turn your company profits into your own personal wealth in a very tax efficient manner.

Pension plans offer the best opportunity to help you achieve your retirement goals. A survey conducted by Amárach in 2011 reported that one in five people do not know how much they are contributing to their pension plan and one in three people have never reviewed their pension (what they are paying or likely to get out) or have not reviewed their plan in the last five years. With so much at stake — no-one else is going to plan for your retire-ment — I strongly believe everyone needs to understand their pension options.

Irish Life launch the ‘Swiss army knife’ of calculatorsTo help Brokers simplify the conversation with clients we have just launched our new ‘4 in 1’ pensions calculator that will show:

• How much your contribution will cost after tax relief • How much it will cost to build up a retirement lump sum• What are the maximum contributions you and your employer

can invest• How to target a tax efficient income in retirement.

To access this calculator, simply log onto b-line or contact your Account Manager.

We are constantly striving to make life easier for you to do business with us. Please feel free to contact me or your Account Manager with any ideas or improvements you would like to see.

“Saving for retirement is as

important and as sensible as ever.”

Autumn 2012 15

The BROKER

Life Cover – The Dangerous Divide between Awareness and ActionA survey commissioned by Caledonian Life, looking at the financial consequences of the death of a family’s primary earner, found that most people have a realistic perception of the amount of Life Cover they would need to ensure that their family’s financial needs could continue to be met. Shockingly however, many appear to be far from prepared financially should such a terrible event occur.

Having sent these facts to the Irish media, extensive press coverage was received, highlighting more than ever the need for Broker advice in Ireland. For example, more than 54% of those surveyed believe that the surviving family would need a lump sum of between 10 and 15 times their current annual income to maintain their family’s lifestyle. Despite this fact — people knowing what cover they should have – the reality is often far removed from that.

In reality, the average Life Cover policy is said to be under €300,000. For someone earning an average industrial wage of just over €35,000, this level of cover would only cover their family for close to seven years. Even more starkly, for a professional earning €70,000 each year this level of cover would only support their family for just over four years: a very short period of time.

Some other findings from the survey offered up even more apparent contradictions. When asked about their own personal circumstances, 74% believe that their family would be well provided for or just have to ‘tighten their belts’ slightly - even though, as we have just illustrated, the same results uncovered that in reality people have insufficient cover in place, making the thought of their family being well provided for very unrealistic.

As experts in the field, you will be more than aware that there are a variety of reasons as to why people do not have sufficient Life Cover in place – often relating to a person’s perception of the affordability of Life Cover. Alternatively, Life Cover may not be something an individual has prioritised or discussed with their Broker.

This of course represents a significant prospect for the Brokers of Ireland, as the demographic surveyed have awareness of the benefits but have yet to take action when it comes to arranging Life Cover. This, partnered with the historically low Life Cover rates available today, makes it an opportunity not to be missed!

Perhaps the public could do with being further reminded of the following three golden rules, which we have emphasised in all of our recent press releases.

1. Don’t undervalue the stay-at-home parentOur recent household cost survey uncovered that the average stay-at-home parent’s basic household duties can

be valued at €59,000 per year. Their role can be significantly undervalued, and as a result, the death of a stay-at-home parent can have significant financial consequences. In some instances, no Life Cover was in place for the stay-at-home parent, making the prospect of their death even more shocking. This, coupled with the fact that Ireland is currently experiencing a baby boom, with one of the highest birth rates in the EU, makes this a dangerous trend for young families.

2. Don’t presume that the level of Life Cover needed increases with ageMany people inaccurately predict that their Life Cover needs will increase as they get older. As you know, this is far from the reality. A couple in their 30s with a young family have greater expenses and dependencies than a couple approaching retirement with adult children who are no longer financially dependent upon them, and this therefore makes their need for sufficient Life Cover far more pressing.

3. There is a huge selection of Life Cover to choose from, and great value currently available in the marketAs you know, Life Cover has decreased in price over the last decade, with significant savings worth thousands of Euro available to the Irish public. This important fact can be overlooked in these financially challenging times, but consumers are urged to research the options available to them with their Broker, who can advise on the most suitable levels of cover. This need for Broker advice is a consistent message in our press releases circulated to the Irish media.

Please visit Caledonian Life’s Broker Centre: esp.caledonianlife.ie, for more information on our ongoing national media campaign, to view our most up-to-date press releases and samples of the extensive news coverage we receive. You can also sign up to receive our press releases straight to your inbox when published – simply visit the press & media section on your Broker Centre.

KAREN O’ROURKEMarketing Executive

Caledonian Life

A nationwide Radio Campaign promoting Financial Brokers is now running on RTE Radio 1 & RTE Lyric FM

Telling the Nation who we are

Financial Planning & Guidance

The BROKER

Autumn 2012 17

The BROKER

Pulse Insurance Limited (Pulse) goes Olympic!PIBA members have been using Pulse, a specialist company which is dedicated to arranging ‘difficult to place’ life assur-ance cases, since early 2011. This was when PIBA made its membership aware of the wide range of unusual circum-stances where Pulse can help secure life cover when the standard market is unable to assist.

It should come as no surprise that Pulse was in at the off with the Olympics, providing life assurance for one of the Torch Bearers. This was a Torch Bearer with a difference as he not only had to contend with the honour of carrying this Olympic icon but also with Cystic Fibrosis. His was, and is, an inspiring story.

As the Olympics and Paralympics have come and gone, and what a success they both proved to be, have you or any of your clients been inspired to take up a sport? Whether it is for charity or for a life change, it is important to be prepared!

We have seen professional sportspersons in the news recently who have collapsed on the playing field with a pre-existing medical condition. It is not always possible to know of a medical condition until it strikes unexpectedly.

Everyone needs to be aware of the importance of ap-propriate insurance protection. Pulse protection products include life insurance, accidental death or disablement and income replacement cover.

Pulse is a specialist company, where unusual and high risk enquiries are an everyday occurrence. Pulse arranges cover for individuals or groups for risks of an accident, death from a natural cause or death from any cause. Being specialists in their field of insurance, some of the cases that Pulse have covered include individuals with a wide range of pre-existing medical conditions such as diabetes, heart conditions, stroke and HIV, to name a few; and also, of course, sportsmen and women and adrenaline junkies!

One of the specialities that Pulse offers is the flexibility of the term of a policy. They can provide full life insurance for as little as one day up to a maximum of ten years and ac-cidental death cover from one day to one year. An example of this is a client who required a one day accidental death insurance policy because she was doing a sky dive to raise money

for charity. Aged 42 and requiring £50,000 worth of cover, Pulse obtained this cover for her at a premium of £50.00.

Pulse is also able to cover professional and amateur sportsmen and women as individuals and on a team basis under a group scheme. Rugby players are one such example, where Pulse can offer cover on an individual basis or for the whole team. An example of an individual sportsperson is a professional downhill skier. The cover required was for full

life cover and the term remaining on this policy is nine years at a level of £750,000.00. A very reasonable premium of £1,480.20 per annum, which paid monthly is only £123.35, was obtained for this gentleman.

Pulse’s flexibility is shown perfectly in the following ex-ample. A man, aged 48, was rowing across the Atlantic. He required an accidental death and disablement policy for one month for £100,000.00. The premium that Pulse obtained for this cover was £476.19.

We have also arranged cover for another Atlantic rower. He, however, required full life cover for a three month term. To ensure he had maximum protection, Pulse sourced for him not only a personal accident policy to cover him in the event of an accident, but also a death by natural causes only policy to cover him in the event of an illness. The sum assured for these two policies was £200,000.00 respectively. The natural causes only policy was a single premium of £160.00 and the personal accident policy was £1,500.00.

Pulse also arranges cover for those who take part in hazardous pursuits, such as motor sports, diving or flying helicopters or light aircraft, commercial pilots and trainee pilots and also on occasion airline pilots. Cover is also easily obtained for non-UK nationals.

Pulse are currently concluding arrangements to be able to provide a further product - holiday travel insurance for people with pre existing medical conditions.

Pulse prides itself on its personal customer service. Your call will always be answered by an experienced member of staff, who will be able to help you through the process of obtaining cover. Please contact them via telephone on 0044 1280 841 430 or by email at admin@pulse-insurance.co.uk.

To find out more on how Pulse can help you and your cli-ents, please visit their website www.pulse-insurance.co.uk.

Pulse Insurance Limited is an Approved Coverholder of Kiln Life Syndicate 308 at Lloyd’s and is authorised to transact life assurance on behalf of underwriters including the issuance of policy certificates and collection of premiums. Lloyd’s of London is permitted to transact Class I business (as defined in Annex 1 of S.I. 360 of 1994) on a Freedom of Services basis and is listed on the Register maintained by the Central Bank of Ireland.

promoting

18 Issue 38

The BROKER

Platforms Coming ‘Clean’ in the Irish MarketThe Retail Distribution Review (RDR) will come into effect on the 31st of December 2012 in the UK. While there is no sign of RDR being implemented in Ireland, the introduction by the main international fund managers of ‘clean’ share classes will have an impact on how many financial advisors do business in Ireland.

A search on Google quickly shows that there’s been little commentary on the likely impact of the RDR legislation on the Irish market. Perhaps it’s not surprising given the appar-ent lack of appetite among other European regulators to follow suit in the short term.

New legislation or not, RDR is going to have an impact on the Irish market in the short term. The key to understanding this lies in the adjustments fund managers are making com-mercially to deal with RDR.

Traditionally fund managers have offered different share classes within their collective investment schemes to suit dif-ferent types of investors; e.g. institutional share classes for large volume distributors and retail share classes for direct investors. The management charge for the institutional share class varies, but is typically half the cost of the retail share class. The institutional distributors often ‘bundle’ these investments with other services such as pension wrapping and have marketed them with annual management charges very similar to the retail share classes. This high margin ‘bun-dle’ model has enabled the main fund distributors in Ireland to support their initial commission payments to Brokers.

Before the announcement of RDR, fund supermarkets and platforms promoting the retail share class in funds have been paid significant rebates by the fund managers. This has allowed many platforms to thrive on the rebates with little or no additional charges to their clients.

With RDR, these rebates will cease. So how will the fund platforms get paid? The answer lies in the new unbundled ‘clean’ share class which is being introduced by fund manag-ers. A ‘clean’ share class is a new form of retail share class with a typical annual management fee of 75 basis points, typically 50% of the previous retail annual management charges.

To date over 80 international fund managers have de-clared ‘clean’ share classes on over 1,700 funds. (Source: FT Advisor). These fund managers include BlackRock, Schroders and Standard Life, who have established 75 basis points ‘clean’ share classes in their funds.

The introduction of ‘clean’ share classes by fund managers will fundamentally change the current business model in Ire-land. These ‘clean’ share classes are going to be promoted to retail investors in Ireland and will be available through fund platforms such as Davy Select. They will offer retail investors transparent charging structures where fund, administration, platform and advisor charges are all fully transparent and clearly differentiated.

The implications for Irish investment and pension provid-ers is that retail clients will see the true cost of investing in funds as the charges are unbundled from the pension ad-ministration service and other fees.

Platforms and the Irish MarketDavy Select is the first to market in Ireland with a fully integrated pension and investment platform. This is also Ireland’s first fully customisable online platform which allows independent financial advisors to offer their clients a whole market solution under their own brand.

In the UK there are over 30 platform providers with approximately £190 billion in assets under management (Source: The Platforum). The model is well established in the UK and it is clear that many of the platforms will target the Irish market in the future. They will bring scale and very low cost transaction models. The majority will not engage with the existing advisor channel and will go directly to consum-ers.

As an established provider in the Irish market, we believe it is important for advisors to embrace the benefits offered by platforms both for their own business and for their client’s needs. At Davy, we are wholly committed to developing our business model in conjunction with the existing intermediary channels in Ireland.

In a recent survey conducted by Amárach for Davy, over 60% of respondents expressed an interest in managing their own pension. What is also clear from our research is that many investors are not confident in their own ability to make investment decisions. The role of the advisor has never been more important as investors seek greater choice, lower transaction costs and ongoing value from their advisor relationships.

The transition from an ‘initial commission based’ sales model to a ‘funds under management’ model is difficult to manage in the current economic environment. Difficult as it may be, it can lead to a more valuable business model for advisors, with more sustainable and stable revenues and greater supplier independence.

At Davy, we recognise the importance of operating in an open, transparent and independent way. We are committed to working with advisors and customising our Davy Select platform to meet their requirements and those of their cli-ents.

Ciaran O’Donoghue is Managing Director of Davy Select in Davy. Views expressed in this article reflect the personal views of the author and are not necessarily those of Davy. J & E Davy, trading as Davy, is regulated by the Central Bank of Ireland. Davy is a member of the Irish Stock Exchange, the London Stock Exchange and Euronext.

CIARAN O’DONOGHUEManaging Director

Davy Select

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The BROKER

20 Issue 38

Anthony Grealish (Glencorrib Financial Services) Bernard Dempsey (Executive Insurance & Investment Brokers)

Bartle Landy (Bartle Landy Financial Services) Geraldine Layden (Summit Finance) Jerry McSweeney (Jerry McSweeney & Associates Ltd)

Darren McGarry (Business Manager, Standard Life) Nigel Monaghan (Head of Distribution, Standard Life)

PIBA in association with Standard Life held three Investment seminars on Monday 25th of June 2012 in the Radisson Blu Hotel, Athlone, Tuesday 26th of June 2012 in the Clarion Hotel, Cork City and Friday 29th of June 2012 in the O’Callaghan Davenport Hotel, Dublin 2.Speakers included: David O’Brien – Standard Life Investment Director Gary Connolly – iCubed Viv Chambers – Pathfinder ResearchOver 300 delegates attended these seminars, which were kindly sponsored by Standard Life.

Group Shot

Suzie Aungier (Lyons Financial Services) Ashling Doherty (Standard Life) Jennifer McCluskey (Lyons Financial Services)

Gary Connolly (Speaker), Diarmuid Kelly (PIBA CEO), David O’Brien (Investment Director, Standard Life), Nigel Dunne (Chief Executive, Standard Life), Liam Carberry (PIBA Chairman)

Sinead Cullen (Standard Life), Geoff Whelan (Servatus Ltd) Gillian Ryan (Standard Life)

Pat Burke (Patrick J. Burke & Associates Ltd) Tommy Coyne (Thomas Coyne Insurances)

PIBA Investment Seminar Seriesin association with Standard Life

The BROKER

Autumn 2012 21

The BROKER

Diarmuid Kelly (PIBA CEO), Liam Carberry (PIBA Chairman)and other attendees

Nigel Dunne (Chief Executive, Standard Life) David O’Brien (Investment Director, Standard Life)

Group Shot

Terry Brady (Terry Brady Insurances), Brian Andrews (Brian Andrews Insurances Ltd), Paul O’Byrne (O’Byrne Insurances Ltd), John Lowe (Money Doctor)

Diarmuid Kelly (PIBA CEO), Liam Carberry (PIBA Chairman) Nigel Dunne (Chief Executive, Standard Life)

Sylvia and Rodney Croly (R.J. Croly & Co. Ltd)Gary Connolly (Speaker), Liam Carberry (PIBA Chairman), David O’Brien (Investment Director, Standard Life), Diarmuid Kelly (PIBA CEO) Nigel Dunne (Chief Executive, Standard Life)

The BROKER

22 Issue 38

GILL O’CONNORProduct Manager

New Ireland Assurance

Mind the GapClosing in on the Gender DirectiveFrom the 21st of December 2012 (G-Day), premiums on all new individual insurance contracts will move to a unisex basis. How will this change the insurance industry? How will Brokers navigate clients through the best contract for them in the run up to the deadline, and afterwards?

The landscape of our insurance market is going to change. The Gender Directive brings the biggest step-change our in-dustry has ever seen, and there will be plenty of activity in the market as insurers and Brokers jostle to come out with the best offering for their target market.

At the moment, products and pricing bases are uniform across most insurance companies. We know that pricing must change — but insurers are also likely to adapt marketing strategies and product features to target their optimal mix of customers. We could see specified illness products with gender-specific illnesses for example, or we could see new factors being introduced to better map the risk profile of the market — postcode is being used more and more as a pricing factor in the UK. Insurers will have to be careful to steer clear of indirect discrimination — for example a rating factor such as how many pairs of shoes the applicant owns makes no sense other than as a proxy for gender.

What will pricing look like post G-Day?For the most part, unisex pricing will only be applied to new insurance contracts taken out by individuals (private, volun-tary and separate from the employment relationship). There are some instances where unisex rates will apply on existing contracts — e.g. where a new contract is required or where the transaction needs agreement of both the individual and the

insurer. This may vary from one insurer to another.The table below gives an indication of the size of pricing

movements we are likely to see in the market post G-Day. While it may seem like a simple exercise for insurers to ‘average’ the pricing of their male and female books, insurers will have to guess what their likely mix of genders will be in 2013. The proportion of males and females that a particular insurer un-derwrites will be influenced by the insurer’s marketing, product and pricing strategy, and how this compares to the strategies of competitors.

We are likely to see some pricing adjustments during 2013 as insurers modify their pricing to reflect competitor pricing and any early sales data.

Income Protection, although a small part of the market, will be perhaps the trickiest to price, with current female premiums being substantially higher than those for males.

Product Indicative Pricing Changes Post G-Day

Life Cover Unisex – small reduction in male rates, moder-ate increase in female rates

Specified Illness Unisex – younger lives: moderate increase in male rates, small decrease in female rates

– older lives: small decrease in male rates, moderate increase in female rates

Income Protection Unisex – substantial increase in male rates, moderate reduction in female rates

Annuities (personal) Unisex – small reduction in male pension in-come, small increase in female pension income

Annuities (employer related) Unaffected, rates remain gender differentiated

GENDER DIRECTIVE CHEAT SHEET• The Gender Directive was introduced in 2004 by the Council of the European Union to ensure equal treatment for men

and women in access to and supply of goods and services.

• Insurers were allowed to continue using gender as a rating factor provided this was based on ‘relevant and accurate actuarial and statistical data’.

• A Belgian consumer group, Test-Achats, brought a case to the European Court of Justice challenging the right of insurers to charge different premium rates.

• In March 2011, the European Court of Justice ruled that the insurance sector’s derogation from the 2004 Gender Direc-tive was invalid, and the Gender Directive will apply to insurance from the 21st of December 2012.

• The ruling was received with shock and disbelief across Ireland and the United Kingdom, with a more mixed reaction across Europe where some countries already price on a unisex basis.

• European Commission Guidelines were published in December 2011, putting forward a sensible interpretation on how the Gender Directive should be implemented into law in the light of the Test-Achats judgment.

• The impact of the Gender Directive is likely to be restricted to pricing only — insurers can continue to collect gender data, and use this for underwriting and risk management.

• Industry representatives across Europe are working with the European Union to ensure that the upcoming Age and Disability Directive is not written in such a way as to prevent insurers using age and health status as rating factors. The impact of age and health status on price is much greater than gender — the removal of these factors could threaten the viability of insurance as we know it.

Autumn 2012 23

The BROKER

Act now!The best thing you can do right now is alert your clients to the increasing cost of cover, and help them secure cover before premiums increase for G-Day.

Income Protection for men will become substantially more expensive. Any of your male clients, particularly those who are self-employed, who do not have cover in place should act now.

Life Cover for women is also going to increase significantly. This is a great opportunity to remind mothers how valuable they are! Many women whether working in the home or em-ployed do not have adequate life cover to leave their children financially secure should the worst happen.

You can ensure that your clients’ cover is put in place as quickly as possible by using New Ireland.

• Instant decisions on 70% of clients underwritten online, even those with a medical history.

• Higher non-medical limits and use of nurse medicals with New Ireland minimise the need for doctors’ reports, which add significant delays to putting cover in place.

New Ireland has a range of supports and campaign materials available to help you target and inform your clients or potential clients of this window of opportunity.

Your New Ireland Broker Consultant is available to answer any questions you have and support you in managing this transition well both for your business and for your clients.

This article is intended for information purposes only and should not be relied upon without seeking appropriate advice. New Ireland Assurance believes any information contained in this article to be materially accurate but New Ireland Assurance does not warrant its accuracy and completeness. All opinions and estimates constitute best judgment as at August 2012 and are subject to change without notice. New Ireland Assurance Company plc is regulated by the Central Bank of Ireland. A member of Bank of Ireland Group.

Pension Tax IncentivesWhere to from here?The value of funding for retirement through making personal contributions to pension plans is something I have been writing about for the past twenty years or so, in many differ-ent industry publications. Of course, much of this value has been based on the tax incentives available to those making personal contributions to pension plans — tax relief on con-tributions, tax-exempt investment growth, and tax-free cash at retirement.

Back when I started writing these articles all of twenty-one years ago things were much simpler than they are today:

• Tax relief was available on personal contributions of up to 15% of Net Relevant Earnings for all eligible pension con-tributors, without any cap on the amount of earnings.

• Investment growth within pension funds was tax-exempt and there were no annual levies on the value of the funds.

• Retirement lump sum benefits were tax-free.• And, there was no limit on the size of the fund that an indi-

vidual could accumulate!

Current Tax Efficiency

Over the years there were a lot of changes made to the tax incentives, some of which made saving for retirement even more attractive; and more recently, some that have rolled back on what had been given previously.

Needless to say, the whole idea of having the tax incen-tives was to encourage a greater population to fund for adequate pensions in retirement. Unfortunately, particularly following the introduction of AMRFs/ARFs, some powerful

and already wealthy individuals used the tax incentives to accumulate a great deal more wealth. Of course, the bad publicity attracted by the actions of a small number of in-dividuals has meant that the tax incentives have very much come under the spotlight. So much so that we now face the prospect of the tax incentives being so diluted that funding for retirement through pension plans may no longer be at-tractive for the people at whom they were originally aimed.

For the majority of people, funding for retirement through pension plans can still be tax-efficient. But the number of individuals to whom this applies is smaller than in the not too distant past, and for many the tax efficiency is also not as good as it was. The introduction of the Standard Fund Threshold (currently at €2.3 million), and the application of the earnings cap (currently at €115,000) to the age-related maximum contributions are just two of the steps that have adversely affected the tax efficiency of pension funding for higher earners.

For self-employed individuals and employees in non-pensionable employment making pension contributions to personal pensions or to PRSAs is generally tax-efficient because 25% of the accumulated fund can be taken as a lump sum with the first €200,000 tax-free and the balance up to a total of €575,000 taxable at 20%. This is provided their pension contributions do not exceed the age-related maximum figures and their eventual funds do not exceed the Standard Fund Threshold.

The removal of PRSI relief on employees’ pension con-tributions, and the fact that relief from USC is not allowed

EAMONN KIELYPensions Sales Manager

Zurich Life

The BROKER

24 Issue 38

The BROKER

on these has meant that for some employees in pension-able employment, meaning that AVCs may no longer be tax-efficient. An example of this would be where a Defined Benefit pension scheme member has accumulated an AVC fund equal to, or greater than, his maximum allowable retire-ment lump sum.

AVCs are likely to be tax efficient for Defined Contribution pension scheme members, who will take 25% of their accu-mulated fund as a lump sum benefit at retirement. Likewise, a public servant whose scheme’s retirement lump sum will be lower than the maximum allowable by the Revenue could fund solely for an additional lump sum benefit through AVCs or PRSA AVCs and find this to be tax-efficient, particularly if he gets tax relief at 41% and the additional lump sum is paid tax-free.

Doomsday ScenarioThe danger we face is that if the tax incentives are diluted any further many individuals will stop funding for their retire-ment through pension plans. This has already started to hap-pen and could end in a doomsday scenario. This is why we need someone in authority to say that no further dilution of these incentives will take place, and pension funding is safe.

If people do not make provision for their retirement the long term consequences for the country could be very severe. For example, many people will need to work into old age as they did many years ago, thus not freeing up jobs for the younger generation and thereby increasing the rates of emi-gration. The State – if it has the funds – will have to provide for the older people who can no longer provide for them-selves; and remember, people are living much longer now than they did in the past. This could result in large increases in the taxes the State has to gather.

Occupational PensionsHowever, there is still some good news! Occupational pension arrangements, both Group Schemes and Executive Pensions, can provide a more tax-efficient basis for retirement funding than personal contributions.

Generally speaking, where an employer is prepared to

make contributions to an occupational arrangement for an employee, provided the employee is also prepared to contrib-ute, the employee is best advised to make the contributions. It is any additional discretionary contributions that the em-ployee might make by way of AVCs or PRSA AVCs that should be evaluated for their tax efficiency.

In addition, proprietary directors whose companies make pension contributions to occupational schemes on their behalf find this to be a most tax-efficient way of funding for retirement. This is a very good reason for self-employed in-dividuals to form companies and put occupational pensions in place; and the Standard Fund Threshold ensures that this situation cannot be abused.

The FutureWhatever happens to the pension incentives there is one positive point from our industry’s point of view and that is that people in the future will need to make provision for retirement more than ever. The State is unlikely to be able to provide adequate retirement benefits for its citizens who are living much longer.

Where discretionary pension contributions are no longer tax-efficient for clients it will be up to us as an industry to develop products that are attractive for individuals to use to fund for their retirement, for example through a retirement savings plan, or to enhance the retirement benefits being provided by employers. Zurich Life has already moved in that direction through our RetireSmart contract, and I’m sure it’s only a matter of time before many other providers move in the same direction.

Zurich Life Assurance plc is regulated by the Central Bank of Ireland.

The tax and legislative information contained herein is based on Zurich Life’s understanding of current practice as at 21st August 2012 and may change in the future.

The material in this article is based on Zurich Life’s understanding of current revenue practice and relevant pension legislation as at August 2012 and may change in the future. Professional advice should be sought in relation to any specific matter.

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PIPA Ad you wont believe your eyes September12.indd 1 04/09/2012 16:16

26 Issue 38

The BROKER

IMD IIOn the 3rd of July, the European Commission published, as part of its Consumer Protection Package, its proposals for the revision of the Insurance Mediation Directive alongside its proposals on Packaged Retail Investment Products (PRIPs) and UCITs V. The purpose of this Consumer Protection Package is to promote consumer protection, address inconsistencies in insurance mediation and improve trans-parency in the retail investment market across the European Union.

The following are the objectives of the IMD II proposals:

• Expand the scope of application of IMD I to all distribution channels (e.g. direct writers, car rentals, etc.);

• Identify, manage and mitigate conflicts of interest;

• Raise the level of harmonisation of administrative sanctions and measures for breach of key provisions of the current Directive;

• Enhance the suitability and objectiveness of advice;

• Ensure sellers’ professional qualifications match the complexity of products sold;

• Simplify and approximate the procedure for cross-border entry to insurance markets across the EU.

A significant change contained in the draft proposals is a ban on receiving commission, fees or any monetary benefits paid by a third party in relation to the concept of “independent advice”. PIBA strongly opposes any such amendment. PIBA feels that the current regime introduced by the Consumer Protection Code in relation to using the term “independent”, whereby the intermediary allows the consumer the option to pay in full for its services by means of a fee, is sufficient as the client has the choice between paying the intermediary directly or choosing the commission method. The issue of independent advice is also being discussed as part of the MIFID review at European level and a vote on the issue is due to take place in September. It is likely that the decision taken on the matter in the MIFID review will be mirrored in the IMD review. BIPAR, the Europe-an Federation of Insurance and Financial Intermediaries have also made strong representations in opposition to the proposed ban.

The proposals also contain changes in relation to commission disclosure: these vary between requirements for life insurance products and non-life products. A mandatory ‘full disclosure’ regime is proposed on the life side which will be effective from the adoption of the IMD II. For non-life insurance products, a transitional period of five years will apply whereby an on-request regime will be in place (i.e. on customer’s demand). After this five year transitional period, a mandatory full disclosure regime will automatically apply for the sale of non-life products as well.

A key issue contained in the proposals which PIBA has concerns about are the significant deficiencies and inequities between the required disclosure of remuneration for insurance intermediaries (including tied) and insurers writing business directly. Intermediar-ies are required to disclose the ‘full amount’ of their remuneration, including contingent commissions, but insurers are only required to disclose the ‘nature’ and ‘basis of calculation’ of their ‘variable remu-neration’ without any definition of the term ‘variable remuneration’. The term ‘variable remuneration’ seems to imply staff sales bonuses

only, and not include staff basic remuneration and associated over-heads; so this disclosure is a very limited and misleading form of disclosure, as compared to the intermediary who is required to disclose their full turnover.

If disclosure is to apply fairly there has to be full disclosure of all insurance direct sales costs. The Irish life assurance disclosure system, introduced in 2001, tackled this issue by requiring insurance intermediaries to disclose ‘intermediary remuneration’ but also cru-cially requiring direct writing insurers to disclose ‘sales remuneration’ in relation to the sale of a policy.

PIBA believes that the Irish life disclosure regime, which has been operating reasonably well in this manner for over a decade, could be used as a template to amend the proposals to require insur-ers to disclose full sales remuneration and not just ‘variable’ sales remuneration. PIBA has highlighted this belief in submissions made to BIPAR.

The proposals also give increased powers to EIOPA (European Insurance and Occupational Pensions Authority), which was estab-lished in September 2009. It is clear that EIOPA will play a key role in the implementation of the new EU-wide framework and it will have the power to develop and draft technical standards. A single electronic register of IMD firms will be maintained by EIOPA. This single electronic register shall function as a portal linking back to national registers.

EIOPA will be responsible for drafting guidelines in relation to sanctions, and PIBA was happy to see that contained within the proposals it states that “In order to ensure compliance with the prin-ciple of proportionality, sanctions and measures imposed should be published on an anonymous basis where publication would cause a disproportionate damage to the parties involved”. PIBA believes that the impact of the publication of a settlement against a small intermediary has a disproportionate effect on the reputation of that firm compared to that of a larger institution such as a banking insti-tution. We understand that the justification of naming institutions in such publications is to act as a deterrent to the industry, however we believe the same effect can be achieved by publishing such sanc-tions on an anonymous basis. PIBA has highlighted this fact to the Central Bank of Ireland on a number of occasions.

Another issue which PIBA has highlighted to BIPAR and will be raising directly with the Department of Finance in a meeting later this month is the continuation of the exemption regarding the requirement for registration for certain firms involved in insurance mediation. In Ireland, accountancy bodies are deemed approved professional bodies and therefore accountants can operate in relation to insurance mediation on an incidental basis without the requirement to register. PIBA feels it is inappropriate to have a dual regulation system in place: the same registration requirements should apply to all involved in insurance mediation.

The proposals will now be discussed, amended and adopted by the European Parliament and by the Council of Ministers. Adoption is likely to happen during 2013. There is a possibility that it may coincide with the Irish presidency, which takes place between January and June 2013. It is expected that the proposals will be implemented during 2015.

ELIZABETH SMITHCompliance Manager

PIBA

“It is expected that the

proposals will be implemented

during 2015.”

The BROKER

Autumn 2012 27

PIBA takes a leap forward in CommunicationOver the summer months we conducted a thorough review and subsequent realignment of our communication strategy.

Having reviewed how we communicate with our members, industry, the Broker community, media and policymakers we have added social media to our communications strategy, centring on LinkedIn and Twitter. This is on top of our existing email and e-newsletter communications. We have taken strides forward in how we provide relevant current news and in assisting Brokers in communicating with each other through the online edition of The Broker magazine, www.pibabroker.ie, and the creation of a PIBA LinkedIn Group where Brokers can share ideas and interact.

In summary, here is how we are communicating.

The BROKER

o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o

o

o o o

o o

o o

o o o o o

o o o o o o o o o o o o o o

o

o o o o o o o o o o o o o o o

o o o o o o o o o o o o o o o o

28 Issue 38

The BROKER

Defined Contribution Pension Schemes:Role of the Independent Financial AdviserRise of Defined Contribution Pension SchemesThe last 15 years have seen enormous changes in the landscape of private sector occupational pensions. In 1997 employees covered by employer pension schemes were 70% defined benefit (DB) and 30% defined contribution (DC). The profile has now moved to 45% DB and 55% DC. Furthermore, stricter funding regulations issued this June are expected to lead to the wind-up of 200 financially stressed DB schemes in the next few years. These developments will create a greater need for individuals to receive independent financial advice.

Need for Independent One-to-One Financial AdviceThe level of benefits that members will receive on retirement from DC schemes is uncertain. Individuals require support to set financial goals for retirement, decide the optimum amount to contribute given their financial circumstances, make suitable investment decisions and avoid nasty surprises. One-to-one consultations carried out regularly by independent financial ad-visers can achieve this. Personal advisers can also help to make sense of the myriad of paperwork and information presented to members.

Regretfully these consultations are rarely conducted by employee benefits firms, whose main focus is on employers and trustee boards. The lack of independence as well as the excessively high charges levied by employee benefits firms for conducting these consultations are also a barrier.

DC Deferred Members – A Forgotten Class?A group that requires particular attention in relation to one-to-one financial consultations are deferred members, undoubtedly the forgotten class from the employee benefits firm’s perspective. Em-ployees leaving service get a statement of 8-10 pages setting out the four statutory options available to them:

1. Transfer to a Personal Retirement Bond (PRB)2. Transfer to a Personal Retirement Savings Account (PRSA)3. Transfer to an approved arrangement of their new employer 4. Retain benefits in the old employer scheme.

Deferred members do not receive annual benefit statements or pen-sion updates and do not receive one-to-one financial advice. They are therefore poorly equipped to make an informed decision and so remain in the old employer scheme by default as a deferred member.

DC Deferred Members – Trustee IssuesBenefits for deferred members remain a responsibility of the trustees even though they have left employment. This causes a number of difficulties.

• Trustees have legal responsibilities under the Pensions and Data Protection Acts including holding up-to-date contact de-tails. Lack of regular communication can lead to lost contacts and subsequent efforts to locate deferred members can be time consuming and expensive, with non-Irish nationals and emigrants a particular challenge.

• A poor level of service is provided to deferred members (no automatic annual benefit statements or updates) as the focus of the old employer and its scheme is on current employees.

• The loss of contacts created by this lack of communication is a serious matter for trustees as they will be unable to discharge their primary responsibilities to pay benefits and maintain member data.

• Employee benefit firms continue to charge the employer fees for scheme membership, usually about €30 p.a. per deferred member.

Benefits of Transferring OutThese difficulties can be avoided if deferred members take per-sonal control of their pension benefits, for example by a transfer to a PRB with a comparable charging structure to the old scheme. Independent financial advisers can help individuals take personal control by explaining the various statutory options and equipping them to make an informed decision. For example, there are advan-tages of transferring to a PRB:• Greater personal control and flexibility

– PRB written in name of individual – Personal choices not subject to trustee approval or restric-

tions • Wider range of investment funds to choose from

– Access to fixed term deposit funds, guaranteed tracker bonds and many more

– Range of lifestyle options for passive investor • Better service from life office than employer scheme

– Life offices better equipped to communicate with individual policyholders

– Annual benefit statements, on-line access, phone support • No need for trustee approval to draw down funds from age 50

– May be worthwhile to access lump sum to reduce personal debt

• Retain option to transfer to new employer scheme at a later date.

ConclusionThe rise in DC pension provision in the private sector reflects a wider trend in society towards individualisation. Regulation has struggled to keep pace with this development, with the focus on corporate trustee duties and information ‘overload’ to members. DC pensions need to be made more accessible and understand-able to members and not be the sole preserve of the corporate ‘experts’. This empowering of individuals should be the role of the independent financial adviser.

Individuals can face critical decisions relating to their retire-ment benefits at various stages such as scheme reconstruction (e.g. DB to DC), scheme wind-up, leaving service, retirement, attaining age 50 and joining employment. The availability of independent financial advice at some of these critical junctures should be included in the regulatory framework for pensions as it would deliver better outcomes for DC members in the long term. Employee benefits firms are not best placed to deliver such independent financial advice due to their conflicts of interest. The Pensions Board and other relevant authorities could be lobbied in this regard.

MICHAEL LACEYManaging Director

Open Financial Services Ltd.

And for life and pensions, that feeling doesn’t get much better than being with Ireland’s number one.

At Irish Life we’ve over 70 years experience of protecting Irish families, with the biggest share of the life and pensions market in Ireland, while our investment managers now take care of a portfolio worth over €34 billion.

And, as a sign of how hard we’re working to support brokers, we’re really proud to have won the Top Life Company Award from the IBA the past two years running.

When it comes to financial resources, other companies may talk about their strength in other countries. We use ours for the benefit of the Irish broker market.

To help give your clients that feeling of security, talk to your Irish Life Account Manager today.

Information is correct as of 25 July 2012. Irish Life Assurance plc is regulated by the Central Bank of Ireland.

YOU’LL ALWAYS FEEL BETTER KNOWING YOU’RE SECURE.

ILA 9651 (NPI 07-12)

The BROKERThe BROKER

30 Issue 38

KIERAN McHUGHCEO

Lockton

A Broker’s duty of care remains, irrespective of the cost of deliveryKieran McHugh examines a recent U.K. case which has important implications for Brokers in Ireland

A judge in the Royal Courts of Jersey has awarded damages of £528,000 (exclusive of costs) against a leading insurance Broker and has criticised its quote-engine sales process as being “more in the interests of the Broker than in the interests of the policyholder”.

Following closely the judgment of Mr Justice Steel in the Envi-roncom case in 2010, in Café de Lecq Limited -v- R.A. Rossborough (Insurance Brokers) Limited the court found that the Broker had negligently failed to draw its client’s attention to the terms of, and the consequences of not complying with, a key warranty.

The claim related to a fire at the Jersey beach Café de Lecq, caused by an overheating deep fat fryer, which resulted in the café being totally destroyed. The policy contained a warranty that stipu-lated that the fryer be fitted with a thermostat with an automatic cut-out in the event of overheating.

Breach of WarrantyThe fryer was not so fitted and the insurer Axa rejected the claim for breach of warranty. Following this, the claimant sued its Broker for negligence for not making them aware of the requirements of the warranty and the consequences of not complying with it.

Rossborough defended the claim on the basis that the person they dealt with was an experienced insurance buyer and in corre-spondence with him Rossborough made it clear that he had to read the accompanying policy documents where he could have seen the warranty.

The court rejected this argument and the judge said: “… simply telling a client here is the policy documentation: be sure to read

it and check that it meets your requirements is not good enough, irrespective of the client’s experience in insurance matters.”

This case brought to the attention of the court that: “The process for selling package policies is driven by considerations of speed and economy which may have advantages for all concerned; it may also entail significant risks for the client as was found to be the case here.”

“The automated process is designed to minimise the time and effort that the Broker has to spend on the matter and to transfer responsibility for getting things right to the client, thereby draining the Broker’s role of much of its raison d’être.”

The judge went on to say: “… (the automated process) is liable to foster a situation in which the Broker becomes more closely allied with the insurer whose policy documentation he is generating than is healthy, to the detriment of the client whose interest he is sup-posed to be looking after.”

What are the implications for Brokers?Neville Miles, a colleague at Lockton U.K. commented “Brokers who rely too heavily on automated selling processes risk being judged to have failed to exercise reasonable care and skill in dealing with their clients and risk being found to be negligent.”

This case demonstrates that Brokers cannot plead that they cannot afford to properly advise their clients; this clearly includes taking reasonable steps to ensure that onerous aspects of policies sold to clients are drawn to their attention.

One can reasonably assume going forward that Irish Courts will adopt a similar approach to their counterparts in Britain.

“… all been inspired by the Olympics … now touch those toes … touch those …”

The BROKER

Autumn 2012 31

The BROKER

RACHEL DOYLEChief Operations Officer

PIBA

Mortgage Survey Quarter Two 2012PIBA surveyed its mortgage members again for Quarter Two 2012 to find out what changes, if any, may be happening in the market place.

It showed that 55% of Brokers are seeing an increase in de-mand for mortgages, the same level as Quarter One. So, people are beginning to think about purchasing a home.

The 2011 census figures published on the 30th of August showed that the number of households in Ireland renting their accommodation has increased by 47% since 2006. These new figures clearly indicate a level of pent-up demand but the ques-tion is, why are people not buying?

Twenty-six per cent of PIBA Brokers surveyed attributed the increase in demand to people feeling that it is as cheap to buy as to rent.

To test this I did a comparison of two three-bed proper-ties on the same road in Dublin 6W. The first property on this road is currently being advertised at a rental price of €1,500 per month.

The second property is on the market for €260,000. Tak-ing a mortgage of 90% on this property over a 30 year period at a rate of 3.24% would give you a repayment cost of €1,018 per month (this does not take into account any mortgage tax relief that may apply).

This example supports our members’ opinion that in areas of high rental yields there is a strong financial rationale as to why someone would look to buy rather than rent. There can be a substantial reduction in monthly outgoings.

PIBA members say that while demand remains consistent and strong, the rejection level on mortgages is still way out of line.     Twenty-four per cent of Brokers say that 80% of cases submitted to lenders are still being declined. And 31% say that the main reason given for refusal was “Repayment Capacity was not shown”. Repayment capacity is all about demonstrat-ing to the bank that there is enough money left over each month after expenses to pay a mortgage. Someone looking for a €180,000 mortgage at 3.24% over 25 years would have a monthly repayment of €876.

The banks will then ‘stress test’ the repayment: they will look at the potential borrower’s situation to see if s/he can with-stand an interest rate increase in the future.

While repayment capacity may be preventing some poten-tial borrowers getting onto the property ladder, when asked

what the biggest impediment to buying a property was, 73% of Brokers said “Lenders not willing to lend”. This figure is up from 61% in Quarter One 2012, an increase of 12%.

On the whole there has been a very dramatic drop of over 94% in lending for house purchase since 2006 and the recent Irish Banking Federation/PwC Mortgage Market Profile figures show €524 million  in new mortgage lending for the second Quarter of this year. This illustrates just how steeply the lending market has fallen. While a substantial drop would have been expected in the current economic climate, the experience of PIBA Brokers is that current lending figures go nowhere near meeting demand for mortgage credit.

Of those lenders who are willing to lend, 56% of Brokers stated that AIB is lending the most, followed by Bank of Ireland/ICS (36%).

In the most recent Central Bank monthly statistics lending for house purchase was 2.1% lower on an annual basis in July 2012.

On a more positive note there is an improvement in senti-ment among consumers. The survey found that fear about the economic situation and the future is registering at only 15%, down 5% on Quarter One.

  In relation to the issue of distressed mortgage holders the survey also shows that over 65% of Brokers are assisting mortgage holders in difficulty to negotiate with their lenders and that most lenders are now willing to enter into arrange-ments. There is a positive and discernible change here but the experience can be mixed. A number of different arrangements are being entered into, the most common being repayment holidays or interest only payments. There is a question hanging over whether or not these provisions are being made too late when mortgage holders are already in arrears. Earlier interven-tion in a situation where, for example, the main income earner becomes unemployed allows the mortgage holder to take the break before it becomes an arrears issue. This would eliminate some of the costs involved for all parties.

Unfortunately the increase in arrears is likely to continue in the short term until more lenders are forced to reach real-istic, sustainable and consistent solutions. This should begin to happen as we approach the introduction of the Personal Insolvency legislation.

It is in the interest of everyone in society and the economy that the credit and arrears issues be addressed in a fair and equitable way. A floor needs to be established so that all sides can move on and a level of normality can begin to be restored.

“At Zurich, we like to talk about it.”

Zurich Insurance plc is regulated by the Central Bank of Ireland.

General Insurance

Our award winning claims service places a dedicated claims handler at your service from the moment of notification. That’s a voice on the phone in Dublin or Wexford, someone who’s ready and willing to help. As part of our ongoing Broker Commitment Programme, you can rely on our experienced panel of technical specialists to deliver when it matters most.

Talk to your Business Development Executive, or go to zurich.ie/brokers

The BROKER

Falling Interest Rates to challenge the InvestorThere is an interesting dynamic at play in the US market pres-ently and it has existed now for a number of years. Interest rates are close to zero! For the investor this has led to a difficult conun-drum: where to put your money? There is no sign the economy is going to accelerate soon so property prices are static. Interest rates are zero in the short term and even the 10 year bench mark bond is 1.75%. This is lower than the rate of inflation. At best the economy is bouncing along the bottom, not falling but failing to show real signs of growth. It looks likely the interest rate environ-ment is fixed for some years to come. Investors desperate for a return have only the stock market to turn to. Normally in a reces-sion the stock market is to be avoided but the depressed return on deposit linked investments has tempted those with some savings to ‘spin the wheel’. Americans like the stock market, indeed holding a portfolio of stocks is in their DNA, but the stock market is no alternative to capital guaranteed investments.

In the core Eurozone countries the same problem exists. In Germany they even have negative interest rates on some invest-ments. At the time of writing we are awaiting Mario Draghi (head of the ECB) to produce his bond buying programme, the purpose of which is to drive down short term interest rates in the periphery countries. If he is successful yields out to three years could fall dramatically. This could even be combined with a cut in the ECB rate to .5%.

In Ireland investors and savers are enjoying high interest rates, right outside the yield curve. Frankly to date all the pain has been on the borrower. Despite low interest rates abroad, funding costs have only increased for the hard pressed mort-gage holder or SME. We all know the reason why: the country and all the banks are bust. Low credit ratings lead to higher yields. The country and the banks have seen an outflow of funds and all efforts have centred on restoring liquidity to the failing institutions. Is this about to change?

I have respect for the NTMA: they built a pension reserve of €20bln during the ‘Celtic Tiger’ years. Someone was planning for our future. Sadly it had to be used to bail out our dysfunc-tional banks. However their recent return to the bond market

leaves me baffled. They have just paid approximately 6% for €5bln worth of funding, stretching in maturity from 5 to 35 years. The correct math for a functioning economy is to fund at interest rates at or below your growth rate. Our current growth rate is about 1%! The reasoning behind this strategy is beyond my understanding. Is it politi-cally driven, i.e. ‘we are back in the bond markets’? Or do they know something we don’t? Either way this cannot continue; to fund at this sort of level when our growth is slowing is suicidal. Combined with Mr Draghi’s plan to

drive down sovereign bond yields this exercise looks decidedly political, but certainly unsustainable.

Likewise the banks have been paying up for corporate and retail deposits since the crisis began in 2008. Remember that any deposit in an Irish financial institution is subject to the Govern-ment Guarantee. The cost of the guarantee is roughly 1% on top of the interest rate paid to the customer. This puts the funding cost of deposits to Irish financial institutions at between 5 and 6%. Loan rates in a lot of cases are lower. Mortgage yields, taking tracker and variable together, certainly are. Loan rates to SME’s have been rising but their ability to pay is diminishing. The banks have been under pressure from the Troika to improve their depos-it to loan ratio but it comes at a severe cost. Look at permanent tsb’s half year results and you can get a snapshot of the size of the problem. These banks are haemorrhaging losses. They have been re-capitalised but the loan versus deposit rate differential means they will continue to bleed into the future. Something has to give and the only solution is to slash the rates on the deposit side. Even the Troika has recognised this and has relaxed the de-posit to loan targets. Therefore traditional deposit rates paid by Irish banks are likely to be a lot lower in the near future.

The coming years will be difficult for the investor. Achieving an acceptable credit risk allied to a reasonable return will be a struggle. Traditional investor products which rely on a deposit return to achieve a capital guarantee will not work. Leaving de-posits in low ranking banks for a minimal return makes no sense. Deposits in creditable institutions will return less than the rate of inflation.

Investors and the people who advise them will have to look elsewhere. There are returns out there. Corporate bonds for example can yield a decent return. Large corporate risk can be more attractive than banking risk these days. Bonds are liquid and money can be accessed easily, unlike structured deposits or investments. Like our American cousins the equity market or indeed the commodity market might become attractive. Outright equity purchases on single stocks will remain extremely dangerous but ETF’s (Exchange Traded Funds) offer a low cost multi exposure alternative. Everyone should have exposure to oil and food commodities in their portfolio; they are the costs we are exposed to most when we retire.

Good returns are out there but they will not be where we traditionally look for them.

It is up to the investor and the financial advisor to face the low interest environment ahead by up-skilling on the technology and product that is available to offer a return.

Peter Brown is the main lecturer and Founder of the Irish Institute of Financial Trading (IIFT.ie). As Executive Chairman of IIFT, Peter has been at the vanguard of developing training courses for would-be participants of the financial markets. He also delivers seminars on a monthly basis.

PETER BROWNFounder

IIFT

Autumn 2012 33

“At Zurich, we like to talk about it.”

Zurich Insurance plc is regulated by the Central Bank of Ireland.

General Insurance

Our award winning claims service places a dedicated claims handler at your service from the moment of notification. That’s a voice on the phone in Dublin or Wexford, someone who’s ready and willing to help. As part of our ongoing Broker Commitment Programme, you can rely on our experienced panel of technical specialists to deliver when it matters most.

Talk to your Business Development Executive, or go to zurich.ie/brokers

The BROKER

34 Issue 38

“Selling trust is a crucial, critical success factor for

Brokers.”

The BROKER

DERMOT McCONKEYDermot McConkey Development & Training Ltd.

Trust is hard to Build, easy to Break and nearly impossible to Rebuild“Everything takes longer now. I’m chasing five people at present to complete business with them but they are all so slow to make up their minds. They want more time to think about it. What have they to think about?”… so said a frustrated Broker to me recently. This mirrors typically what I am hearing on courses every day at present in the insurance industry. Selling in tough times has never been so slow and challenging.

Our current unstable, in the main buyer’s market shows that people are reluctant to spend money, particularly on things that “have not yet happened”! By that I mean, insurance often protects against future disaster, life or general, and since the disaster is not on the immediate horizon now, people believe it won’t happen to them so… no need, no want, no rush, no do. One of the main reasons people are reluctant to invest in anything at present, including insurance products, is the lack of motivation and trust that currently exists in the world at large. The pillars of society have been decimated. Look at the image of the Church, the Banks, the Stockbrokers, the Politicians. All at their lowest level ever and yet not so long ago, these people were admired, respected and valued.

Customers want to know they can trust you. So, can you and your staff ‘sell’ it? I believe selling trust is a crucial, critical success factor for Bro-kers at present. It is as important as regulation and compliance, factfind-ing or selling product benefits. I’ve met staff in Brokerages, indeed Bro-kers themselves, who are not sure how best to sell the trust factor. Well in this article I thought I’d take the opportunity to share with you a number of suggestions for doing just that.

QualificationsI know it is obvious but promote the fact that you and your staff are qual-ified, by examination and experience, to offer the best advice around.

TestimonialsTestimonials are the greatest proof that you offer qualified professional advice and service. Collect testimonials from happy clients. This is called the Law of Social Proof or social validation. Trust in action if you like…safety in numbers.

KAMTell them they will have a dedicated Key Account Manager (KAM) if they do business with you and offer 24/7/365 availability to them. While most will not need this type of dedication or time commitment, it reassures them you will be there, no matter what, if ever they have insurance issues or concerns. They will not necessarily have that level of support with a direct or online company or Bank. Trust in action again.

GuaranteesOffer guarantees if at all possible with the products you sell, the service you offer, the communication processes you promote.

Under promiseCarry out promises. If you say you’ll do something, do it.

Introduce your back-up, team membersIntroduce prospects and clients to others in your team (if you have them). Inform them of what your staff are responsible for and give them communication contact points with them, e.g. email addresses, direct line numbers, mobile numbers, in case you are ever not available.

Head and Heart questionsAsking factual and emotional questions is another trust builder, provided you pay attention and provide good eye contact. If face to face, actively listen to their heart-felt responses and summarise their points regularly to make sure you understand their point of view.

Provide proofOffer proof of the value of your service through story telling. Real life case studies or examples of both successful and, perhaps, not so successful outcomes can help a prospect or client relate to the chal-lenges they face and reassure them that you can provide the happy ending.

ReputationTaking it that you have a good one, I suggest that you and your staff tell prospects and clients that you are “proud of your reputation in the area of … (e.g. your customer service, your claims handling, your inde-pendence, you being a member of the Professional Insurance Brokers Association, your annual review process). “Good reputation” to prospects and clients can mean consistency, reliability, dependability, less risk and most importantly, trustworthiness! Why? Because a reputation is earned, not bought.

Service back-upTell them how to contact you (perhaps by email, mobile, direct line, call-ing in?), times to contact you, who to contact if you are not present, why they should contact you (e.g. if they have anything that worries them, a pending claim perhaps, any insurance related matter, a request for quo-tations for new business, comparisons with other offers, general interest in promoted products / services).

Trust is hard to build, easy to break and nearly impossible to rebuild. It is what can make you different in a very scary, ever changing world. Trust means telling the truth over time. Do you?

Use it well and I trust you will win more business.

Dermot McConkey FSII, MIITD Dermot McConkey is Managing Director of Dermot McConkey Development & Training Limited, a business development and sales training consultancy. www.mcconkey.ie.

THE HIGH COURT OF IRELAND COMMERCIAL

2012 Record No. 394 COS

IN THE MATTER OF AVIVA INSURANCE EUROPE SE AND IN THE MATTER OF AVIVA INSURANCE LIMITED

AND IN THE MATTER OF THE ASSURANCE COMPANIES ACT 1909 OF IRELAND

AND THE INSURANCE ACT 1989 OF IRELAND

AND THE EUROPEAN COMMUNITIES (NON-LIFE INSURANCE) FRAMEWORK

REGULATIONS 1994 OF IRELAND

NOTICE IS HEREBY GIVEN that Aviva Insurance Europe SE has made an application by Petition to the High Court of Ireland seeking the sanction of the High Court, pursuant to the Assurance Companies Act 1909 of Ireland and the Insurance Act 1989 of Ireland and the European Communities (Non-Life Insurance) Framework Regulations 1994 of Ireland, to transfer to Aviva Insurance Limited all of its rights and obligations under policies written by it in Ireland and the United Kingdom.

Copies of the proposed Scheme of Transfer, whereby the said transfer is to be effected, the Petition presented to the High Court of Ireland on the 9th day of July 2012 and the Scheme annexed thereto, the Affidavit of Seán Egan dated 6 July 2012, Affidavit of Clifford James Abrahams, dated 6 July 2012, the exhibits to the said affidavits, the Independent Actuary’s report and a summary of the Independent Actuary’s report (the “Transfer Documents”) are all available for inspection at the registered office of Aviva Insurance Europe SE at One Park Place, Hatch Street, Dublin 2, Ireland and at the registered office of Aviva Insurance Limited at Pitheavlis, Perth PH2 0NH, Scotland, at the offices of Aviva Insurance Europe SE’s legal advisors, Matheson Ormsby Prentice at 70 Sir John Rogerson’s Quay, Dublin 2, Ireland and at Matheson Ormsby Prentice’s London office at 16th Floor Heron Tower, 110 Bishopsgate, London, England, EC2N 4AY from 1 September 2012 until 31 October 2012 between the hours of 9am to 5pm Monday - Friday (public holidays excepted). Copies of the Transfer Documents will be made available free of charge to any policyholder or other person with sufficient interest in the transaction requesting such copies and are also available for viewing and / or download online at www.aviva.ie/regnotice. Policyholders may also contact the dedicated policy holder telephone line 00 353 1 665 0770 from Monday to Friday between the hours of 9am and 6pm.

A Supplemental Report will be prepared by the Independent Actuary and will be available at the above addresses and online at www.aviva.ie/regnotice in early October 2012.

The hearing of the Petition will be heard by the High Court of Ireland on Wednesday the 7th day of November 2012 at the Four Courts, Inns Quay, Dublin 7, Ireland at 11am.

Any person who wishes to be heard on the hearing of the said Petition should notify the Petitioners’ solicitors, Matheson Ormsby Prentice, 70 Sir John Rogerson’s Quay, Dublin 2, quoting reference DM 1067/105, in writing no later than Wednesday, 31 October, 2012 at 5pm of his or her intention to appear at the hearing of the said Petition and should indicate to the said solicitors whether such person or persons support intend to support or oppose the said Petition and further should, by the said time and date, file in court and furnish to the Petitioners’ solicitors such evidence by way of affidavit as is proposed to be relied upon at the hearing of the Petition by such person.

Dated: this 1st day of September 2012

Matheson Ormsby Prentice, 70 Sir John Rogerson’s Quay, Dublin 2, Ireland

153525_AVIVA_LegalNotice_RestOfWorld_fp_InsBrkAssMag.indd 1 01/08/2012 16:48

36 Issue 38

MDRT 2012This year the MDRT annual meeting took place in Anaheim, California and had 5,900 attendees traveling from 63 different countries.

The event took place from the 11th to the 13th of June 2012 and surpassed itself with the extraordinary speakers and amazing events held for attendees.

As always there were ample opportunities for attendees to interact with Financial Advisors from all over the world. Outside the conference attendees gathered at social events in informal settings such as the opening night concert, the famous Irish Night and other stimulating and interesting events organised by both the MDRT and other attendees.

Many PIBA members travelled to Anaheim to experience the MDRT 2012 annual meeting. One of those members was Anthony Jones of AMJ Financial, Wexford, who spoke about “Facing up to objections” at one of the focus sessions attended by 1,500 delegates.

To qualify to be a member (for the first time) of the MDRT you

must reach certain production requirements, in addition to fulfilling other requirements. To become a member in 2012 you must have either earned €80,100 in commission or produced €160,200 in life and pension premiums during 2011.

If you are interested in becoming a member of the MDRT please find details below. If you would like to talk to a Broker who is already a member of the MDRT, please contact Rachel Doyle at (01) 492 2202 or rachel.doyle@piba.ie.

HOW TO BECOME AN MDRT MEMBERMDRT have a website (www.joinmdrt.org) devoted to advisors inter-ested in joining.  Prospective members can download members-only content to give them an idea of the benefits of membership.  You can also learn about how to qualify and how to request and submit an application.

Terry Hardiman, Paul TomsettMaurice Hedderman, Mikki Wilder Rachel Doyle, Michael Deasy

Liam Carberry (PIBA Chairman) Jennifer Borislow (MDRT President) Rachel Doyle, Anthony Jones

UK and Irish Delegates

Anthony Jones, Brendan Glennon Anthony Jones (MDRT Speaker) D. Scott Brennan (Incoming MDRT President)

Paul Tomsett, Kevin Newman Maurice Hedderman, Liam McGory

Michael Sheehan (carrying the Irish Flag at the MDRT flag ceremony)

Jarlath Jordan, Patrick McEntee

The BROKER

The BROKER The BROKER

PIBA Member ProfileName : Damian CondonCompany name : Gresham Wealth ManagementLocation : DublinEstablished : 2012

BackgroundMy decision to set up in business came from a desire to have greater control over my own destiny. I turned 40 in January and having started my working life at 20 with various roles in the financial services sector I made the decision in March 2012 and began the process of becoming regulated by the Central Bank as an Authorised Advisor (AA).

Since 2003 I had worked as a director in a Brokerage in North Dublin and built up a very valuable and enduring client book. The downturn that started in 2008 has impacted all Financial Brokers but the most important aspect from my perspective has been the strength of the relationships I had built with clients and their families since 2003. This is crucial over the longer term. I realised that the hard work and relationship building in the earlier years had laid a solid foundation that would stand the test of time. This made my decision to go it alone and establish myself in business a lot easier knowing that the clients would remain supportive and that they were ‘buying in’ to me as opposed to a name on a plaque or a sign over a door.

How has your authorisation gone?It has been a slow process and the last six months have been frustrating given that I have the client base and the years of experience as a QFA. I would have expected to have my authorisation at this stage.

There has been the good - the support from PIBA has been invaluable - and then the bad: the lack of communication from the Central Bank in the application process.

On the positive side PIBA provided everything that I needed to submit my application form from basic advice on form filling to assisting in organising my PII cover. As a new member of PIBA I’ve been impressed by the professionalism of the organisation and look forward to their support in the months and years to come.

On the negative side the experience with the Central Bank has been very disappointing. Their level of understanding in dealing with applicants seems to be totally inadequate. Correspondence received has been minimal and emails that I have sent looking for an update receive the same stock answer along the lines of ‘Computer says No’. 

Looking ahead I would like to see some sort of joint steering committee established between the Central Bank and PIBA to put a structure in place for those looking to become authorised. It would make life a lot easier for all if a transparent system or roadmap was established.

What do you see as recurring issues in our industry and how can the industry find solutions to these?There are many areas that require change and improvement. I think the important issue for now is for the Financial Broker brand to succeed. I would have always been critical of the banks and unfortunately their actions have done so much damage to the public’s perception of the financial services sector in general that getting people to put their faith back into our industry will take time.

The establishment of the Financial Broker brand will offer an alternative to the banks and this will hopefully encourage the beginning of a new era in the sector with the public starting to engage with Financial Brokers and learning the professionalism and dedication that is at the core of our business. I would summarise it in this way: with a Bank you are just a number but with a Financial Broker you are a client!

What do you see as the key areas for Brokers to focus on in growing their business?The relationship with clients: I have always believed that staying completely focussed on the client is the key for long term success. There are obviously different types of clients and different types of relationships that are built but the client must always know how much you value their business - simple things make an enormous difference and if done correctly will lead to more opportunity. A referral for example from an existing client is the highest form of praise and is such a great boost - if these referrals are happening business will always follow.

Interests / HobbiesWith three young children ranging in age from 2 to 9, I think most parents will agree that there is very little time left in a day to pursue other interests. I have always been a sports fanatic so whenever I get a chance to attend or watch a GAA, Soccer or Rugby match I’ll do that. I’m also a lifelong subscriber to the sports channels so I don’t miss out on anything related to sport.

Autumn 2012 37

The BROKER

38 Issue 38

The BROKER

Reviews BOOKS, BLOGS, WEBSITES

KARL DEETEROperations Manager

Irish Mortgage Borkers

Website/Blog: GetRichSlowly.org We all know the adage about ‘get rich quick’ schemes, so taking the reverse stance you find the popular blog and website ‘get rich slow’, which encourages savings and frugality. While it is an American site (full of American lingo and products) the actual concepts are good and can be applied anywhere. Much of the focus is on ways to spend less or find savings in everyday things. This can seem like a boring over-played idea but any time I have spent more than three minutes on the site I have come away with something new. It’s regularly updated and worth checking out.

Columbia University – e-seminars (http://ci.columbia.edu/ci/eseminars/0301_detail.html)You can never be too smart and for that reason I’ll try to cover some free learning resources from time to time. The first one is Columbia University’s ‘Mathematics of Finance’, which is a three-hour series. You’ll need your thinking hat on for this one as it starts at the deep end and goes fast. E-learning hasn’t revolutionised the world (just yet!), but you’ll start to find it becoming more prevalent. There are already LIA courses where the lectures are online only and CPD is going in the same direction. The good thing about this is that you can stop, rewind and go back as much as you like; the downside is that you may well have to do that often because you can’t ask the teacher to clarify their point! Columbia is one of several universities in the US with programmes like this; others are MIT and Stanford (but I’ll save them for next time!)

Revolution by Ron PaulWith the US election coming up soon it will probably be laid out as a ‘Republican vs. Democrat’ stage, which it largely is: then enter Ron Paul. The Texan has been in the House of Representatives intermittently since 1976. He is a libertarian who believes in less government and ending drug prohibition and all the other ideas that probably seem kooky to many of us. In his book Revolution though, he lays out strong arguments for many of his beliefs.

A large bone of contention for him is the presence of American military forces in 146 countries around the world. He thinks that the US should stay out of the business of other sovereign nations; there are probably many in the Middle East who agree!

Libertarians don’t get much in the way of air time in America, or anywhere else for that matter; but it is worth considering their ideals: the notion of government being small, there to serve the people and not to act as a power that can just take over anything due to sheer might.

We all have pension customers who are learning directly the risk of government power: the 1% per year ‘pension levy’ which is on the gross funds will reduce people’s wealth and damage their retirement savings. Unlike management fees, which we can all complain about, the state does nothing to warrant this appropriation; and perhaps we should start to call it and describe it for what it really is – theft. If you were to take money without consent from another person in any other manner you would be in trouble.

And that is why getting some libertarian literature into you could be a good idea. We need to rethink the role of the Irish state: it isn’t there to solve every last problem people may have and it certainly isn’t there to appropriate private funds for its own pet projects. Frederic Bastiat said it best in 1848 when he claimed that “the state is the myth by which everybody endeavours to live at the expense of everybody else”: kind of sums up the pension levy!

39 Issue 3639 Issue 36 Spring 2012 39

EventsPIBA Investment Seminar Series in association with Standard Life, June 2012PIBA in association with Standard Life ran an investment seminar series in June 2012.

The seminars took place as follows: Monday 25th of June 2012 – Radisson Blu Hotel, AthloneTuesday 26th of June 2012 – Clarion Hotel, Cork cityFriday 29th of June 2012 – O’Callaghan Davenport Hotel, Dublin 2Over 300 delegates attended. Three Formal CPD hours applied and these seminars were provided free of charge to PIBA members and their staff.

The seminars and lunch were kindly sponsored by Standard Life.

PIBA Summer CPD Bootcamp, July 2012PIBA held a five hour CPD Bootcamp seminar on Wednesday the 11th of July 2012 in Portlaoise.

The following topics were covered:

• Financial Services Ombudsman Office Update | Tom Comerford, Deputy Financial Services Om-budsman

• Anti-Money Laundering | Ciara O’Sullivan, As-sociate Director, Kinetic Partners

• Data Protection | Billy Hawkes, Data Protec-tion Commissioner

• Compliance Update | Elizabeth Smith, PIBA Compliance Manager

• Ethics | Fergus Bradley, Compliance Solutions & Training Ltd.

Over 290 delegates attended PIBA’s Summer CPD Bootcamp. The bootcamp provided five hours’ CPD for both life and general insurance members and was free for PIBA members and their staff to attend.

This bootcamp was kindly sponsored by Zurich Insurance.

PIBA Online Ethics ModuleAn ethics module will be available to all members free of charge through an e-learning system from October 2012.

This facility has been kindly supported by Wealth Options.

PIBA Trustee Training workshops in association with Zurich LifePIBA in conjunction with Zurich Life are running four trustee training workshops in September 2012.The dates and venues are as follows:Tuesday September 18th : Meath (City North Hotel)Wednesday September 19th : Cork (The River Lee Hotel)Tuesday September 25th : Athlone (The Radisson Blu Hotel)Wednesday September 26th : Dublin (The O’Callaghan Davenport Hotel)The format is the same for each session:Tea/Coffee and Registration from 9.30 am; Training Course: 10.00 am – 12.00 pm.This training is free of charge for all PIBA members, their staff and clients. Two hours’ CPD has been awarded by the LIA.These trustee training workshops are kindly sponsored by Zurich Life.

Upcoming PIBA Events• PIBA will be running a General insurance CPD

Bootcamp on October 2nd.• PIBA will be running seminars in association

with New Ireland on October 9th, 10th & 11th in Dublin, Cork and Galway.

• PIBA will be running a number of Winter CPD Bootcamp seminars in November/December 2012.

For more information on PIBA events please contact edel.morey@piba.ie or audrey.feary@piba.ie.

Legislation and ComplianceMEETINGS

Meeting with the Central Bank of IrelandA delegation from PIBA met with the Central Bank in relation to the Funding Levy on the 26th of July 2012.

Meeting with the Central Bank of IrelandA delegation from PIBA met with the Central Bank on the 12th of September 2012 in relation to a number of Broker issues.

Media CoverageRadio/TV CoverageAugust 8th – Diarmuid Kelly interviewed re: Quinn and non-life levy [NORTHERN SOUND RADIO]

Press Coverage (Print and Web)June 10th – Movers & Shakers [SUNDAY BUSINESS POST]June 10th – Mortgage repayment ability crucial [SUNDAY BUSINESS POST]July 25th – House price fall reverses upward trend seen in May [IRISH TIMES]July 25th – No sign of let up as house prices tumble [IRISH DAILY MAIL]July 26th – House prices in capital ‘stable’, insists NAMA [IRISH INDEPENDENT]July 26th – Mortgage demand continues to rise as banks tighten rules [IRISH TIMES]July 27th – AIB to raise variable mortgage rate by 0.5% [RTÉ]July 28th – AIB piles pressure on homeowners by raising variable mortgage rate [IRISH INDEPENDENT]July 29th – Mortgage rates among Europe’s lowest [SUNDAY BUSINESS POST]July 29th – Property price fall ‘perplexing’ [SUNDAY BUSINESS POST]August 21st – First rise since 2006 in new mortgage loan numbers [IRISH TIMES]August 26th – Banks ‘reject 80 per cent’ of mortgage applications [SUNDAY INDEPENDENT]August 31st – Families denied step on property ladder [IRISH DAILY MAIL]September 6th – Cantillon – Little cheer for troubled mortgage holders with debt advisory service [IRISH TIMES]September 7th – ECB rates remain unchanged amid fears of inflation [IRISH INDEPENDENT]September 9th – Mortgage advisory scheme criticised by brokers [SUNDAY BUSINESS POST]

OTHER MEETINGS

The BROKER

PIBA Update

Autumn 2012 39

Rachel Doyle (Chief Operations Officer at PIBA) and Róisín Clarke (Financial Broker) pictured meeting Finian McGrath TD in Dáil Éireann in September as part of PIBA’s campaign to meet Government parties and all political groups to impress upon them the need to ensure that Minister Joan Burton’s service for mortgage holders does not continue to discriminate against Financial Brokers and to ensure that a similar situation does not arise in relation to Personal Insolvency Practitioners under the Personal Insolvency Bill.

40 Issue 3640 Issue 36

Quarterly Crossword Competition

The BROKER

40 Issue 38

HOW TO ENTERSimply complete the crossword puzzle and send your entry along with the form to: Crossword Competition, c/o Salient Print Management, 37 Woodlands, Naas, Co. Kildare.Entries to arrive not later than 31st October 2012.

Name: ..................................................................................................................................................................

Company: ..................................................................................................................................................................

Address: ..................................................................................................................................................................

..................................................................................................................................................................

Phone: ..................................................................................................................................................................

SOLUTION to the Summer 2012 CrosswordCONGRATULATIONS to competition winnerLorraine Breen,Valette & Kennedy Insurance,Well Road,Nenagh,Co. Tipperary.

WIN a two night stay* at Tinakilly Country House Hotel & Restaurant, Co. Wicklow* Includes two nights bed & breakfast and dinner on one evening

Tinakilly House is a Victorian mansion, built in 1883, set in seven acres of beautiful mature landscaped gardens with stunning views overlooking the Irish Sea.The hotel boasts 51 antique laden bedrooms, the award winning Brunel Restaurant, private dining suites and meeting rooms. Also available for exclusive hire. We specialise in bespoke weddings, meetings and events, corporate leisure and team building activities.The ambience of the hotel, superbly appointed bedrooms and the excellent international reputation of our cuisine combine to make Tinakilly a much sought after venue for prestigious business gatherings, corporate entertainment and leisure breaks.Rathnew, Co. Wicklow, Ireland Tel: 0404 69274 (Intl. +353 404 69274) | Fax: 0404 67806 (Intl. +353 404 67806) | Email: reservations@tinakilly.ie | Web: www.tinakilly.ie

General Knowledge CrosswordACROSS6 In Roman mythology, the god of water (7)7 The Eiffel Tower is a tourist attraction in this city (5)9 ‘______ Elliot’, the smash hit London musical (5)10 Olympic event featuring Finn and Laser races (7)12 Sporting event held in London from August 29 to September 9 (11)14 Scottish cyclist who now has six Olympic gold medals (3,5,3)18 Violent rotating windstorm (7)19 Upper part of a steeple (5)21 New Delhi is this country’s capital city (5)22 Shylock’s daughter in ‘The Merchant Of Venice’ (7)

DOWN 1 Detective drama starring Kevin Whately and Laurence Fox (5) 2 Sir Paul McCartney’s daughter, who is a fashion designer (6) 3 U2 song which has the line ‘Have you come here for forgiveness?’ (3) 4 Fast pace for a horse (6) 5 John Smith succeeded this Welsh politician as leader of the Labour Party (7) 8 Type of music from the West Indies (7) 11 Presenter of the TV show ‘Who Wants To Be A Millionaire?’ (7) 13 Indian dish made with meat, fish or vegetables and highly seasoned rice (7) 15 Football champions in Scotland in 2012 (6) 16 Compete against (6) 17 Jones, who performed at the 2012 Diamond Jubilee concert using a hula hoop (5) 20 Number of years in a decade (3)

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New Ireland Assurance Company plc is regulated by the Central Bank of Ireland. A member of Bank of Ireland Group.

MORE PIBA Ad.indd 1 03/09/2012 11:59

* Returns based on an independent survey July 2012. ** Biggest refers to market capitalisation.† Financial rating is for the Zurich Insurance Group.Source: Bloomberg (market capitalisation) and Standard & Poor’s (financial ratings) August 24th 2012.Zurich Life Assurance plc is regulated by the Central Bank of Ireland.

“A pensionI can count on.

That’s it. I’m movingto Zurich.”

Over the last ten, challenging years, Zurich has been consistently the best performer* in the Irish marketplace.

Here’s what we can provide your clients with:

The strength of the biggest company providing pensions

and PRSAs in Ireland**.

The security of a world class AA- rating†.

A wide and diversified fund portfolio.

Unrivalled, award-winning customer service.

All things considered, can you think of a single reason whyyou wouldn’t recommend your clients move to Zurich?For more information, call your Zurich Life Broker Consultant.