“My Customers The Broker...THE OFFICIAL MAGAZINE OF THE PROFESSIONAL INSURANCE BROKERS ASSOCIATION INSIDE THIS ISSUE The Broker ISSUE 37 SUMMER 2012 Financial Broker – The Next

THE OFFICIAL MAGAZINE OF THE PROFESSIONAL INSURANCE BROKERS ASSOCIATION

INSIDE THIS ISSUE

The BrokerISSUE 37 SUMMER 2012

Financial Broker – The Next Steps 5

Back off Bankers 26

The Broker is going online 12

REGULARSChairman’s Remarks .......................................................... 1Editorial .................................................................................. 3PIBA CEO ............................................................................... 5PIBA Member Profile: Momentum FInancial Services Ltd. ......................... 37Book, Blog & Website Reviews ................................... 38Crossword ........................................................................... 40

OTHER ARTICLESThe Importance of Having an Investment Philosophy ............................................................................. 9The Gambler’s Fallacy – A costly mistake for investors too ............................. 10www.help.me – Online Opportunities for Financial Brokers ........... 11The Importance of Effective Risk Management ..... 14BCP Capital Secure Bonds ............................................ 16A Smarter Approach to Retirement Savings ........ 16PIBA Meets: Tony Lawless, General Manager – Brokerage, Irish Life ............... 20PIBA Conference 2012 (photo spread) .................. 22Basic is the new Advanced .......................................... 24One Marshmallow or Two? .......................................... 28Looking to Breathe Life back into Protection ....... 30The Issue of Debt ............................................................ 31MyFolio – Taking the Complexity out of Investing ................. 33The Lessons learned from 2008 ................................ 34PIBA at BIBA ..................................................................... 36

NEWSIndustry Round-up ............................................................. 6PIBA Update ...................................................................... 39

“My Customers are thinking about life in a different way.”

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

Think New. Think LifeProtect.

Call your Zurich Life Broker Consultant for

more information.

As your Customers evaluate their needs and priorities ever more closely, they depend on you to recommend the solutions they require at a price they can afford. And with LifeProtect, our new protection suite, we can make your job a whole lot easier. That’s because we now offer the most comprehensive range of Protection covers while still continuing to provide highly competitive premiums.

LifeProtect offers your Customers:

NEW Cancer Cover

NEW Life Cover (Monthly Income)

ENHANCED Serious Illness Cover

ENHANCED Partial Payments covered

REDUCED Hospital Cash Cover premiums

GREAT existing cover & benefits

“That’s it. I’m moving to Zurich.”

PIBA Protection Ad A4 0512.indd 1 01/06/2012 11:22

The BrokerNOW IN PRINT &

ON THE WEB

SCORE SCORE

Committee MembersLiam Carberry ChairmanPeter Breen SecretaryLiam Carberry TreasurerPhilip BrennanDixie CollinsRodney CrolyMaurice HarnettKevin Meehan

Sub-Committee ChairpersonsLegislation & Compliance Philip BrennanBroker Representation Kevin MeehanP.R. & Communications Donal Milmo-PennyBusiness Development Liam Carberry

Chief Executive: Diarmuid Kelly

Irish Broker - Critical Illness - Ad.indd 1 01/03/2012 16:27

...building better business - together

The Broker14B Cashel Business Park, Cashel Road, Crumlin, Dublin 12Tel: (01) 492 2202 Fax: (01) 499 1569Email: [email protected] Website: www.piba.ie

Editorial Group Edel Morey, Karl Deeter, Anthony Jones, Rachel DoyleEditor Donal Milmo-Penny

Publisher: Salient Print Management, Naas, Co. Kildare. Tel: (045) 866057 & (087) 254 3463Design: Salient Print Management, Naas, Co. Kildare. Tel (045) 866057 & (087) 254 3463

Views expressed by contributors or correspondents are not necessarily those of PIBA or the Publisher and neither PIBA nor the Publisher accepts any responsibility whatsoever for them.

Spring 2012 1Summer 2012 1

LIAM CARBERRYPIBA Chairman

Chairman’s RemarksI would like to thank you the members for bestowing on me the honour of being Chairman of this great organisation at our recent AGM. As you may be aware, this is my second time in the ‘hot seat’, having had the privilege of serving as Chairman in the 2006/2007 term.

I would like to pay tribute to your outgoing Chairman, Jarlath Jordan, who has worked tirelessly to modernise and refresh our subcommittees and policy agenda over the last number of months. We now have a powerful vision and focus of where we want to go as an Association in the months and years ahead.

I would like to make a few comments to you about change at this time. The protracted economic crisis has put unprecedented pressure on all small businesses — none more so than Brokers. We must respond to this by saying “How can we do things better in our business?” Anthony Robbins said if we always do what we always did, we’ll always get what we always got. I think that view is optimistic in today’s climate. I think change is a must for survival for all Financial and Insurance Brokers.

We need to invest in ourselves. We need to invest in hard skills (courses and education) and soft skills (client factfinding). We need to upgrade and invest in digital media and perhaps the emerging social media. Web presence is a serious credibility factor now for Brokers whether their customers buy online or not. Finally we need to have a well thought out and consistent marketing plan that is reflective of our needs and ambitions.

On that last point, I was pleased to see the publication by PIBA of three marketing documents last month:

1. A Guide to Marketing your Business for Financial Brokers.

2. A Guide to Digital Marketing and Social Media Planning.

3. PIBA Compliance Marketing Guidelines.

These documents give a complete and comprehensive guide to marketing your business for Financial Brokers, and I would like to thank Irish Life for sponsoring these. All

members should read these and make a marketing plan for the next twelve months. Not only will this give you a structure to increase your sales but it will make you more positive about your business.

PIBA is about giving you — our members — real support and I am sure you will find these marketing guides valuable. This builds on our earlier compliance support during the year when we helped members adjust to the significant extra regulations with the new Consumer Protection Code, Minimum Competency Code and Fitness and Probity regime:

Seminars in January and February.

returns.

business, etc.)

PIBA also was instrumental in launching the enhanced

and related deals). We brought OmniBroker and FreeQuotes as free benefits to Financial Brokers in place of Assurelink and we continue to work with Broker Information Services (Best Advice) to improve these services.

Our biggest achievement remains the agency agreements with life offices. Eleven years’ work was completed in 2006 and these agreements remain the bedrock and security of Financial Brokers. In these uncertain times in particular, they are a source of reassurance to members.

As your Chairman, I aim to build on this proud record of achievement. With your support, the best of PIBA is yet to come.

Liam CarberryPIBA Chairman

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.

Spring 2012 3Summer 2012 3

DONAL MILMO-PENNYEditor

Editorial

THE PIBANUMBERHow do you see consumers’

perception of investment conditions changing in the coming three months?

Like many of you I attended PIBA’s annual conference and AGM in the Aviva Stadium recently. I went there on the day with a curiosity as to how the broader Broker community is feeling, despite recent industry statistics on volumes being down. What I was struck by was the pervasive positivity that ran through the AGM. Sure, you expect that at the conference, but the positivity coming from the floor of the AGM will be my abiding memory of the day. It was not the positivity of those clinging to thin strings of hope but one of substance from people of character and resolve. I take the day to reflect on the year so far and how that contrasts with the year preceding. I am ahead this year; it’s a reason for cheer, so after the conference I stayed for a beer (or several), but that’s another story.

As you may have noticed the Financial Broker project featured prominently at the conference. I must thank the large number of Brokers who have already signed up and urge you to join them if you have not already: to do so simply call or email the PIBA office. I might take this opportunity to answer the main question asked about Financial Broker on the day: “What is it?” Financial Broker is a branding project for the Broker community. It aims to create a broader awareness of Financial Brokers (those operating in the life and pensions and mortgage market) amongst the public. The project has one core goal: to win a bigger slice of the market for Brokers. This is no small task and no small project. It will benefit your business but needs your support.

None of us alone, or even as a small group, have the resources or finances to achieve what we can together. In the consumer research conducted for Financial Broker we discovered that roughly half of consumers know who you are and what you do; and they like it. What is interesting is the other half, who don’t. We operate in a multi-billion euro market and half the consumers don’t know about you. Imagine what we can achieve by informing them!

Signing up to Financial Broker has many peripheral benefits such as access to the FinancialBroker.ie website to establish a web presence for your business. You will be able to edit your information and put your own content online. You will feature in the “find a Broker” section, thereby generating new leads and business. Anthony

month we are seeking from Brokers could be repaid by a single extra case in five years. This is powerful stuff. I’m signed up; are you?

The BROKER

6.8 %

49.4 %

43.8 %

[A] Improving

[B] Staying the same

[C] Deteriorating

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

“Here’s some help to keep you up to speed.”

Zurich 2012 CPD Programme We want you to be the best you can be. That means providing you with the technical expertise necessary to boost your business performance.

It’s why Zurich was the first to introduce online CPD, and why we now have three online courses along with a range of face to face CPD opportunities available to Zurich general insurance brokers throughout 2012. The way we see it, the more you gain, the more we do.

To find out more about Zurich’s 2012 CPD Programme visit zurich.ie/brokers

General Insurance

Financial Broker –The Next StepsAt its most basic, the aim of the Financial Broker project is to give an identity to the Broker focussed on life, pensions, invest-ments and mortgages. In the same way as an accountant calls themselves an accountant or a solicitor calls themselves a so-licitor, you would describe yourself as a Financial Broker.

Why not stick with Broker? Research indicated that the term Broker was associated with either household or motor insurance in consumers’ minds and that when applied to financial matters, it was associated with stockbrokers. The aim of the Financial Broker project is to create a midspace for the Broker focussed on life, pensions, investments and mortgages. Intuitively most Brokers grasped this because the name Broker or insurance Broker is quite common in descriptions of general insurance firms, but there was a plethora of different names used to describe life and pensions Brokers. That in turn made the notion of national promotion of life and pensions Brokers difficult if not impossible. Indeed the origin of this project was when such national promotion of life and pensions Brokers was first mooted: the question came back — “What are you promoting?” (more about that later).

So for the future we propose the following industry terms:

Insurance Broker General insurance

Financial Broker Life, pensions, investments and mortgages

Naturally when using the term Broker in your firm name or as a description of your firm, you must comply with the new CPC

-tivity is done on a fair analysis basis).

As the CPC guidelines were finalised, the Financial Broker project has been stepped up since the start of this year. In February we issued all PIBA members with a pack outlining the visual look and feel of the new brand and how it can be most effectively incorporated into your letterhead and stationery. The greater the consistency we get in application, the more powerful the brand will be at a national level.

In April we issued the document What is a Financial Broker? to PIBA members. This is a compendium of the international research on the practical value of Financial Brokers, i.e. the value add you give to consumers. The document also addresses some of the issues raised in consumer research about Financial Brokers. We are very grateful for the feedback we obtained from members. We now have a comprehensive reference point for marketing Financial Brokers and we will work over the coming

weeks to simplify and consumerise this document into practical marketing messages.

The missing halfThis project started with the promotion of Financial Brokers in mind. En route, it has given us greater clarity about our pro-fession and a crisp, professional and modern image. But to be

who don’t use Financial Brokers. Within the profession, we know that using a Financial Broker service is a ‘no brainer’ – other ser-vices will only rarely match value or quality of service. So why do so many consumers use banks (even now!) and tied / employee services? And contrary to popular belief, many of these people have sufficient financial resources to make an independent ser-vice attractive.

The answers would surprise and even disappoint Financial Brokers. Some consumers feel the gravitational pull of national banks — a perceived security in dealing with bigger firms. Some consumers believe Financial Brokers will recommend products based on commission incentives – they are ignorant of strict consumer regulation in this regard. For most, there is no appreciation of the value of a Brokerage service. For some, Financial Brokers are simply not on their radar — they don’t know of them or anything about them. Finally it can sometimes be a matter of not knowing where to find a Financial Broker.

It can be disappointing that consumers hold these opinions as they have no foundation. But therein lies the opportunity for national advertising and marketing of Financial Broker services. Consumer focussed messages need to explain the lack of solvency risk, the comprehensive regulation, and the benefits of dealing with a Financial Broker; and there needs to be an easy to use listing of Financial Brokers.

That is where we are going next with the Financial Broker project. We have sought funding from life companies but they have sought evidence first that Financial Brokers are willing to invest in this project themselves. We are therefore seeking

September to go into a ring fenced fund to promote Financial Brokers. The return to contributing Brokers is that they will have a listing on www.financialbroker.ie. By accessing new customers and starting a process whereby there is greater professional recognition of Financial Brokers, the potential payoffs are enormous and we need your support to make this happen.

DIARMUID KELLYChief Executive

PIBA

Summer 2012 5

The BROKER

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

“Here’s some help to keep you up to speed.”

Zurich 2012 CPD Programme We want you to be the best you can be. That means providing you with the technical expertise necessary to boost your business performance.

It’s why Zurich was the first to introduce online CPD, and why we now have three online courses along with a range of face to face CPD opportunities available to Zurich general insurance brokers throughout 2012. The way we see it, the more you gain, the more we do.

To find out more about Zurich’s 2012 CPD Programme visit zurich.ie/brokers

General Insurance

Creating your success throughFinancial Planning

TrustedAdvisor

FinancialGuidance& Choice

ValuableAdvice

6 Issue 36

Industry Round-Up

The BROKER

6 Issue 37

Caledonian Life Market Study – Brokers Beat Banks By €16,000Consumers can save up to €16,000 over the term of their life assurance policy by deciding to purchase life cover from a Broker as opposed to a bank. This is according to a recent market study carried out by Caledonian Life, in which significant price variations were uncovered between life assurance policies purchased from banks, in comparison to those available from Brokers.

As consumers have become more price conscious in recent years, greater competition and increased efficiencies amongst many life companies have resulted in significant decreases in the cost of life cover.

However, Caledonian Life’s recent market analysis highlights the fact that some consumers may not be aware of the fact that banks generally tend to only offer products from one insurer, in comparison to Brokers who have access to multiple product providers.

According to Greg Dyer, Head of Sales and Marketing in Caledonian Life, “The survey revealed a staggering price differential of up to €16,000 between the most expensive bank offering and the best price a Broker can source for a client on the market. Brokers have access to multiple product providers and are obligated by regulation to offer their clients the best product and price to meet their needs.

As the Irish public adapt to these financially challenging times, cost savings are now paramount to any household budget and our analysis shows that an average of €7,700 can be saved over the term of a life assurance policy if purchased from a Broker rather than a bank. This saving could even be the deciding factor for an individual when considering whether or not to take out life cover in the first instance.”

MDRT

MDRT member) gave PIBA members a preview of the presentation which he gave to the 2012 MDRT annual meeting in California.

The MDRT 2012 Annual Meeting took place from the 11th to the 13th of June in Anaheim, California.

Standard Life Financial Confidence Index Retired people in Ireland are now much more confident than the rest of the population when it comes to finances. Out of a score of 100, retired people scored 64.2 compared to the overall Standard Life Financial Confidence Index

The survey of 1,000 adults indicates how different segments of our population have been affected by the economic changes over the last number of years. “Sizeable gaps have developed across some of the age segments. Those aged 45-54 are the least financially secure – they scored an average of 45.3, nearly 19 points below the retired segment” said Brenda Barr, Head of Marketing at Standard Life.

“It’s not that surprising that those in the 45-54 age segment are the most affected by the economic downturn. They would appear to have the most financial pressures – higher mortgage costs, falling house prices and the rising costs of education for those with children. In contrast, retired people would appear to be the least affected by the recession. They probably have their mortgages paid off and their kids are no longer dependent. Many retired people over 65 are also in receipt of an attractive State pension” added Barr.

Get online with AvivaHaving recently announced their return to the

term assurance market, Aviva Life & Pensions have just launched a new Underwriting Requirements Calculator for Brokers. The calculator is designed to help you easily work out the financial and medical underwriting limits for life, specified illness and income protection cover and can be found on their Broker website, www.avivabroker.ie.

Also check out Sales Zone from Aviva: the one-stop-shop to running your own direct marketing term assurance campaign. Visit www.avivabroker.ie the dedicated Broker website today or talk to your Aviva Broker Consultant.

Standard Life on the way to raising €75,000 for Jack & Jill FoundationStandard Life Ireland staff are on target to raise

home nursing care for sick children nationwide. “We set a target to raise €75,000 by the end of 2012 and to date we have raised over €45,000. We’ve done this through a diverse range of activities such as running 10ks, full marathons, office cake sales, donations from casual days, with lots more to come.” said Nigel Dunne, Chief Executive of Standard Life Ireland.

BELOW

Pictured at the start of the Great Ireland Run in the Phoenix Park are some of the Standard Life staff who took part. From left to right: Seamus Lynch, Olivia Tracey, Judith Casey, Stephanie O’Sullivan, Darina Hawkins and Tom Feehan.

Spring 2012 7

The BROKER

Summer 2012 7

Friends First win Top Marketing Awards!Friends First won Gold, Silver and Bronze awards at the An Post Integrated Direct Marketing Awards for the “Signature” Broker Loyalty campaign.

Gold: Best Financial and Insurance campaign Silver: Best Direct Mail low volume Bronze: Best Loyalty campaign

The awards were announced at the annual awards dinner in the Mansion House. The judging panel included some of the most renowned names in Irish and international direct marketing. Visit Spotlight online in Brokerfirst to get expert advice from our award winning team!

First Birthday celebrationsAviva are celebrating the first birthday of their highly successful Multi Asset Funds. These unique fund solutions, when combined with Aviva’s on-line risk profiler, can provide your customers with diversified, ready-made investment funds tailored to their individual risk profile, not only for today but into the future.

Ambassador’s DinnerThe British Ambassador hosted a dinner in his private residence on the 9th of May ahead of the Lloyd’s Meet the Market day.

Lloyd’s Ireland Meet the Market DayThe Lloyd’s Meet the Market day took place on the 10th of May at the Dublin Convention Centre. PIBA was represented at this year’s event.

Over 1,000 people gathered in the replica Underwriting Room which provided the perfect setting for a day of face-to-face discussions between insurance professionals from both sides of the Irish Sea. Cheltenham Gold Cup winning horse Kicking King was the star attraction at the event.

With 60 companies hosting Lloyd’s boxes and stands, the event allowed representatives from the Irish and Lloyd’s markets to discuss their existing insurance arrangements, explore opportunities for the future and strengthen and develop relationships. It also provided an opportunity for the London market to gain first-hand knowledge of local market conditions and assess interest levels in the various classes of business.

RIGHT

With Kicking King: Dominick Chilcott, Barry Geraghty, Eamonn Egan, Tom Taffe, Jane Chilcott,

Ceann Comhairle Seán Barrett TD

RIGHT

Exhibition Room at Lloyd’s Meet the Market Day

BELOW RIGHT

David Holton & Edel Morey (PIBA) at Lloyd’s Meet the

Market Day

BELOW

Ambassador’s Dinner: Eamon Shackleton (Insurance Institute), Diarmuid Kelly (PIBA), Michael Kirwan (Irish Dairy Board)

Summer 2012 9

The BROKER

BRIAN FLANAGANInvestment Sales Manager

Friends First

The Importance of Having an Investment PhilosophyReflecting on the last five years and the extremes in volatility and performance, the reverse of the old adage of “time, not timing” was actually the better approach and savvy investors who bought low three years ago are now sitting on substantial gains.

The buy and hold strategy can sometimes become unstuck, primarily by the herd mentality of buying high and not knowing that stock market gains are made in short periods of time. Although counter-intuitive, investing after a stock market shock (often called a ‘non normal event’) is actually easier to do than investing before a non normal event!

Non normal events are often excused away, like “If it wasn’t for the Lehman Brothers collapse then…” etc. However a quick observation is that non normal events happen more frequently than we think. Consequentially, non normal returns can happen more frequently than we think! Just consider the impact of these non normal events:

2011 European debt crisis 2008 Subprime mortgage crisis and ensuing

financial meltdown 2000–2002 Bursting of the US technology bubble

(+ 9/11) 1998 Russian default and LTCM financial crisis 1997 East Asian financial crisis 1992 Western European Exchange Rate

Mechanism crisis 1989–1991 US Savings and Loan crisis 1987 1980’s Latin American debt crisis

Prior to the downturn in the Irish economy investors saw their businesses and property investments as the main core of their wealth. Now they are looking at their pension funds and realising that this is one of the major parts of their remaining wealth; hence the laissez-faire approach to investments is gone. The investor’s expectation of their financial advisor is higher and to hold on to the business financial advisors are increasingly working on their competitive advantage.

For a quick check on your competitive advantage, ask yourself the following questions:

“Can you show me that you can build wealth and avoid risk?”

“How do I know you are any good!!?” “What is your investment strategy?” “Why use you? What is your competitive advantage?”

The market is full of pitfalls for unsophisticated investors. Investors and advisors are sometimes unaware of what return on an investment is required if there is a significant drop in the value of the original investment. Please see the following table.

INVESTMENT FALLS

RETURN NEEDED TO REGAIN THE ORIGINAL SUM

Investors who try to go it alone with their analysis tend to pay very little attention to the following observations:

Financial markets are rarely efficient. Commoditised financial instruments are typically different

to tailored portfolios. Investors seeking to by-pass financial advisors are rarely

skilled in portfolio construction and usually act without an understanding of asset allocation.

The point is that the need for your financial advisory services is greater than ever. With so much choice and various approach-es to investments, clients need clear direction from a reliable, informed financial advisor who has hard information to sup-port their recommendations and can demonstrate their track record. Thus, being prepared and equipped to deal with inves-tors has already become a competitive advantage for some financial advisors.

If you too want to benefit from the competitive advantage of investment knowledge, consider what Friends First has been doing for the last three years: we have encouraged pension and investment Brokers to have their own investment approach and have a unique sales proposition. People buy people, and investors will buy your ‘investment house view’ if it is good and if you can articulate it. Essentially, an investment house view is a financial advisor’s portfolio approach to investments, using one or more strategies with various preferred mixes of asset classes.

Along with Buy and Hold, Euro Cost Averaging and Life-Styling, some financial advisors’ strategies which are working in the market today are things such as target volatility, cash plus, tramlines and seasonal adjusted strategies.

Financial advisors are using their strategies to counteract the next non-normal event when it happens. They are arming themselves with more ammunition and know their strategies and their capabilities. An advisor with their own house view knows its capabilities and pitfalls. The degree to which an advisor knows the capability of their house view and the metrics put in place to prevent ‘blow up risk’ is what, in my opinion, distinguishes a good financial advisor from a super financial advisor.

Ask your Friends First Account Executive for more information about Investment House Views or visit Brokerfirst.

The BROKER

10 Issue 37

The BROKER

The Gambler’s FallacyA costly mistake for investors tooImagine you are in a casino standing beside the roulette wheel, which has just come up black five times in a row. Would you be more inclined to bet on red or black on the next spin?

Many plump for red on the basis that “it has to come up”, -

larly, the more times a coin lands on heads the more chance we think it has of landing on tails the next time. Equally, a pregnant woman that has previously given birth to four girls is as likely to have a fifth as give birth to a boy.

In each of the above examples, we are describing events which are random, where past occurrences have absolutely no influence on future ones. The belief that because black has come up five times in a row red is more likely the next time is referred to as the ‘gambler’s fallacy’, and the longer the ‘streak’ the stronger the belief that the opposite outcome will appear.

If a coin landed on heads one hundred times in a row

101st time. The coin has no memory and doesn’t realise it has to catch up by turning up tails. And ‘girls run in the fam-ily’ is not the explanation for four girls; it is random and the

Those who fall for this fallacy do so because of a funda-mental misunderstanding of how probability works. They combine the probability of past events (which is irrelevant for independent trials), with that of future events.

Though it has its uses, there are some perils to this cogni-tive bias. If you invest a large sum on a falsely perceived streak in the stock market, you could easily lose a life’s savings. Our tendency to see order amongst random-chance events is a useful survival technique. It makes us feel that we are in con-trol, which is very important. Imagine how difficult life would be if we perceived the world as a series of random events? But it pays to be aware of chance and the role it plays in our lives.

One of the major complicating factors about our mis-understanding of randomness is our failure to realise that randomness is never perfectly random! There can be many stretches in which random events appear to be anything but random.

In tossing a coin, it is not uncommon to have stretches where you might have five heads in a row. Invariably people will overestimate how rare this is. If tossing a coin ten times, how rare do think it would be to flip five heads in a row? Sur-

heads in a row. And if you toss the coin 100 times, you should definitely expect to get at least one streak of five or more heads in a row.

When Apple first sold the iPod shuffle, users complained that it was not random enough. The problem was that the randomness didn’t appear random, since some songs were occasionally repeated. But in a random sequence this is much more likely than people think. Apple changed its random shuf-fle to allow for ‘customisation’. It’s ironic: making something appear more random by making it non-random.

So what has all this got to do with financial markets and investing? Understanding that randomness plays a role in the success of even the best investors will allow you to examine results more clearly. A fund that has had three or even five suc-cessful years in a row really doesn’t mean anything in terms of its future success. Streaks exist, but our intuition does a poor job of understanding and perceiving randomness – so we mistakenly see skill, where luck may have a played a role.

To be clear, I am not saying that active management is random chance. But luck most definitely plays a part. Know-ing that will hopefully cause you to dig a little deeper in un-derstanding what the fund was investing in and whether or not such a strategy will continue to be successful in the future before you would recommend it to your clients.

Obviously the longer the time period we have to assess the more confident we can be that luck was less of a factor, so never, ever rely on past performance over a short time ho-rizon.

The gambler’s fallacy also gives rise to, or at least plays a part in explaining the tendency of investors to sell funds/stocks that have gone up and hold funds that have lost value. Any decision in this regard should only ever be based upon current circumstances and not be influenced by historical re-turns.

Remember – the small print of “past performance is no guarantee of future results” is not a meaningless platitude. A more relevant disclaimer might read “Owing to the combina-tion of skill and luck in the results, investors should carry out proper due diligence before making any assumptions about future returns”. I suspect most investors don’t do this neces-sary due diligence. Long may that be so, as it keeps people like you and me in a job!

GARY CONNOLLYPrincipal

iCubed

Summer 2012 11

www.help.meOnline Opportunities for Financial BrokersAs more and more Financial Brokers recognise the potential that the online environment offers to them in relation to their marketing ef-forts, this article aims to set out a few tips and things to consider as you develop your online proposition.

Be clear about what you’re trying to achieveGet very clear at the outset about what you’re trying to achieve through your online presence. Are you online simply because you feel you should be? Maybe you are acting on the knowledge that potential clients are carrying out research online into Brokers they are consid-ering using? Are you online as a means of driving enquiries to your business? Or do you want to use your online presence to increase your engagement with your existing clients? Maybe it’s all of the above!

Each of these reasons will impact the type of website that you need and should also influence your approach to developing content for your site. If you simply want to be online, then a simple site with basic content may be all that you require. However, in this instance, don’t expect your website to greatly enhance your business by increas-ing the level of enquiries. At the other end of the spectrum, if you want to really engage potential and existing clients with a view to driving enquiries, get ready to put in some effort by continually improving your online presence.

The Benefits and Pitfalls of Websites for Financial BrokersIn my opinion, websites are not optional for Financial Brokers today. I personally would not contemplate entrusting my financial affairs to a business that I can’t do some basic research on. Today before any of us do business of any sort, we tend to carry out at least some cursory research online. If you don’t have a website, prospective clients won’t be able to carry out that research and will often look elsewhere.

So, let’s assume you’re convinced of the need for a website and are committed to a strong online presence. What can you expect in return? Well first of all, you have a shop window that prospective cli-ents can view from their own homes. Also a strong web presence will provide reassurance to potential clients of the credentials of your busi-ness. Having this presence will hopefully encourage prospects to pick up the phone to you.

However the days of websites being used simply as online bro-chures are fading fast. Some Brokers are now really leveraging their websites as a repository for a continual stream of interesting content that they are providing for their target audiences. Their websites act as the hub of their communication efforts, with the ‘spokes’ being their communication channels to promote and share this content: email and social media etc.

On the flip side of the coin is the damage a poor website can do. I think a lot of Brokers really underestimate the negative impact that out of date content can have. It might suggest not having your finger on the pulse and not being in tune with recent developments in the world of financial services. The same applies to websites with badly written content containing poor grammar and spelling mistakes. What does this say to potential clients about the care that will be taken with their affairs?

Relevant and frequently updated content engages your audiences. It will also help you in your search engine optimisation efforts. Write your content with your target audience in mind – what do they want to hear about? Don’t fall into the trap of writing to prove your expertise; instead write content that your audience will want to read.

And then there’s social media...The bottom line in relation to social media is: embrace it! First of all it’s not going away and it’s not just a ‘young person’s tool’. Social media is seeing explosive growth among all age groups. Secondly and more importantly, social media offers enormous opportunities for Brokers to engage with clients and prospects. I believe LinkedIn particularly, and Twitter if used properly, can be a great route towards increasing engagement.

The jury is out on the benefits of Facebook for Brokers because of the very ‘social’ nature of the platform. At the end of the day, Financial Broker brands are going to struggle to engage people in the same way that Guinness or Manchester United (or Leeds United in my unfortu-nate case) can! But watch that space: the emergence of Facebook Offers potentially opens up interesting opportunities for financial services brands to engage prospective customers. Also Facebook is a very interesting advertising alternative because of the way advertisers can home right in on their target audiences with relevant messages.

So for starters, I suggest you need a LinkedIn page, then develop your profile as fully as possible and build up your connections network. Once you’ve done this, engage these connections by sharing content, both your own original content and relevant content written by others you see on the web.

Developing content is indeed a challenge for Brokers. All Brokers I’ve spoken to are probably sick of me banging on about the need for a structured content plan. The benefits of putting time into brainstorm-ing a content schedule for the coming year are immeasurable. It helps you avoid ‘writer’s block’ each month and helps keep the momentum needed to continue your communications on an ongoing basis.

So in summary, the online world will play an increasingly prominent role in how Financial Brokers communicate with and engage their cus-tomers. Develop your shop window (your website), keep it full of new and interesting products (content) and then encourage everyone to come and take a look (using email and social media). Grab the op-portunity that’s out there to engage your clients through this very ef-fective and low cost medium.

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

EAMONN TWOMEYPrincipal

StepChange Ltd.

“Websites are not optional for

Financial Brokers today”

The BROKER

The BROKER

12 Issue 37

The BROKER

The Broker is going onlineWe are delighted to announce the launch of the online edition of the PIBA magazine The Broker. The online edition will be located at www.pibabroker.com. This differs from the print edition in that it is designed to bring news to the Financial Broker community as it happens. We believe this is an important initiative from PIBA which will provide a valuable resource for those in the industry to share relevant news and information as it happens. This is a Broker focussed website and will only carry Broker relevant material. We hope that www.pibabroker.com will be a place you will visit regularly to find out what is happening in your industry. PIBA has developed this resource for you — so your input, comments and contributions are all very welcome.

Our mission with this initiative is captured in our online edition tag line: The Broker – Information Now. You will be able to stay bang up-to-date on what is happening in the industry, as it happens. As well as industry news, you will find information on upcoming industry events and product developments. Pibabroker.com will be contributed to by Financial Brokers, PIBA members, PIBA staff, PIBA committee members, the life offices and other experts on a regular basis. New content will be delivered every working day.

We are keen to have regular contributions from the Financial Broker community so if you have something to share we would be happy to hear from you. To become a contributor click on

www.pibabroker.com/contributor-registration and complete the simple form included. We will respond with information about becoming a contributor. Our system is very simple to use so do not let technology be a barrier to getting involved.

We are also asking for a representative from each major market participant to take a weekly themed slot to ensure the site remains fresh and informative at all times. We hope to include regular items on life and pensions, mortgage, general insurance, compliance, marketing and products as well as commentary on what is happening in the industry and the economy at large.

Our print edition will still be with you quarterly. We hope you like how it has changed over the last number of years and we plan to continue its evolution. Improving the magazine’s quality and relevance is our constant quest. The Broker serves many purposes, one of which is as PIBA’s shop window, reflecting our values as an organisation. This is borne out by items such as our regular pieces on compliance in the print edition. We plan to continue to enhance our value to our members, and as ever your feedback, good and bad, is always welcome.

Ultimately, Pibabroker.com plans to change the game on how information is delivered in our industry. Our goal is to give Brokers a single information point. This industry wide initiative reflects PIBA’s commitment to servicing the Broker community at an unrivalled level.

DONAL MILMO-PENNYEditor

Summer 2012 13

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DEVELOPMENT OF PRINT EDITION

COVER Old and New

PHOTO SPREAD Old and New

The Professional Insurance BrokerT h e o f f i c i a l m a g a z i n e o f t h e P r o f e s s i o n a l I n s u r a n c e B r o k e r s A s s o c i a t i o n

Issue 34 Autumn 2011

THE OFFICIAL MAGAZINE OF THE PROFESSIONAL INSURANCE BROKERS ASSOCIATION

INSIDE THIS ISSUEThe Broker ISSUE 36 SPRING 2012

Financial Serendipity

Interview: Seán Egan, Aviva CEO Making the most of AVC funds

PIBA Service Excellence

Awards 2010

T h e P ro f e s s i o n a l I n s u r a n c e B ro ke r

16

T h e P ro f e s s i o n a l I n s u r a n c e B ro ke r

17

Colum O'Brien (Zurich Life), Paul Cullen (PIBA), Joe Creegan (Zurich Life), Michael Hoare (PIBA)

Kimberley Kennedy, Brendan Johnston (Zurich Life), Diarmuid Kelly (PIBA), Richard Caffrey (Zurich Life)

Peter Breen (PIBA), Brendan Johnston (Zurich Life)

Denis Kelleher (New Ireland)

Michael Hoare (PIBA Chairman), Liam Small (Aviva)

Elizabeth Smith, Liam Carberry (PIBA)

Jim Connolly, Gillian Walsh (Standard Life)

Harry McKeon (Aviva)

Declan Lynch (Aviva), Maurice Harnett, Michael Hoare (PIBA)

Tracy Meade, Liam Small (Aviva), Diarmuid Kelly (PIBA), Garrett Howard (Aviva)

Greg Dyer, Daragh Feely (Caledonian Life)

Mark Shannon (Canada Life), Eunan O'Carroll (F

riends First)

Brendan Johnston (Zurich Life), Michael Hoare (PIBA)

Michael Hoare (PIBA), Richard Sloane (KBC Homeloans)

Nigel Monaghan (Standard Life), Kevin Meehan (PIBA)

Trish Kinsella (Aviva), Denis Kelleher (New Ireland)

Peter Breen (PIBA)

Hugo Doherty, Richard Sloane, Breda Gormally, Seán Breen (KBC Homeloans)

Winner of Life Assurance category 2010 :

Winner of General Assurance category 2010 :

Winner of Lending category 2010 :

Zurich Life

Aviva Insurance

KBC Homeloans

The BROKER

Colm Kelly (Colm J. Kelly Financial Planning), Pat McCormack

(Pat McCormack & Associates), Tim Dooley (Dooley Insurances)

Jane Topkin, Neil Brooks (TAB Financial Services)

Red Cow Moran Hotel, 7th February 2012

Eimear Farrell, Aideen Noonan, Nicola Walsh

(Liberty Asset Management)

Anna Rubin (Mentor Financial Services) Liam Carberry (Liam Carberry Financial Planning Services)

Patricia Cahill (Coonan Mortgage Group)

Nicola Fitzpatrick (Foresthill Financial Planning) Paul Cooney (Abacus Finance) Alasdair Sutton (AGS Financial Services)

Rodney Croly, Sylvia Croly (R. J. Croly & Co. Ltd)

John McEntee (McEntee Financial Services Limited)

Pat Fogarty (Patrick Fogarty Assurance)

Eddie Kingston, Thomás O’Loughlin (Powerwealth Management)

Charlie Morley (Personal Financial Consultants)

Pat O’Connell (O’Connell Insurances) Diarmuid Kelly (PIBA CEO)

Maria Pilkington, Don McKenna (Donald P. McKenna &

Associates)

Len Broxson, Phil O’Donnell (Reade Pensions & Financial Services)

Tony Bunbury (Tony Long Financial Services)

Valerie O’Donnell (Reade Pensions & Financial Services)

Kevin Meehan (BCK Wealth Management), Diarmuid Kelly

(PIBA CEO), Ross Devlin (BCK Wealth Management)

16 Issue 36

Spring 2012 17

The BROKER

Compliance draws the crowdsJanuary & February 2012 11 dates, 11 venues, 800+ attendees, nationwide

Providing members with a headstart, PIBA kicked off 2012 with a nationwide roadshow on the 5th of January. The

roadshow commenced in Portlaoise and finished in Athlone, taking in a total of eleven locations including Cork,

Limerick, Meath, Cavan, Sligo, Waterford, Galway and two Dublin venues.

The seminars were attended by record numbers with over 800 attendees. The seminars were free to PIBA members

and their staff and qualified for 4 hours’ CPD for both life and general insurance.

The seminars covered the Consumer Protection Code 2012, the Minimum Competency Code 2012 and Fitness and

Probity standards, and also provided an opportunity for members to provide their association with feedback in the

setting of a private members’ forum.

“I may not have wanted to hear a lot of the information, but I found it very informative and beneficial and well organised.”

“I have found the support and recent seminars to be such a good help.”

“It was very comprehensive and our firm got a lot of benefit from it.”

Alexander Hotel, 26th January 2012

Ross Barry (Barry Ross & Co.) Paul Fitzpatrick (Marino Investments & Insurances)

Pat O’Connell (O’Connell Insurances)

Dermot Burke (Burke Pensions & Financial Services)

Peter Heuston (Heuston Financial Planning)

Therese O’Donohue (Meritas Financial Advisors)

Duncan Duke, Shane Dunphy (Inverdea Financial Services)

Linda Cronin, Fintan Cronin (Cronin Investments)

Seamus Fox (Global Life & Finance)

14 Issue 37

The BROKER

CONOR BRENNANDirector of Broker Distribution

Zurich

The Importance of Effective Risk ManagementInsurance is a significant cost for many companies to pay each year, yet business owners spend a surprisingly small amount of time thinking about how they can positively im-pact this cost. In times of financial stress, a business can save itself a considerable amount in premiums by ensuring that they eliminate practices that can cause their premiums to soar. It is the job of the insurance Broker to highlight the areas of good practice within their clients’ operations and to encourage those clients to amend potential risk factors with the aim of receiving a quotation that more accurately reflects the risk. The greater the level of detail that a Broker relays back to an insurer about the risks in a client’s business and how those risks are addressed, the easier it is to get a competitive premium. In many instances it is the areas that are easily dealt with that will reap the best financial rewards.

Protect your employees, protect your business A visible trend in recessionary times is the increase in the number of employer liability claims. A Broker should advise their clients to be cautious of this and encourage vigilance in areas that see the greatest number of incidents. In the area of health and safety, in a factory-floor type environ-ment it’s important to have effective supervision at all times and proper recording of accidents. Businesses need to have proper health and safety procedures in place with somebody responsible for taking a log of any issues. Clients should be made aware that back pain/injury and stress are the most common reasons for absenteeism within the work-force; where possible any areas that place undue strain on their employees’ spine should be eliminated in favour of me-chanical alternatives such as conveyors. Procedures that in-volve manual handling should be stringently monitored and avoided if not fundamental to the work at hand. If manual handling cannot be avoided, then strategic measures such as compulsory training, job rotation and the introduction of sufficient breaks should be implemented; supportive devices

such as hoists and trolleys should be supplied by the insured at all times.

According to the Personal Injuries Assessment Board -

ability, with an average payment of €23,400. Slips, trips and falls were the most common type of accident, accounting

The Occupational Injuries Board figures for 2011 indicate that the number of claims made in relation to occupational illnesses was 11,616, while the number of days’ work lost

Simple solutions such as the introduction of non-slip mats, clear walk-ways and ensuring equipment cables are covered and secured are all paramount in the protection of a client’s business. Encouraging your clients to carry out regular walk-throughs of their premises will help them to highlight areas of potential liability concern such as ensuring pedestrian and traffic routes on the premises are clear at all times. Simi-larly, in warehouses, regular shelving and rack inspections will reduce the likelihood of stock falling and causing injury.

Cover against the elements Throughout 2010 and 2011 a surprising number of freak weather events (snow, flooding) shook the country. It is estimated that the total value of claims paid throughout the insurance industry in Ireland as a result of the Novem-ber 2011 floods was €127m. While many of these claims were unavoidable and unpredictable from the perspective of the insured, there are various maintenance procedures that could help to limit the extent of the claims recorded. By clearing flood gates of debris, scanning the property to expose ingresses of water, clearing gutters for post snow run-off, and ensuring that the floors in areas where staff or customers congregate have clearly visible “wet floor” signs and non-slip mats, the insured is playing their part in limit-ing the extent of material damage and liability claims. Fire/

Summer 2012 15

The BROKER

explosion continues to be one of the greatest risk exposures for insurers but basic care when dealing with flammable or combustible substances can limit the likelihood of such a catastrophe affecting your clients. Timber pallets should be stored in open areas, away from buildings or perimeter fences and combustible materials need to be under lock and key. Clearly defined procedures around the handling of com-bustible materials should be in place at all times. Hazardous goods such as inflammable liquids should be removed and locked up separately at the end of each day and petrol or diesel pumps should be safely shut down.

Increases in Crime Another area that has seen an increase in recessionary times is crime, namely theft and malicious damage. Accord-

respondents have seen an increase in crime in the past two

occasion. The costs associated with crime are increasing rapidly, with the current survey showing the costs incurred

CCTV and shutters for a premises, the insured is showing that they have the desire to protect their business and this will be reflected in the quote received. Ensuring that all win-dows are locked and that valuable stock is secured before leaving a premises at night are two cost effective ways of reducing your risk of burglary.

Fraud is an increasing concern in all aspects of personal and business life. Employers should be aware of all visitors to their premises and should enforce sign-in and sign-out procedures. Small companies that don’t have the necessary internal controls in place are open season for fraud and theft. It must be treated as an everyday risk and firms that don’t take preventative steps are exposing their business to serious losses.

Zurich Expertise

While the onus to limit risk factors is firmly with the insured, it is important that we understand that some events are un-foreseeable and the damage caused can be immediate and devastating. When events of this nature occur it is funda-mental to a business’s survival that the relevant insurance is in place. When flooding occurred throughout Cork and Dublin in 2011, Zurich was on hand to offer immediate sup-port at ground level. Our team worked tirelessly to ensure claims were dealt with quickly and efficiently and in many cases businesses were able to reopen within three to five days. Zurich offers tailored solutions to accommodate its clients and offers a flexible approach in relation to payment solutions. It is this type of service and focus on the needs of our customers and Broker partners alike that has earned Zurich such accolades as the PIBA Broker Service Excellence Award 2011.

TREVOR CULLENDirector

BCP Asset Management

BCP Capital Secure BondsIt was almost 20 years ago on a trip to London where we discovered one of the very first capital secure bonds; it was a five year bond offered by a subsidiary of American Express. At the time, the concept was pretty much unheard of in Ireland; we approached them with a view to part-nering and distributing the bond throughout Ireland.

By all accounts it was a great success: we raised what was then a not -

investors’ returns have gone from strength to strength. These gains were achieved with the reassurance of capital security. Currently BCP Capital

Quality and ExperienceOver the years BCP has built up a wealth of knowledge and experience in the manufacture of capital secure bonds. The primary factors in produc-ing a successful bond that is likely to pay returns in excess of deposits are: understanding how to balance the structure between underlying assets and deposits, the ability to select the correct underlying assets, and keeping costs to a minimum.

When selecting the underlying assets BCP has always invested heav-ily in resources. BCP’s investment management team is bolstered by the recruitment of external advisors to aid in the success of each bond. These include Goldman Sachs, Standard & Poor’s (S&P) and London based Capital Economics. Underlying fund managers include Merrill Lynch and Societe Generale. While this process is costly it is vital. It has proven to be very successful for Brokers and their investors alike.

Low Charges Charges within a bond will also affect the quality and hence the even-tual outcome for investors. Keeping charges to a minimum will give the product producer greater scope in manufacturing the structure and se-lecting the quality of the underlying assets. BCP has a low cost base relative to other institutional fund managers and combined with its high volumes, BCP is in a strong position to operate with low product fees. High funding rates and very competitive option costs combined with low fees ensure the highest quality products with a greater probability of investor gains. As one of the largest providers of structured products in the Irish market, BCP command the highest funding rates and the low-est option costs in the market. For example the BCP Split Deposit Growth

You are in Good CompanyBCP has partnered with some of the best names in Irish financial ser-vices. On the custodian side clients face Bank of Ireland, Barclays Bank or Ulster Bank.

On the pensions side BCP has partnered with Irish Life and Friends First to provide some of the best value products available. Contracts available are personal, buy-out bond, executive and ARF/AMRF. The structure used is Irish Life’s SIF platform and Friends First’s SDIO. How this works is the Broker signs up the investor for a pension or ARF contract. The investor then selects the relevant SIF/ BCP bond of their choice. The usual commissions and allocations apply from the insurance companies and BCP.

Wide Choice of ProductThe current range of BCP Capital Secure Bonds includes a Commodity Fund managed by Merrill Lynch, and an Absolute Return Fund managed by Societe Generale’s Lyxor Asset Management. On the pure equity side there are the Split Deposit Bonds, which offer strong deposit rates along with geared equity exposure without capital risk. Finally, there is a straight deposit account with very keen rates of interest which can be drawn as income or rolled up for growth.

BCP PRB/ARF/AMRFBCP offer PRB/ARF/AMRF contracts on all their products. The advan-tages of the contract to the investor are: ZERO entry fees, ZERO annual management fees, ZERO annual charges for QFM services, ZERO exit penalties. BCP do NOT charge annual management fees for PRB/ARF/AMRF monies held on deposit.

Tax Benefits-

lation, the gross interest earned will be paid after deduction of Deposit -

at source. However, certain non-resident investors, credit unions, charities, pensions and companies may apply to receive returns gross without deduc-tion of tax. The Finance Act 2007, as amended by the Finance Act 2011

A Smarter Approach to Retirement SavingsIntroductionBefore 1999 tax free cash and annuities were the only options at retirement. Annuities had an appeal. For one they guaranteed income for the rest of the individual’s lifetime. The big downside was loss of fund and therefore control.

Finance Act 1999 – Introduction of Approved Retirement Funds (ARFs) helped, for the first time, to provide qualifying investors with four new features: retention of control, choice of investments,

flexibility, and ability to distribute the residual fund to dependants on death in retirement. The trade off was the loss of guaranteed income for life.

Finance Act 2006 – The Finance Act 2006 created a new require-ment to drawdown income.

Finance Act 2011 – The Finance Act 2011 saw extension of the ARF option to members of Defined Contribution Plans, with a sub-stantial increase in the specified income limit. At least this sought

16 Issue 37

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Summer 2012 17

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to extend relief to those who were previously compelled to purchase an annuity.

Clearly ARFs are dependent on fund performance to sustain longevity of income. The last five years have seen considerable volatility in world markets. Average Managed Fund performance at

of actual investment returns, charges and income drawdown requirement have in many cases seen an erosion of the original investment; and erosion in a traditional ARF means a reduction in income. Continued erosion means both the fund and income could disappear during the investor’s lifetime — an unacceptable risk for many people.

Alternative Fund ChoicesThe deposit option presents an attractive proposition and its avail-ability should be an important consideration in post retirement plan-ning. Like most options there are trade offs. For example, a reduction

period. This is because of the liquidity requirement needed to sat-isfy the annual fund management charge and imputed drawdown. Another trade off is the inability to participate in market related performance over the duration of the deposit (without breaking the deposit terms and conditions). Thirdly, there is the unknown element at the end of the deposit term regarding availability of comparable rates and current product choices.

Committing all of one’s investments into a single investment for an extended fixed period arguably gives rise to significant risk expo-sure. Diversification is something that should always be considered in the light of any particular client’s needs and circumstances.

A Third WayThe Report for Partnership Pensions Review Group July 2007 con-tained a policy consideration for “hybrid products which combine features of annuities and ARFs”. The variable annuity is the answer. This can be defined as any unit linked or managed fund which offers optional guaranteed benefits as a choice for the consumer (Society

In mid October 2011 a new product was introduced by Canada Life under ARF legislation. It is called the Canada Life Approved Retirement Fund with lifelong income benefit. Now for the first time, individuals who qualify for the ARF option can also consider a further option — one that provides access to funds as well as a guaranteed minimum income for life.

From a client’s perspective there are five key features: a guar-anteed minimum income for life, an income increase potential, ac-cess to the fund as well as a choice of funds and, last but not least, an enhanced death benefit by comparison to traditional ARFs.

Traditional ARF ComparisonThe charts below compare a traditional ARF and a variable an-nuity. The following is intended to be conceptual, assumes that investment returns are neutral, i.e. growth is neither negative nor positive, and is net of plan charges.

Chart 1 shows decreasing income over time with a traditional ARF.

By overlaying the Canada Life Approved Retirement Fund with lifelong income benefit (Chart 2), the minimum guaranteed income becomes payable. In other words a minimum level of income is reached and does not fall any further — even if the fund continues to decrease. In addition discretionary with-drawals may be taken but when this option is availed of the guaranteed income is reduced proportionately.

Introducing some numbers (Chart 3) may help to further illustrate the effect of the Canada Life Approved Retirement Fund. The graph shows an example ARF of €400,000, and is intended to show the general effect. It is not to scale and is merely intended as a comparison. It is also assumed that both plans start with the same imputed drawdown amount. When the fund value reaches €320,000, the imputed

income under the Canada Life Approved Retirement Fund

investment) — however income under the traditional ARF will continue to decrease. Income with a traditional ARF may evaporate. On the other hand income under the Canada Life Approved Retirement Fund with lifelong income benefit will never run out — even if the underlying fund does. Bear in mind that if additional discretionary withdrawals are taken then the guaranteed income will decrease in proportion to the fund withdrawal.

The Canada Life Approved Retirement Fund with lifelong in-come benefit is good news for existing clients who would not have been able to consider this option when drawing down their benefits originally. They now have the opportunity to consider transferring some or all of their existing ARFs to the new facility. This is equally good for those who are coming towards retirement age.

FRANK WRIGHTPensions Development Manager

Canada Life

CHART 1

CHART 2

CHART 3

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

Value€ Income

Traditional ARF

Time

Value

€ LIB guaranteed income

Traditional ARF vs. Canada Life LIB ARF

Time

€400,000

€320,000

€150,000

€ LIB guaranteed income @ 4% €16,000

The benefit of guarantees – Example ART €400,000

Time

Traditional ARF5% of €150,000 = €7,500

and falling!

The BROKER

Financial Planning & Guidance

Nationwide LaunchSeptember 2012

Have you signed up yet?

For further information: contact the PIBA Office on 01 492 2202.

C

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CM

MY

CY

CMY

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PIBA 37 Advert A4 FB Launch 2012 Final.pdf 1 09/06/2012 00:38

Financial Planning & Guidance

Nationwide LaunchSeptember 2012

Have you signed up yet?

For further information: contact the PIBA Office on 01 492 2202.

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M

Y

CM

MY

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20 Issue 37

Q You have certainly come into the position during a turbulent time for the Irish Life & Permanent Group in Ireland. Perhaps you can give us some background to the restructuring that has taken place

in the past year?It was one of those years where we had to keep saying “what doesn’t kill us makes us stronger”! It was really tough, but I believe we are in a much stronger position now. There were probably three big developments in the last year:

Firstly, we are now in state ownership for the time being – and, while we’d have liked the sale process to have concluded, it’s not a bad position to be in as it gives us great security while giving us the freedom to manage our business.

Secondly, in the coming weeks, we will be formally separated from permanent tsb. Again, this is a very positive move as it allows us to focus purely on life and pensions and especially on supporting the Broker market. In addition, it will increase Irish Life’s Stand-ard and Poor’s rating to the sovereign rating, which helps to build customer confidence. Having said that, these ratings are not that relevant to life companies who are incredibly financially secure – I believe that using that financial strength to support initiatives like

Thirdly, we set up Irish Life Financial Services, the aim of which is to allow us to pro-duce non life products, such as deposit trackers, for the Broker market to give Financial Brokers a wider range of products to recommend. Progress has been slower here, but we’d hope to have the first products later this year.

At the PIBA conference, I mentioned that when I joined Irish Life in 1990 we were a State-owned company, with no bank, totally focussed on life and pensions. It wasn’t a bad place to be then, it feels like a good place to be now; and I believe we are well structured to support the Broker market going forward.

Q Historically, Financial Brokers have been an important source of business for Irish Life. In light of these recent developments can you tell us about your future commitment to the Broker channel?

Our commitment to the Broker market is core to Irish Life’s strategy – something our CEO, Gerry Hassett, reminds all staff of at regular intervals. We have invested in the

have worked really hard to improve our service to Financial Brokers and will work even harder to retain the PIBA award in 2012. We have invested in technology like e-Scan and redeveloping Bline and virtually all of our product development resources are focussed on Broker offerings like SIF and our new Strategic Assets Return Fund. We are constantly looking for feedback on how to improve, we will continue to work with PIBA to see how we can support the Broker market even more going forward, and if anyone has any suggestions, I’d love to hear them.

Q Irish Life is a significant and growing player in the bank assurance market; this has been highlighted by the recent agreement with Irish

Life to provide life insurance products to AIB. This is clearly an important line of business for you so how do you see this sitting beside your Broker channel business in the future?I think it sits well. I’ve always maintained that you don’t need to be a Broker only com-pany to be the company that most supports Financial Brokers. There are two key things to remember about AIB:

Firstly, we didn’t go looking for it. It was put to tender and we, like other major life companies, simply pitched for it and won, based on our service proposition. Secondly,

The reason I mention these two facts is that our core strategy of being Brokers’ number one supporter has not been, and will not be, affected by this. In fact, it will allow us to invest more in the Broker market as we can allocate more of our costs over a wider base.The other key point is that AIB chose us primarily for our compliance and service infra-structure. Bancassurers tend to have simple products, so the substantial product advan-tages that Brokers have around price match, charging structures and broader fund range (including SIF) are not in any way threatened. If anything our Broker focus will ensure that these advantages will be strengthened.

Q What advice would you give Financial Brokers in relation to the areas they need to address in the future?

I’m not sure that Financial Brokers need much advice as they have, in many ways, proven themselves to be very adaptable and resilient in a very challenging market. What I can say is what I have heard from Brokers, and as a result, what we are plan-ning to do. Firstly, as the recession hit and the amount of new business has reduced, Brokers with a reliance on up front commissions have suffered far more than those that have built up good renewal or trail.

To me, the ability to expect a level of income on the 1st of January each year, and to be paid on an ongoing basis for the workload needed to advise clients makes total sense. The problem is that many Financial Brokers cannot switch to renewal or trail

level of high renewal or bullet payments.If it were me I’d set a target that a large proportion of my income would be recur-

ring income by, say, 2017 and would try to develop a plan to do that. For example,

over €40,000 of your cashflow is not related to new sales, but renewal or bullets. This both builds certainty of income and dramatically increases the value of the business.

The other area is to try to focus on technology; to cut out wasted time that could be spent on areas that actually drive income, like prospecting or advising. Online ap-plications, Bline alerts, e-Scan and paperless documents all reduce the time spent correcting mistakes, chasing paperwork or making telephone calls.

PIBA Meets …

Donal Milmo-Penny (PIBA), Tony Lawless (General Manager – Brokerage, Irish Life)

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Summer 2012 21

Q The PIBA Marketing your business for Financial Brokers and the PIBA Digital Marketing and Social Media Guides were recently launched in association with Irish Life. How will these guides assist

Financial Brokers?   At the PIBA conference, Gerry Duffy talked passionately about the need for time out to think or rethink your strategy, so hopefully the guides will help Brokers do that. The next stage is to put the plan into practice. Marketing and e-business need to gener-ate new business, so we’ve focussed our marketing budget on trying to help Financial Brokers increase demand in a practical way. For example, I hope that our Protection Crusade with it’s free cover, cash back and now affordability campaigns will help Fi-nancial Brokers convince people to get off the fence and actually take out life cover.

In addition, our role is to try to support Financial Brokers’ marketing and e-busi-ness strategies on the ground, so we’ve pulled together a huge amount of supports in our new Broker Support Hub - from email campaigns, and sales ideas to online content and reference guides, With Broker feedback, we’d like to ensure that this is an indispensible one stop shop to help Financial Brokers turn their strategies into sales.

Q Are you yourself active in the area of social media?

In terms of e-business, I’d say I’m as active as anyone in their 40s! I’m on Facebook and LinkedIn, but the potential to use them for business is greater for those who run their own businesses. From Irish Life’s point of view, we are again trying to support Financial Brokers by developing iphone apps, eScan, web content and email cam-paigns, for example. To put it in perspective, our ‘Free Cover’ campaign was totally ‘e’ – Brokers emailed clients at no cost, who applied for cover electronically (not one incomplete or incorrect form!) and we issued thousands of policies for Financial Bro-kers in one day, without one quality issue. Brokers now have thousands of satisfied protection leads at virtually no cost or workload. It’s the way forward, in terms of all of us working more efficiently together.

Q Tony, can you paint us a picture of the future of Irish Life in light of the recent attempted sale of the business not concluding? Do you see these negotiations reopening or a possible alternative acquirer

coming to the fore? To be honest it’s very hard for any business to predict what will happen. I’d imagine that the Government would not be that interested in selling us now for any less than the €1.3bn they bought us for, and with the Eurozone issues still not resolved, that looks more like a possibility that’s a year or two off. The important thing for us is that we are incredibly secure as a business and focussing on doing the things that will help grow the market for all of us – anything else is a distraction really.

Q How do you think that the life insurance market will look in the coming years? Do you see consolidation amongst the life offices, or possibly some offices closing in favour of new businesses?

The reality is that the market is one-third of the size it was five years ago, so unfortunately, I do believe that consolidation is inevitable, whether that is through mergers or players exiting as we’ve seen a few of the more minor players doing over recent months.

This may create some gaps for new niche players to enter and will challenge the remaining players to be more innovative in their product range to ensure that the choice that Brokers demand is satisfied.

Q Finally Tony, how do you see the future of your product offering evolving? Do you see the platform model becoming the norm?

That’s an interesting question. I see a few trends. Firstly, with less disposable income, protection will be key as clients focus more on protecting what they have. This mindset will also drive continued growth in more secure investment offerings. Secondly, I believe product remuneration will continue to evolve towards more sustainable renewal or trail models. While I’m not convinced there is a need for RDR type fees to be imposed, I think both Financial Brokers and life companies will drive this agenda in a controlled way.

In terms of platforms, it’s an area we are closely monitoring in the UK. There are probably three aspects: trail or fee based remuneration, a very broad range of assets and a web based front end to allow Financial Brokers to manage client relationships better.

In some ways the market is moving towards that slowly. We talked about remuneration. In terms of broad asset choice, the extension of our SIF offering to deposits, trackers and TD Waterhouse has extended our Broker offering dramatically already, and the development of Irish Life Financial Services will further broaden Broker choice.

The final piece is the customer web end, which cannot really be of use unless Financial Brokers can view or transact all client details in one place. This cannot happen until they decide to pick one (or maybe two) main platform provider to place all of their business with and I think this is some way off.

So, will platforms become the norm? Certainly the market is moving towards that. At what speed, or what it will look like in five years time is anyone’s guess.

Tony Lawless GENERAL MANAGER – BROKERAGE, IRISH LIFE

Donal Milmo-Penny (PIBA), Tony Lawless (General Manager – Brokerage, Irish Life)

The BROKER

The BROKER

Financial Broker stand Michael Cassidy (Michael Cassidy Mortgages & Investments) Vincent Casey (Vincent Casey Life & Pensions Co. Ltd.) Bartle Landy (Bartle Landy Financial Services)

Neil O’Brien (Speaker), Tony Lawless (Irish Life)

22 Issue 37

PIBA Broker Conference 2012KICK-OFF: THE FUTURE FOR FINANCIAL BROKERS Lansdowne Road Stadium, Dublin

Tony Lawless, General Manager Brokerage, Irish Life addresses the crowd

Tony Lawless (Irish Life), Liam Carberry (PIBA Chairman) Diarmuid Kelly (PIBA CEO), Frank Murray (Broker Information Services), Niall Quinn

PIBA Staff

Liam Carberry (PIBA Chairman), Gerry Duffy (Speaker) Diarmuid Kelly (PIBA CEO)

Steve Stuart (Con Quigley Financial Services Ltd.) Seamus Crowe (Zurich Life) Con Quigley (Con Quigley Financial Services Ltd.)

Christy McGee (Christy McGee Insurances Ltd.) Vicky Dunne, John Roberts (Irish Life) David McGee (Christy McGee Insurances Ltd.)

Frank Murray (CEO, Broker Information Services)

Niall Quinn, Keynote Speaker

Frank Murray (BIS), Pat McEntee (PGM Financial Services Ltd.), Paula Hudson (Insurance Institute), Paul FitzPatrick (Marino Invest-ments & Insurances), Vincent Glavey (Glavey Financial Services)

Colm McGreal (McGreal Insurances) John Hogan (John Hogan & Associates), Sinead Cooney (BIS)

Martin Donegan (Donegan Life & Pensions), Brendan McGuire (Pren-dergast Maguire Financial Services), John Carew (John Carew Investments Ltd.), Mark Mason (Mason Mortgages & Financial Services)

Susan Hayes (The Positive Economist)

Neil O’Brien (Mental Fitness Expert, Time to Fly Ltd.)

Summer 2012 23

The BROKER

SPECIAL THANKS TO:OUR CONFERENCE PARTNER FOR THE 5TH CONSECUTIVE YEAR OUR MAIN SPONSOR OUR EXHIBITORS

The BROKER

24 Issue 37

“Top sports and business people have the ability

to rise above mayhem and see things for what they really are”

The BROKER

NEIL O’BRIENMental Fitness Expert

Time to Fly Ltd. www.timetofly.ie

Basic is the new AdvancedIn this article I would like to demonstrate the magic moment when doing something basic really well actually transforms into something advanced. Then because what you are doing looks really advanced, people will want to know your ‘secret’ and, compared to everyone else, you will be producing ad-vanced results. But before we get to this I need to set the scene and the context.

Too Much PsychologyIn difficult times there can be too much psychology in the system: too much worrying, analysing and thinking. This is because our confidence has taken a hit. I like to define con-fidence as how quickly you move from knowing to doing. In other words, you know something; you do something. The gap between knowing and doing is very short. But when we’ve lost confidence, although we know something it can still take a while before we act on it.

Doing is the new ThinkingSo to get your confidence back you need to start taking regular action again. Now, I don’t mean being a busy fool, but I do know that you know what you should be doing more of and less of right now. When we’ve lost confidence I think we can take too much time ‘getting ready’; preparing to take action rather than actually doing the thing. I never thought I’d be quoting him but Mike Tyson has a great expression that also summed up his boxing style and approach –

‘Everyone has a plan until they are hit’.

So, we’ve been hit. We had plans, priorities, hopes and aspira-tions and we are now being forced to re-evaluate. So where do we start? How do we rebuild confidence? Where do we focus the effort? How and where do we get a sense of certainty in times of great uncertainty?

BouncebackabilityResilience is the ability to bounce back and then bounce for-ward. When I work one-on-one with clients or with small busi-nesses one of the great indicators of their ‘mental fitness’ is how long it takes them to recover from a setback or disappoint-ment. I learned this from my sports clients: they measure their physical fitness in recovery rates and I think you can measure mental fitness in the same way. How long does it take a golfer to recover from a poor month, a footballer to recover from a poor league, a salesperson to recover from a poor quarter etc.

Rock BottomFollowing a setback of course you are allowed to be down, to feel bad: you don’t have to be ‘positive’ all the time. But when do you decide to get going again? What does it take to fire you into action? Very often people wait to hit ‘rock bottom’ first be-fore they get going. In other words, they wait until they’ve no choice or until the choice is taken out of their hands; the choice is made for them. Then they find incredible inner resources and

strength to get going. But why wait? What if you plugged into these resources earlier? How much more successful could you be if you just started earlier?

Ten Yard Race for Pro AthletesSo where do you start? I worked recently with a marathon run-ner and he told me that at the start of a race he is doing sport psychology but when he ‘hits the wall’ 16 miles later, when he feels that he can’t go on, he reduces the marathon to a series of 10 yard races. In other words he reduces the marathon to its most basic form and he takes it 10 yards at a time. When he does this often enough and long enough he then starts to feel better, then he thinks better and then he is better and he sprints the last 400 metres or so.

His ability in that moment of extreme pressure, panic and anxiety to put his faith and effort into doing the basics well is actually advanced sport psychology! There is nothing better you could suggest to him in that crisis.

Top sports and business people have the ability to rise above the mayhem and see things for what they really are, select the simple things that will generate confidence and certainty and then mobilise the forces into doing these simple basic things brilliantly.

Basic is the new AdvancedThe basics have never changed. The basics of good budgeting (home and work), of good health, of good customer relation-ships, of good parenting, of good golfing and of good business have never changed; the issue is, are you doing them often enough and well enough? The irony is that when things were fantastic in Ireland we stopped doing the basics. We wanted to outsource the basics: we felt we had risen above them.

But now we’ve hit the wall. So next week don’t over-think things, just make sure you cover ten yards. Also make sure you champion someone else who’s also doing the basics really well. Someone who’ll make an extra phone call or two. Someone who’ll give a client extra genuine attention.

Is the NewSo, to summarise, return to the basics, re-commit to them in work and in life. Place your faith and effort into doing the simple, obvious common sense things really well and really consistently and you will prevail. An internal sense of stability and certainty always beats one that is dependent on external forces.

Doing is the new Thinking, Basic is the new Advanced, Discipline is the new Relaxation, Common Action is the new Common Sense and … Being Real is the new Leader.

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Aviva Life & Pensions Ireland Limited is regulated by the Central Bank of Ireland.

26 Issue 37

The BROKER

Back off BankersPIBA continues to receive reports on an ongoing basis from members in relation to banks marketing to clients based on transactions in their accounts, such as direct debits made payable to other institutions.  Members also advise of clients’ experiences whereby they are put under pressure to take out in-house products in order to acquire an overdraft for example. PIBA highlighted these issues to the Central Bank both in meetings and in submissions on the revised Consumer Protec-tion Code in 2010/2011.

PIBA carried out a survey of members in May in relation

consumers are:

1. Being pressured to take out in-house products with banks to maintain overdraft and other loan facilities; and

2. Their account transaction details, such as direct debits pay-able to other institutions, are being targeted to persuade consumers to switch to in-house products.

These practices undermine the integrity of the financial services system and conflict with the concept of independ-ent advice and choice. Members also advise that often the affected consumers are reluctant to make an official complaint against the relevant institutions, considering the financial posi-tion some of these clients find themselves in.

The issue was also highlighted in the 2010 Data Protection Commission Annual Report, which found, among other things, that: “in several institutions our investigations revealed market-ing customers on the basis of information contained in their direct debits, such as a monthly payment to another financial institution or a payment to the life branch of an insurance company.”

A delegation from PIBA recently met with the Office of the Data Protection Commissioner, where Diarmuid Kelly outlined the concerns of PIBA in relation to this practice.  It was clear from the meeting that the Office of the Data Protection Com-missioner are willing to investigate and carry out inspections in relation to this practice, but that in order to do so, they require documentary evidence that the practice has occurred.

What is a Data Protection Breach?The Data Protection office provided clarity in relation to what constitutes a breach of Data Protection, as a number of the scenarios which members have outlined to us relate to a breach of the Consumer Protection Code rather than a breach of Data Protection.  For clarification, below is a list of examples of what would constitute a Data Protection breach.

Tracking of client bank account transaction history in order to profile a customer for marketing purposes.

The bank using direct debit information as a means of targeting the customer for insurance/pension products or other marketing.

The bank using the setting up of a direct debit to offer competing insurance/pension products.

In order for the Office of the Data Protection Commissioner to inves-tigate such instances they must be supplied with evidence that this practice is ongoing. This evidence require-ment means that an individual customer would have to state that they had received a call from their banking institution, advise who they were dealing with, and give details of relevant direct debits going through their account or details of the specific transaction activity mentioned to them in the call from the financial institution.

Consumer Protection Code BreachesMembers have also advised PIBA of cases where certain insti-tutions have made the acquisition of one product contingent on another product being taken out by clients.    Clients are often unaware that this is a clear breach of the Consumer Protection Code.

This protection is contained in Chapter 3, General Require-ments of the Consumer Protection Code:

3.17: A regulated entity must not make the sale of a product or service contingent on the consumer purchas-ing another product or service from the regulated entity …

Going forward, PIBA would advise members where they have clients who have experienced either of the above outlined practices to contact the PIBA offices. We will assist you in lodg-ing a complaint with the Data Protection Commissioners or the Central Bank of Ireland as appropriate.  PIBA will also keep a central record of all complaints received and ensure that they are followed up with the relevant authority.

ELIZABETH SMITHCompliance Manager

PIBA

Banks accused of

acting illegally

Banks abusingcustomer data,say brokers

Hold valid Professional Indemnity Insurance.

Procedures Manual.

Mimimum Competency Requirements Folder.

Fitness & Probity Folder.

Fully updated Terms of Business to comply with Consumer Protection Code.

Completed Factfind in respect of clients.

Evidence of research of products.

Signed Statement of Suitability issued to client prior to product being put in place.

Receipt issued if payment is given to you for onward transmission to product provider.

Retain records for 6 years from date of last transaction with the client.

Online reporting to the Central Bank within 6 months of your end of year.

Simple Steps to Compliance

Professional InsuranceBrokers Association

If you have any queries in relation to Compliance & Legislation, please contact Elizabeth Smith at [email protected] or Áine Whelan at [email protected]

28 Issue 37

The BROKER

One Marshmallow or Two?The story of the Stanford Marshmallow Experiment is well known – a group of four-year-olds are given a marshmallow, and told that if they don’t eat it by the time the researcher

-ity ensues, with children singing to themselves, sitting on their hands or covering their eyes to avoid eating their marshmal-low. The study kept in touch with these children throughout

-aged to wait led more successful, happier lives.

The moral of the story is that those who can delay grati-fication do better in the long run. By giving up a little in the short term, saving for tomorrow often with little impact on lifestyle, we can gain so much more for ourselves and for our families.

The advantage of starting to save early for long-term goals is that over time, savings can benefit from investment growth. This is a tricky message to get across to savers at the moment, whose risk appetites have reduced substantially, and high interest rates currently available with a State guar-antee offer little incentive to take on risk.

The opportunity: for individuals who are willing to take investment risk, growth will supplement savings and con-

annum net of charges, a regular investment over 10 years will

before tax.The dilemma: individuals are prepared to take some in-

vestment risk on smaller sums as the fund builds, and choose where to invest accordingly. But the levels of risk that an individual is willing to take on €300 monthly savings may be very different to the risk they are willing to take on a €10,000 lump sum. The initial fund chosen for regular savings may not be appropriate to the individual once the value has grown to a sizeable amount.

While funds are doing well, inertia and the greed inher-ent in us all will mean that individuals are likely to leave a substantial part of their savings exposed to a higher-risk fund. The perception of risk is lower when funds are performing well — we all remember feeling invincible during the Celtic Tiger years when everything was going well.

When markets perform poorly, savers’ appetite for risk reduces drastically, and they will often over-compensate by moving to a lower-risk fund than is appropriate for their goals. The effect is twofold: firstly, their move out of the market will be at a bad time, when values are low. Secondly, the lower-risk

fund is likely to have lower growth potential, and so bringing the value back on track is likely to take a long time if it hap-pens at all.

An Untapped MarketThe potential market for savings is huge and covers a variety of individuals:

Those who have built up deposits with banks and wish to move into investment markets but are worried about the timing. Spreading investment risk by investing monthly rather than in a lump sum is a good way to smooth entry into the markets.

Parents saving for children’s education: for example, by sav-ing the State Child Benefit, parents can build up savings that will cover a large portion of the cost of their children’s education through primary and secondary school as well as college.

High earners saving for retirement: when pension contribu-tions are limited by restrictions on tax relief, a savings plan offers another way of saving for retirement.

Self-employed saving for retirement: using a savings plan as part of pension provision may be a good compromise for some who are worried about tying up funds while their busi-ness outlook remains uncertain. This allows individuals to plan for their retirement today, but gives them the comfort that they can access their funds if they need to.

Benevolence – Those who have built some wealth may wish to use some or all of the Small Gifts Exemption to pass on wealth to others over a period of time. The Small Gifts Ex-emption allows gifts of up to €3,000 each year to be made without taxation. Depending on other gifts, this would al-

-ings plan of another – who need not be a relative.

Certain Close Companies with undistributed investment or

of the income, if it is not distributed after a period of time. Funding a savings plan with this income can reduce the li-ability to the surcharge.

New Ireland has recently launched FutureSave, which offers a great opportunity for Brokers to re-enter the savings market. There is likely to be a good cross-over with the needs of exist-ing pension, investment and protection clients, as well as huge potential to attract new clients. New Ireland will be making a range of supports available to help Brokers highlight the ad-vantages of FutureSave to clients with various needs.

For more information talk to your New Ireland Broker Consultant today.

GILL O’CONNORProduct Manager

New Ireland Assurance

WARNING: The value of your investment may go down as well as up.WARNING: This product may be affected by currency exchange rates.WARNING: If you invest in this product you may lose some or all of the money you invest.The content of this article is for information purposes only and does not constitute an offer or recommendation to buy or sell any investment or to subscribe to any investment management or advisory service. All opinions and estimates constitute best judgement at the time of publication and are subject to change without notice. Terms and conditions apply. Where relevant, life assurance tax applies. New Ireland Assurance Company plc is regulated by the Central Bank of Ireland. A member of Bank of Ireland Group.

“The moral of the story is that those

who can delay gratification do

better in the long run”

The BROKERThe BROKER

30 Issue 37

RONAN O’NEILLBroker Marketing

Zurich Life

Looking to Breathe Life back into Protectionof the few shining lights for Brokers — protection sales have held up reasonably well. However, when you look more closely at what is actually being sold, it suggests that we are seeing a trend toward life only protection sales and a move away from important, albeit more expensive, covers such as serious illness.

Of course, life cover is essential for customers, particularly if they have a mortgage, but for many, serious illness protection is equally important. However, as the perceived price gap between life cover and serious illness cover widens, it becomes more dif-ficult to make serious illness sales. What was once almost an au-tomatic choice for customers, serious illness sales have slowed — and in the advice versus price debate, currently, price is win-ning out.

At Zurich Life, we worked to address the key issue of client afford-ability and fill the gap between life cover and serious illness cover. We wanted to give you an innovative product solution that would enable you to meet the protection needs of your customers and help overcome the key objection of affordability.

Innovative Cancer Cover – a new offering for your customersIn May we introduced LifeProtect, Zurich Life’s new and improved protection suite. The cornerstone to our new offering was the launch of Cancer Cover — a standalone option. As with serious illness plans, Cancer Cover pays a lump sum benefit on diagnosis of a serious illness of specified severity — in this case cancer. Cancer Cover costs substantially less than traditional serious illness plans. It is this substantial cost saving that should generate great interest from customers who recognise the very real need for this type of cover, but who up until now have not been able to afford full serious illness protection.

We focused on cancer because it is the second largest cause of death in Ireland (after heart disease).* In fact, when we in-vestigated Zurich Life’s 2011 serious illness claims, the results

** According to the Irish Cancer Society, 1 in 3 people* will suf-

fer from cancer at some stage in their lifetime and, on average, there are 30,000* new cases diagnosed each year. But of more concern for us is the fact that, despite greater awareness of can-cer and positive changes in our lifestyle and diet, the number of new cases is still expected to rise to an average of 40,000 a year by 2020.*

The financial implications of dealing with cancerWhile Cancer Cover will not reduce the risk of any clients contract-ing this disease, a lump sum payout from a protection plan can certainly help alleviate the added financial stress associated with cancer. While we are all too aware of extra costs serious illnesses such as cancer bring, sometimes the message gets lost.

The National Cancer Registry of Ireland recently published a report*** into the financial implications of dealing with cancer.

The typical cancer sufferer endured:

Increased medical costs such as expensive medications Actual out of pocket expenses such as increased travel Increased utility bills due to extra time spent at home Severe reduction in earnings due to patients (and in many in-

stances family members) having to take time off work to deal with the illness.

Protection in the form of Cancer Cover could be a solution for many of your customers; it gives the peace of mind of knowing that they have a financial back-up in place should the worst happen.

Greater benefit flexibility for family protectionFurther product enhancement saw the introduction of Life Cover (Monthly Income) — a straightforward way of protecting a family in the event of death. Rather than providing a large lump sum on death, a guaranteed amount is paid each month for the remainder of the policy term, which a family can use to pay for their regular outgoings. A regular income can be a lot easier to manage than a lump sum as families don’t need to worry about investing a large amount. It could also make your sales process easier as customers will more readily identify with a monthly amount rather than having to calculate a lump sum that needs to cover everything!

Marketing supports and sales ideas for youFeedback from Brokers to us over the past year has been consistent: you want support in generating business and sales ideas. As part of the launch of LifeProtect, we have put together a comprehensive marketing pack. A key part of the pack is our Reliable Route to Pro-tection Sales, an online interactive toolkit. Available on the Zurich Life Broker Centre, this toolkit will equip you with all the informa-tion you will need to maximise protection opportunities you come across. It provides you with information on targeting clients and improving your factfinding, and all the sales tips you’ll ever need!

For more information on how you can make LifeProtect work for you, speak to your Zurich Life Broker Consultant.

* Source: Irish Cancer Society, April 2012

** Source: Zurich Life, April 2012

*** Source: National Cancer Registry Ireland, 2010

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

The BROKER

Summer 2012 31

The BROKER

“Almost 60% of Brokers stated

that banks were coming to arrangements

with consumers who are in difficulty”

RACHEL DOYLEChief Operations Officer

PIBA

The Issue of DebtThe Central Bank report issued at the end of April stated that at end-March 2012, over 77,000 residential mortgages were

the total number of residential mortgages on private dwell-

total) that were in arrears of more than 90 days at the end of December 2011.

The number of accounts that were in arrears of more than -

end of March 2012: an increase from just over 74,000 at the end of December 2011. Out of the restructured mortgages

however the remaining 41,000 were in arrears. Interest only arrangements account for just over half of all restructures.

cases and in 111 of these cases orders for possession or sale of the property were granted.

A total of 170 properties were taken into possession dur-

were voluntarily surrendered or abandoned. The total num-ber of properties taken into possession in the first Quarter of

taken into possession in Q3, 2011. For the same period Q1, 2012 PIBA carried out a survey

to arrangements with consumers who are in difficulty, which supports the Central Bank statistics that show an increase in restructuring.

-gotiate arrangements.

Looking at these figures it’s not hard to see that the per-sonal insolvency bill can’t come quickly enough to assist those in need. The question is does it go far enough?

The Bill allows for out of court debt settlements and will be a welcome relief for some of the mortgage holders out there who are in distress.

This Bill has established three out of court settlement op-tions for those who are struggling with debt.

The three options are:

Debt Relief Certificate (DRC) Debt Settlement Arrangement (DSA) Personal Insolvency Arrangement (PIA).

A Debt Relief Certificate (DRC) is available to those who are non-working and possess a net disposable income of un-der €60 per month, and have no assets. The debts must be unsecured and less than €20k.

The borrower must deal through MABS or an approved inter-mediary who submits the application for the DRC on their behalf.

If the borrower’s application is successful and they are

granted a DRC, their debt is frozen and after a year it is writ-ten off. A DRC will only be granted twice to any one borrower in a lifetime and there must be a gap of six years between the incidents.

A Debt Settlement Arrangement (DSA) is available to borrowers with over €20k in unsecured debt. This time the borrower deals through a personal insolvency trustee who submits a proposal to the Insolvency service on their behalf to obtain a DSA. The trustee then calls a meeting of credi-

creditors must be in favour of accepting the settlement. The borrower then pays the settlement figure and the remainder of the debt will be paid off over a five year period. If a DSA is granted the creditors cannot issue recovery or bankruptcy proceedings during the five years. A DSA can only be applied for every five years.

A Personal Insolvency Arrangement (PIA) applies to any-one who has between €20k and €3m in unsecured or secured debt. The PIA has a similar process to the DSA. The borrower must be insolvent with no chance of becoming solvent within

of the PIA and the borrower pays an agreed amount, the out-standing debt will be written off after six years.

This arrangement protects the borrower’s home and pro-hibits creditors issuing proceedings during the six year period. The PIA can only be instructed once in a lifetime and if a bor-rower breaks the agreement they are then liable for the total amount owed.

It is too early to see what way these mechanisms will work and what impact they will have on the current mortgage ar-rears issue until the final bill is published and in practice.

At the moment these outstanding issues are impacting not only on those who are in arrears but also on the current lending situation.

-

of 2011. Yet the latest lending figures state that lending for

-ing for house purchase since 2006 and the fact remains that

With the increasing arrears the lending position does not look as if it’s going to change in the immediate future, yet that is possibly the single most important thing that is need-ed to get this property market up off the floor.

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.

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The BROKER

MyFolioTaking the Complexity out of Investing

From June 2012, one of the requirements of the Consumer Pro-tection Code (CPC) is that regulated entities must demonstrate that the product or fund chosen is consistent with the consum-er’s attitude to risk.

In the ever increasing world of compliance, the timing of a new proposition by Standard Life couldn’t be better. MyFolio is a family of risk-based multi-asset portfolios which, together with an online risk questionnaire, can help advisors to build a more robust investment process for your business, and a more attractive solution for your customers.

Assessing your customer risk profileTo help advisors understand their customers’ attitude to risk, we have introduced a risk questionnaire which has been devel-oped by Oxford Risk, an independent team of leading psychol-ogy academics originating from Oxford University. The ques-tionnaire is available on brokerzone.ie, and when completed, it will produce a comprehensive report on your clients’ attitude to risk.

Introducing MyFolio FundsAfter you decide on the most suitable risk profile for your client, you can then select the appropriate MyFolio Fund to fit that risk profile. There is a choice of five MyFolio funds which range from a lower risk fund, MyFolio I, to a higher risk fund, MyFolio V.

The MyFolio funds invest in multi asset portfolios, including property and absolute return strategies. The low risk funds will invest predominantly in defensive assets, whilst the higher risk funds will invest mainly in growth assets. All five MyFolio Funds will hold investments in absolute return strategies including GARS.

MyFolio Funds target the highest returns achievableThe five MyFolio funds target the highest total return achievable for the chosen level of riskBarrie & Hibbert, world-leading experts in risk modeling solu-tions, work with Standard Life Investments on the optimum stra-tegic asset allocation for each of the MyFolio funds. Absolute return investment strategies are incorporated across each fund

to provide an innovative source of diversification. Actively rebalanced and monitoredThe MyFolio funds are actively rebalanced and monitored by

the fund managers on an ongoing basis, so you don’t have to dedicate time to this.

MyFolio funds were launched by Standard Life in the UK

funds of over £1bn.

So what are the key benefits of MyFolio for advisors?— Helps to satisfy CPC requirements

Under the CPC 2012 guidelines which come into force in June 2012, advisors must demonstrate that the product or fund they have recommended is aligned with their custom-er’s attitude to risk.

— Simplifies your customers fund choiceDesigned to fit five different risk levels, from lower to higher risk.

— Reduces time spent on investment selection and port-folio management To keep your client’s investment on track, rebalancing and monitoring are built into the MyFolio funds, so freeing your time to meet with your clients.

— Ease of accessThe MyFolio Funds are priced on a daily basis and are available across the range of Standard Life pension, savings and invest-ment products. The MyFolio Funds are the latest development of the Synergy Fund range – investors can choose to invest in a MyFolio fund and also any of the other Synergy funds available.

— Expertly managedAccess to the long-standing investment experience and ex-pertise of Standard Life Investments.

Myfolio – Key Benefits for customersWhen it comes to investments, one of the key things custom-ers are interested in is knowing that their investments are constantly monitored and looked after on their behalf. With MyFolio they can be confident that this is the case, and that at all times someone is looking at the portfolio to make sure that it is still appropriate.

Clients can choose a specific fund that is suitable for their risk profile, still comfortable in the knowledge that the overall risk profile will be well governed and looked after on their behalf.

Finally and importantly, a key benefit is that the MyFolio funds are available across the Standard Life range of savings pension and investment products. So whether they are sav-ing on a regular basis or looking to invest in an ARF there is a MyFolio fund solution available that matches their attitude to risk.

The value of investments within the funds can fall as well as rise and is not

guaranteed – your client may get back less than they pay in.

The value of investments within the funds may rise as well as fall as a result

of exchange rate fluctuations.

BRENDAN BARRHead of Marketing

Standard Life

Summer 2012 33

The BROKER

34 Issue 37

The BROKER

BRIAN Ó NUALLÁINBusiness Development Manager

Aviva Investors Global Services Limited

The Lessons Learned from 2008Or the Problem with Managed and Consensus Funds!

As the saying goes, “a rattlesnake that doesn’t bite teaches you nothing”.

For the average Irish balanced managed and consensus

venomous bite. According to the Mercer Managed Fund survey,* the average balanced managed fund delivered

consensus managed fund delivered a very similar and also

Managed funds – an abridged historyManaged funds became popular investments during the

main asset classes, i.e. equities, property, bonds and cash. Equities were typically invested globally but there was a high exposure to Irish equities as a natural consequence of currency considerations for the Punt at the time and the level of local investment management expertise (or per-haps the lack of global expertise). The property element was also usually mainly invested in Irish commercial prop-erty and bonds often initially consisted of investments in Irish Government bonds, but in later years gained exposure to Euro sovereign bonds following the introduction of the Euro.

These funds would generally have a greater proportion of their funds under management invested in equities as this asset class is generally the leading performer at the head of the risk return spectrum over the long term and offers high liquidity. Property and bonds provided alterna-tive asset classes that could be considered to act somewhat differently to equities during rises and falls in stock markets, providing a level of protection to investors.

Reward can’t have a downside … can it?The balanced managed fund sector was defined as medium risk by consensus of the industry as a whole. However, what does ‘medium risk’ really mean to an investor? What level of

mention of “minus” in my experience can magically trans-form a happily enthusiastic and adventurous investor into a “keep my capital intact” investor in an instant. As you’d ex-

that when one of the now iconic first customer warnings was introduced, it began its life as “Warning: the value of your investment can rise or fall”, which soon was amended to a more cautious, “Warning: the value of your investment can fall or rise”. Did you spot the difference? This was on the basis that the original statement might mislead investors to ex-pect an increase in their investment before any subsequent fall (ouch!).

The average investor in a balanced managed fund since **) has experienced

“Now Mr and Mrs Client, tell me was that the kind of invest-ment journey you expected from your ‘medium risk’ fund?”

So where did it all go wrong?Over time a number of factors contributed to the dramatic

four of the central characters in that tragedy:

Fund managers monitored each other’s asset allocations and performance very closely through the available indus-try surveys and began taking additional risk by investing more in equities over time in a bid to outperform their peers. This led to ‘herding’ around the benchmark and to a vicious cycle of ever increasing equity exposures to ag-gressive levels, which were amongst the very highest in international pension terms at the time.

There were very high allocations to Irish equities and Irish assets in these funds which, while justified by the perfor-mance of the Irish economy pre-crash, reduced the overall protective benefits that wider global diversification would have provided. They were also effectively big bets on a very small economy and stock market in global terms.

Fund managers were also constrained by investment man-dates set for them by their life companies, which required them always to have a certain percentage allocation to

market conditions. For example, in this instance, if equity markets were in freefall the fund managers were still man-

Also a ‘one size fits all’ approach to finding a suitable invest-ment solution for an ‘average’ investor led to these being the most popular fund recommendations for clients.

The story for Consensus Funds is different though, right?Not necessarily! Consensus funds are designed to deliver the average balanced managed fund return from the Irish fund manager market. They effectively remove the risk of the fund underperforming the average fund manager’s performance…by…yes you’ve guessed it, delivering approximately the aver-age performance of the balanced managed fund sector. All of the above mentioned flaws were immediately also inherent in consensus funds as they evolved and this led to a very similar

managed and consensus funds have fundamental issues that

The BROKER

Summer 2012 35

can directly impact on investors. It is strikingly apparent that there was a disconnect between the level of risk being taken in these funds and the client’s comfort level /return expectations.

So, what’s the solution then?As Albert Einstein said, “We can’t solve problems by using the same kind of thinking we used when we created them.”

Managed funds in Ireland have been around for the best part of two to three decades. The investment industry has evolved and developed significantly during this period with access to an ever increasing number of asset classes. A number of developing economies around the globe are also offering increasing opportunities. Innovations in modern portfolio modelling and the use of better together with more technologically advanced methods of risk man-agement have the potential to enhance the risk adjusted outcomes for investors.

A next generation solution …There is a fresh solution available aiming to solve the prob-lems exhibited by both managed and consensus funds and to improve the performance experienced by their investors — multi asset funds.

These funds are genuinely different from the past, or at least they should be if they truly have access to global capabilities with experts in the field of asset allocation together with a very wide and increasing number of asset classes to invest in.

In our view the best of these multi asset funds will usu-ally include:

Robust portfolios built from a much wider choice of asset classes from an increasing number of regions of the world.

The expertise and insight of specialist asset allocation experts who analyse the long-term forecasts for the valua-tions, correlation and volatility of various assets.

A specialist short-term tactical team who assess the threats and opportunities offered by the economic environment over the next 6-12 months and how the portfolio can be adjusted with the aim of taking advantage of these.

The utilisation of different styles of investment e.g. passive/ active, value/growth etc., at times in the economic cycle that the manager believes are most advantageous for the portfolio.

The ability to include an external manager’s fund, as rarely does one asset management house have access to all of the available solutions.

Access to a diverse range of the latest developments in as-set classes such as commodities, absolute returns, emerg-ing market debt and convertibles.

Management of investment risk. One of the most impor-tant lessons arising from the last few years is that clients’ perspectives have changed from a return to a risk focus. A select few multi asset funds have now very successfully addressed this by offering funds which aim to manage and control the risk of their funds over the client’s investment horizon.

It is important to point out that all of this extra fire power for generating a better risk reward outcome for your clients needn’t come at an extra premium — global asset manag-ers can generate economies of scale which can nicely trans-late into an affordable annual management charge.

In our view this modern approach is a welcome and sig-nificant development, because now, probably for the first time, the objectives of investors, Brokers, fund managers and pension trustees are aligned together in managing risk with the aim of providing a better return outcome.

Finally, a few words of caution: beware of poor qual-ity and expensive imitations which have more of a resem-blance to the old managed funds of yesteryear!

Important InformationExcept where stated otherwise, the source of all infor-mation is Aviva Investors. Any opinions expressed are of Aviva Investors Global Services Limited and they should not be relied upon as indicating any guarantee of return from an investment managed by Aviva Inves-tors. No part of this document is intended to constitute advice or recommendations of any nature.

The value of an investment and any income from it can go down as well as up and can fluctuate in re-sponse to changes in exchange rates. Investors may not get back the original amount invested.

Past performance is not a guide to the future.

Aviva Investors is the business name of Aviva Inves-tors Global Services Limited, registered in England No. 1973412. Registered address: No. 1 Poultry, Lon-don EC2R 8EJ. Authorised and regulated in the UK by the Financial Services Authority and a member of the Investment Management Association.

* Mercer Group Pension Managed Fund Survey as at 31/12/2008.

** Mercer Group Pension Managed Fund Survey as at 31/12/1997 and 31/12/2008.

36 Issue 37

PIBA at BIBAPIBA delegates Diarmuid Kelly (CEO) and Philip Brennan (Director) attended the BIBA Conference in Manchester on the 16th of May.

The British Insurance Brokers Association (BIBA) represents general insur-ance Brokers in the UK and has 2,000 members.

The conference itself is a two day event and has an impressive line-up of exhibitors, featuring the mainline general insurance companies, speciality players and service providers to the industry. There are main

platform speakers as well as technical sessions over the two days. There

The event is certainly well worth a visit from Irish general insurance

2013.

A view of the Exhibition area

Diarmuid Kelly (PIBA CEO) and Philip Brennan (PIBA Legislation Sub-Committee Chairman) outside the Conference venue

The BROKER

The BROKER The BROKER

3,%$�0HPEHU�3URÀOHCompany Name : 0RPHQWXP�)LQDQFLDO�6HUYLFHV�/WG�Company name : -RKQ�'LVNLQ�DQG�1LDOO�&DOOHU\Location : $VKIRUG��&R��:LFNORZMember Since : 2000

%DFNJURXQGJohn graduated from the Marketing Institute of Ireland in 1985

while working for ACC Bank. Having worked for Davy Plan Life, Canada Life and ACC Bank, he has been working in the financial services indus-try now for over 30 years. He lectured in International Business with various colleges between 1992 and 2009.

He has a regular radio slot as a money advisor on East Coast FM’s morning show, and as such, covers various financial topics.

John started Momentum Financial Services Ltd. in 1995 and was originally based in Leeson Street, Dublin. In 2001 Momentum moved to Wicklow town and since 2010 are based in new custom built offices in Mount Usher Court, Ashford, Co. Wicklow, just beside the famous and lovely Mount Usher gardens.

In 2006, Niall joined John as co-owner of Momentum. John and Niall had known each other for a number of years and when Niall joined Momentum he brought with him a wealth of experience, hav-ing worked for AIB Bank and AIB Private Banking for 16 years. Niall is a qualified QFA as well as having diplomas in a variety of subjects such as accounting and finance, wealth management, pensions and retirement planning, and mortgage practice, as well as a certificate in general insurance. Currently Momentum has a staff of eight individuals including its directors. The combination of John and Niall’s backgrounds and knowledge in different areas of the industry gives Momentum an added advantage, with over 50 years of combined experience.

9LHZV�RI�%URNHU�LQGXVWU\The industry has changed drastically in the last few years, which

has called for us to make adjustments to how we conduct our business. With the investment landscape evolving constantly and market volatil-ity, it is essential to construct an up-to-date specific personalised finan-cial portfolio to suit each customer. This means a regular review process with customers to ensure both parties are on the same wavelength.

The Consumer Protection Code highlights the need for documenta-tion in the compliance process and at Momentum we pay particular attention to the customer fact find to ensure we are able to work with our customers to give them the best possible advice for their specific

circumstances. In Momentum we have allocated a staff member full time to the role of compliance.

We have had to face a number of challenges in the industry, which has necessitated adaptation of work practices. We found ourselves looking at other sectors of the business such as health insurance and taking on new deposit agencies.

We have also looked into putting in place a proper CRM system to help contact customers and to deal with issues like the frequency of contact, the information to give our customers and how to deliver that information. Social media also needed to be investigated, to get the message out to existing and potential clients.

An inevitable change coming around the corner to face all Brokers is fee-based advice, similar to the UK model: we need to plan now for these changes. It is very important for a Brokerage to have a business plan but we shouldn’t be afraid of making changes to it.

,QGXVWU\�,VVXHVAt Momentum we are fortunate to have a wide range of experience from which to draw.We see ourselves as advisors rather than sales people. We believe in looking after our customers and putting their interest and aims first. A referral from a client is our best compliment and source of new busi-ness.

As with all Brokerages we weren’t immune to the effect of the down turn. We do have to deal with the sometimes harsh realities in the in-dustry at the moment. There is no point in putting our heads in the sand; we have to deal with the reality as it happens.

This does mean sometimes showing low returns and losses to cus-tomers. But we must face this time holding our customers’ hands rather than cowering in the background.

In dealing with this volatility in the market, as part of our research for our customers we have looked into more guaranteed funds and guaranteed deposit rates. With so much uncertainty and lack of return in the market, we must still aim to meet our customers’ expectations. Another issue all Brokers have had to face is indemnification of com-mission due to customers stopping contribution payments, in particu-lar on pensions.

This is the client prerogative and is unavoidable in a lot of cases.

'RZQWLPHBoth Niall and John are members of the local tennis club and both have a keen interest in golf and rugby. John also plays cricket.

Summer 2012 37

The BROKER

38 Issue 37

The BROKER

Reviews BOOKS, BLOGS, WEBSITES

KARL DEETEROperations Manager

Irish Mortgage Borkers

There are two books on the list this time around: one on property and one on default. The common theme? I wrote a chapter in both of them! While part of this is shameless self promotion I also think — and with clear bias — that they are both very relevant to the current economy in Ireland.

What if Ireland Defaults? The first book is called What if Ireland Defaults? edited by Brian Lucey, Constantin Gurdgiev and Charles Larkin (lucky Chapter 13 is my take on mortgages if we default). If you find yourself debating the pro and con arguments of defaulting or leaving the Euro, or whether or not we will default then this is a ‘must read’ — it goes through many scenarios on different topics and is a collection of essays from academics, politicians and practitioners.

Some people say default is the only solution: the authors argue to the contrary. The question however is whether we will default anyway and what such an event might bring; on the mortgage front it would cause a rapid evaporation of an already anaemic market. Already on the top ten list in several book stores What if Ireland Defaults? is a great collection of thoughtful pieces from some of Ireland’s best known commentators on the economy.

Despite the title you won’t have to be talked down off the roof after reading it; rather it is an objective assessment where opinions vary and historical examples are given for precedent.

The Irish Property Buyers’ Handbook 2012/2013This is a book by property negotiator Carol Tallon and it covers every aspect of buying a residential property in 2012. Some of the banks are saying they will give it out to prospective home buyers — although it has a strong ‘pro-Broker’ message in it for obvious reasons!

The handbook is an excellent publication: in reading through it I learned a lot and that is from somebody who already has some experience in the property business. The do’s and don’ts of the market are discussed candidly, as well as the role of estate agents, Brokers, and how they all inter-relate.

One of the best things outlined is ‘how to negotiate’ on a property; the methods are precisely counter to what most people do (it is suggested to negotiate in advance). Property is undervalued according to studies by the Central Bank and whether you choose to accept that or not, it doesn’t remove the validity of the tools you need to negotiate a property purchase (or sale if you are the vendor). For that reason this handbook is a highly relevant tool in the current market.* Disclosure: I am not being remunerated for any sales on these two publications.

Website review: http://www.bankofengland.co.ukThe Bank of England website may seem like the most irrelevant financial website to review, but trust me it is a site well worth checking out. Britain is our largest trading partner and what happens there affects us. Beyond that it is a treasure trove of excellent research and thoughts on regulation and the financial services industry in general. A recent study by the Bank looked at the ‘implicit subsidies’ given to banks by guarantee schemes and the like — answering a question that most of us have never pondered, namely asking what is the money value of schemes that help banks, rather than just the ‘actual cost’ [check out Financial Stability Paper number 15].

On the topic of central bank websites, the Irish Central Bank is also a rich source of market relevant information. Called www.centralbank.ie, they recently launched their second Intermediary Times, which should have made its way to your inbox. Other relevant topics covered are about the insurance industry, changes in the economy and all manner of studies that are carried out on things from the property market, to banking and savings. Much of the information they publish makes its way into the papers and that is one way of finding it, but much of it is also quite specialised: certainly when it comes to studying insurance products or credit you might want to rely on checking the site out yourself rather than hoping somebody else does it for you and puts it in the paper!

Follow me on Twitter: @karldeeter

39 Issue 3639 Issue 36 Spring 2012 39

Legislation and ComplianceSUBMISSIONS

Submission made on the Central Bank (Supervision and Enforcement) Bill 2011PIBA made a submission on the Central Bank (Supervision and Enforcement) Bill 2011 on the 23rd of May 2012. Included in this submission were PIBA’s proposed amendments to the Companies Act and Investment Intermediaries Act to remove the audited accounts requirement.

MEETINGS Meeting with the Office of the Data Protection CommissionerA delegation from PIBA met with the Office of the Data Protection Commissioner on the 23rd of April 2012. Items discussed included the targeting of clients through the monitoring of the money transmission system and restrictions on referrals from existing clients.

EventsPIBA Investment Seminar Series in association with Standard Life | June 2012PIBA in association with Standard Life are running an investment seminar series and would like to invite you and your staff to attend.

The seminars will take 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 23 Formal CPD hours applied for.Applicable to life and pensions Brokers.FREE for PIBA members and their staff to attend.Thank you to New Ireland for supporting these events.

PIBA General and Life CPD Bootcamp

seminar on Wednesday the 11th of July 2012.This bootcamp will provide CPD for both life

and general insurance Brokers and is free for PIBA members and their staff to attend.

For more information on PIBA events please contact [email protected].

Media CoverageBelow is a sample of media coverage received over the last quarter.

Radio/TV CoverageApril 30th – Rachel Doyle of PIBA was interviewed in relation to PIBA’s Mortgage Survey [TV3]May 1st – Rachel Doyle of PIBA was interviewed in relation to PIBA’s Mortgage Survey [NEWSTALK] May 24th – Diarmuid Kelly of PIBA was interviewed in relation to bank interference [NEWSTALK] [RTE DRIVETIME]May 24th – Rachel Doyle featured on the Business news in relation to PIBA’s Mortgage Survey [RTE DRIVETIME]May 24th – PIBA’s Rachel Doyle was interviewed for the news on the PIBA Mortgage Survey [TODAY FM]

Press Coverage (Print and Web)April 20th – Cautious welcome for Bank of Ireland negative equity mortgage plan [IRISH TIMES]April 22nd – Age a factor in cancelling insurance [SUNDAY BUSINESS POST]April 26th – Fearful banks lending less [IRISH EXAMINER]April 26th – Credit tightening, says Central Bank [IRISH TIMES]April 29th – Call for probe into women’s car insurance [SUNDAY BUSINESS POST]May 1st – Property prices too low, Central Bank [IRISH TIMES]May 1st – Brokers blame low lending for ‘over-shoot’ on property [IRISH TIMES]May 1st – Deposits rise but loans to households still falling [IRISH EXAMINER]

[IRISH TIMES]May 2nd – Permanent tsb to cut variable mortgage rates [RTE]

[EVENING HERALD]May 3rd – ‘Ghost estate’ sale a positive sign for Ireland [FINANCIAL TIMES]May 6th – Savers at risk as rates edge lower [SUNDAY BUSINESS POST]May 6th – Mortgage applications rise [SUNDAY BUSINESS POST]May 6th – Cash playing a bigger role in property market [SUNDAY BUSINESS POST]May 6th – Your five minute guide to first-time buyers [SUNDAY TIMES]May 10th – Nama if you do, Nama if you don’t [IRISH TIMES]May 17th – Personal Debt is the real problem [IRISH INDEPENDENT]May 23rd – Brokers accuse banks of flouting rules [FX CENTRE.COM]

May 24th – Banks abusing customer data, say brokers [IRISH TIMES]May 24th – Banks accused of operating illegally [IRISH EXAMINER]May 24th – Banks Breach consumer laws [IRISH DAILY STAR]May 24th – Banks use transaction data to push products [IRISH DAILY MAIL]May 24th – Banks are snooping on customers [IRISH DAILY MIRROR]May 24th – Banks break law [EVENING HERALD]May 24th – Arrears are being dealt with according to brokers [RTE]

divide as Dublin goes up [IRISH INDEPENDENT]

rich investors push prices back up [IRISH INDEPENDENT]May 27th – Brokers prepare to report bank practices [SUNDAY BUSINESS POST]May 27th – Your Money: Preparing for your financial future [SUNDAY BUSINESS POST]May 27th – Banks violating consumer laws [SUNDAY TIMES]May 31st – Banks and write-downs - what’s the story? [IRISH TIMES]June 3rd – Money education is key for future generations [SUNDAY BUSINESS POST]June 3rd – Consumers warned over buying online insurance [SUNDAY BUSINESS POST]

The BROKER

PIBA Update

Summer 2012 39

40 Issue 3640 Issue 36

Quarterly Crossword Competition

The BROKER

40 Issue 37

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 July 2012.

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

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

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

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

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

SOLUTION to the Spring 2012 CrosswordCONGRATULATIONS to competition winnerMike Crowley,Lehanes & Associates Ltd.Sackville Street,Dunmanway,Co. Cork.

WIN a two night stay* at the Radisson Blu Hotel and Spa, Galway* A two night stay with breakfast included

Rejuvenate in the luxurious surroundings of the Radisson Blu Hotel and Spa, in the heart of Galway city.

Enjoy a two night break with super buffet breakfast each morning.

Soak up the festival atmosphere this summer and join in all the craic that Galway has to offer.

pool, sauna, steam room and outdoor hot tub overlooking Lough Atalia.

General Knowledge CrosswordACROSS7 Machine that converts energy into mechanical force (6)8 This saint’s day is celebrated on April 23 (6)10 Musician who performs alone (7)11 12 Lloyd Webber musical based on poems by TS Eliot (4)13 ‘The _____ Witch Project’, a famous

17 Colin, whose films include ‘Love Actually’

18 This martial art was first included in the Olympic Games in 1964 (4)22 23 Sport which takes place in a velodrome (7) 24 Small rooms on a ship (6) 25 Country which has had major financial difficulties in 2012 (6)

DOWN 1 And 3 Down. British heptathlon hopeful

2 Ability to move quickly and easily (7) 3 See 1 Down 4 Spring plant with glossy leaves and colourful flowers (7) 5 Actor who will play James Bond in the

6 According to the Bible, apostle who

9 Many people consider this sport to be the centrepiece of the Olympic Games (9) 14 Precious stone (7) 15 Specially celebrated anniversary (7) 16 Protective eyewear (7) 19 Family in ‘Little Women’ … or a Spring

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