Getting to Know: Mark Weaver

Mark Weaver became a familiar name to many when he authored a report for the FSC that was critical of insurance adviser commissions. We find out a bit more about the recently-retired actuary.

Friday, May 5th 2017, 10:48AM

by Susan Edmunds

Who are you and what do you do?

I am Mark Weaver and I recently retired as a principal of Meville Jessup Weaver, a firm of consulting actuaries and superannuation scheme administrators. In 1976, I qualified as an actuary, and emigrated to New Zealand and windy Wellington in 1982, courtesy of Tim Henaghan and the Wyatt Company. My career has spanned employer-based superannuation schemes, general and life insurance, and investment consulting. It's been varied. I enjoyed some successes in my career which I mostly put down to getting lucky from time to time.

If there is one thing you would like to change about the financial advice industry, what would it be?

The remuneration needs to change and the changes required need to be done properly. The whole financial sector is in a sorry state and we need to rebuild integrity from the top. I believe wholeheartedly in the importance of proper financial advice - financial literacy is important, but how products are sold, and the value of the products offered, is everything. There are a whole bunch of highly skilled advisers out there which NZ needs to tap into - top quality people. Of course I believe in the recommendations put forward in the FSC report but it needs to go further. We have to eliminate the incentives both in the remuneration and in the product design that attract the wrong people into the industry and lead to advisers making the wrong choices for clients. This ultimately means level commission at rates maybe up around 20%-25%.The alternative is products with limited customer value and the question left as to whose benefit the product was sold for. The life industry has morphed over the last 20 years to providing annual renewal term policies with changing benefit offerings. If the client really does need their benefits to be updated each year, then the adviser needs to go to see them every year and get paid for seeing them. Okay, it takes more time in year one, but that's called investing in your business. It follows it has to adopt similar commission solutions to general insurance.

What's the best advice you have ever received?

That's besides fully understanding the client's goals and thinking before you speak? Surround yourself with smart people. You cannot add value to the client if the people around you are stupid. I have been big on this, as my ex-colleagues will happily tell anyone.

What made you decide it was time to leave MJW?

Easy. Been there for 24 years with old-age pension due. And in the last year or so, I started thinking that the clients needed a change - a new view on the ever-changing issues. As a business, MJW were aware of the need for succession planning and back in 2012 had worked with a bright newly-qualified actuary to go to Sydney and get upskilled. So we were able to have a win-win, with me retired and a new partner on board with all the latest ideas and contacts.

What did you most enjoy about your 20+ years there?

The two issues which come to mind are the FSC project per above and the privatisation of ACC. ACC was such fun as it was all about major change for the insurance industry and an opportunity to do things differently. There was such a clash of ideologies with insults readily flying - a la - FSC report. No, but from a work perspective it was all new, great learning. Possibly privatisation was too difficult, but the system does need changing from time to time and changes to how they manage the claims are overdue.

The fun started when Helen Clark was elected and workers compensation was renationalised. As a business, MJW got involved in selling the outstanding claims back to ACC with the insurers wanting, naturally, to pay as little as possible, and with some help from our friends we did a wonderful job.

On a one-on-one level, you get to work with some smart people and the new analysts out of university are critical to a business such as MJW.

What were the frustrations?

Providing you are succeeding for the clients, the frustrations in the firm are limited - you go home satisfied each evening. There are certain goals you have and with six voices round the table you have to work out how you are going to get your colleagues to understand your position, while also staying open to alternative ways of achieving the same ultimate outcome. A fault of mine was not always doing all my homework and trying to do things too quickly. You have to build a consensus and take time to sit and talk, which sometimes seems hard work. Of course, you get a better answer and outcome if you do put the time in. Actuaries can easily think they are smarter than they are and struggle to fully appreciate the real world out there.

The big actuarial firms get more credit for their abilities than they deserve and if you are doing a major sign-off piece of work, the letterhead that gets to London in regard to the work is all too important - but that's the way the game is played and another one of those things it is good to understand and learn early in your career. In the smaller firms we satisfy ourselves with knowing that as an individual analyst, we get to be involved in the whole job and see the whole picture and issue we are looking to solve.

And a real source of frustration is not unrelated to the adviser business - you need the analysts to understand that it is the clients who pay the bills and yes, we need to get back to the client today - tomorrow's no good. you surprised at the reaction to your report

Were you surprised at the reaction to your report for FSC?

Yes. I am an optimist and always looking/expecting people to do the right thing - why would you not? The background to the project was the thinking by my colleague David Chamberlain that NZ was going to have to face this issue of conflicts of interest in remuneration structures, as in the Trowbridge Report. He then just left me to go around the industry to canvas the finances - the easy job! And we got all the more established, longer-term industry players in - they fully understood the issue and what the report was likely going to recommend. There were no surprises.

So the industry was presented with the opportunity to say yes to the report - if on a slightly begrudging basis - and go to the regulator with a united front and for the industry to lead the change. Instead, it chose to ignore end customer outcomes and burn yet more shareholders' capital for no value at all. You can see from all the comments in the follow-up reports from MBIE that they know there is a remuneration issue here, which, without solving the underlying problem, only produces a half-baked solution.

Are you a KiwiSaver member?

Yes, and in the AMP scheme. [It] clearly struggled in the last few years and it's not clear they managed the risks in their strategy well - too much exposure to emerging markets and commodities, for example.

If so, what's your investment strategy?

Currently in the Growth Fund. Originally in the old AXA Balanced Fund - default option. Thinking about it again, I should have been in the more aggressive from day one as I'm able to deal with the volatile returns.

What's one thing people may be surprised to know about you?

I once led the funeral service for my best mate in Old St Paul's cathedral. Michael was the leader of the Wellington Men for non-violence and co-counselling groups in the 1980’s and 90’s. It was probably the biggest tribute an actuary from North London could ever be asked to do.

Tags: Getting to Know