Partners Life outlines its dealer group strategy
Partners Life managing director Naomi Ballantyne has thrown her support in behind Newpark and at the same time criticised other groups.
Friday, September 13th 2013, 10:21AM 
10 Comments
Ballantyne told advisers at the Newpark Development Day in Auckland this week that Partners Life wouldn’t be where it is today without Newpark’s support.
“We would not have this business we have today without Newpark. When you speak we listen.”
Ballantyne outlined Partners Life dealer group strategy. She said when the life company started the dealer groups were battling each other and dying.
“Cannibalising each other's businesses was the growth strategy,” she said.
“There was a very, very significant risk that those groups weren’t going to survive - with the exception of Newpark. Our best solution was to save them from themselves.”
Ballantyne clearly said that Partners was supporting dealer groups as its distribution strategy.
She said life insurance companies “are full of people that think they know how to be brokers”, but in reality they don’t.
“We don’t know how to do your job,” she told advisers. “We don’t know how to manage salespeople. We don’t know how to do your business.”
She even admitted that Partners thought it could run a dealer group when it set up Us Advice.
One of Ballantyne’s key criticisms of the dealer groups is that they were paying away the extra commission life companies paid them to win over advisers.
Her view is that these overrides are paid to the dealer groups so they can grow their businesses and support members and do the things they promised the life companies that they would do.
“We are paying it to [dealer groups] to do the work we would have to do – unsuccessfully.”
Ballantyne said it looked like cannibalisation was starting to happen again as one, unnamed, group was paying out the extra commission to members.
“It is not the right answer for the industry or for you,” she said. “That dealer group is killing itself.”
It means that the group can’t do what it told the life company it would do and the company will end up having to do those things itself. If they have to pay twice like that they will stop paying the commission, she said.
She outlined things that she expected dealer groups to do.
One was that when the head of a dealer group talks to the company that person carried far more weight than an individual adviser.
“When they speak on your behalf have weight behind them,” she said. “When Darren speaks, I pay attention.”
“There are lots of things we have done because the groups have pushed.”
Ballantyne acknowledged the importance and power dealer groups have with life companies.
“There are days when I would very happily throw dealer groups in the rubbish bins,” she quipped.
She also referred to an incident some years ago when one group shifted its loyalty. “There is history where one company wasn’t playing ball and the whole group moved.”
“That’s what hangs over my head each day.”
Dealer groups also provide advisers which camaraderie and support and a platform to share ideas.
“We do love you…but I am a life insurance company and I have to be nice to you. That’s not the same thing as being on the same team.”
She also said dealer groups provide training, business development, support and advice around regulatory issues and groups can access far better deals for members than what members could do individually.
Partners Life supports dealer groups as it is, she says, the best way for independent financial advisers to get support tot grow their businesses.
However dealer groups have to support their members.
It’s all about advisers growing their businesses, not just getting a little bit more money for the business they already have.
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I am thrilled that Newpeak has supported your growth, but please do not assume others in the advisory community need to follow a similar pathway.
A member of NewPark or any other dealer group for that matter are not forced nor mandated that they must write a fixed % with any particular product provider so are the the truely independat ones? - Just asking.
@billy the broker - it seems you are a little misinformed. FYI, Sovereign do acknowledge Newpark Brokers. Not only do we hold a Sovereign Agency but we even have a BDM who meets with us.
I know for a fact that Sovereign is willing to offer agencies to Newpark members however they will need to negotiate terms and have an agreement outside of their relationship with Newpark which is only fair.
The crazy thing is that both Sovereign and Partners Life are great companies, and all this banter about who is better or who is more financially solid is irrelevant if we have taken our clients through a thorough advice process in the first place.
As for Dealer Groups, they can provide a lot of value, especially if you are looking for tools and ideas to improve yourself as an adviser.
In response to which insurer is better or which distribution model is better?Surely it comes down to what is best for the client?
Who am I as an adviser to presume an A+ financial strength rating is more important to a client than having a mortgage repayment monthly benefit that has CPI Claims indexation built in.
As long as we have disclosed to our clients who we can place business with, covered off how we get remunerated, justified why we are recommending a particular insurer over another, and cover off the good and bad points, then we have done our job.
There is nothing long with replacement business as long as you can covey the value to the client and make sure you are not putting your client into a worse position at time of claim.
On another note: If you went into a nutritional supplement store where there are many different products for you to buy, but the retail assistant would only recommend one of the many options on show, and didn't have the knowledge to explain the good points of the other supplements, would you be comfortable buying from that store?
Similarly don't we have an obligation to our clients to give them choice if there is a policy out there that can give them more money in their hand a claim time?
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This is a problem across the financial sector, not just dealer groups. Advisers generally do it, and regardless of being 'independent', tied, or dealer group. Some would blame high upfront commissions for that, and they would have a point. Banks do it to each other too; on lending, with both their sometimes ridiculous new-business acquisition practices (think cash, TVs, low rates etc), and their dubious life insurance selling tactics.
We see it with life companies. Whilst some efforts are made at retention, the focus remains solidly on new business. With everything from trips to upfront commissions geared to writing new business - much of which is replacement.
The fact is that much of that "growth" is actually zero-sum to the industry. For a lot of the dollars one company shows as growth, another is reporting as lapses. One would assume that growth-focused companies with less existing business to defend would inherently be making a greater contribution to that.