Brendan Burgess
Founder
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PRSA 'Standard' & CAI 'Savermark'
<!--EZCODE ITALIC START--> Glossary
AA - Authorised Advisor
CAI - Consumers Association of Ireland
CM - A 4GL search engine unique to AAM (Askaboutmoney)
DSF - Direct Sales Force
HNW - High Net Worth ( i.e. a rich person)
IB - Industrial Branch (life assurance door to door salesmen)
Mith - Mithrandir (the author of this post)
Mithrandia - A rambling style of writing informative posts using acronyms in an effort to deter HNWs from using websites so that they will contribute to the coffers of AAs and help make those AAs into HNWs
NPPI - National Pensions Policy Initiative
PB - Pensions Board
PFJ - Personal Finance Journalist<!--EZCODE ITALIC END-->
The CAI Savermark was a voluntary scheme, without statutory power, and no intervention in the process of the free market. It did influence product pricing especially in deposit rates, and to a lessor extent it helped highlight investment costs.
But insofar as it influenced actual purchasing patterns I think it failed, ultimately because the market is overwhelmingly advisor centric. And advisor have to get a cut whether by fee at the HNW end, discounted commiisions in the middle, or full commissions at the low end.
There is little chance of the Pensions Board, who'll spend on advertising, and promote among PFJ's, reaching the high public profile of Savermark, I'd propose. It will face the combined marketing and sales power of the Life industry. And the advisory process of the market itself. Other than disclosure law, is it the case that benchmarks like the PRSA 'Standard' are likely to be doomed to fail?
The PB wants to reach the non pensionable. But these are the 50% who didn't take up the 'Free' money SSIA. And only at €12.50. These are the people who haven't taken up personal pensions. Tax relief is irrelevant if your on low income, making ends meet, or are just about comfortable but at a marginal 20%. Who sells at this end of the market, and how are they to be encouraged to sell more if Life Offices operate at the 'Standard'?
Already one large DSF has been told it will need to sell on a fee basis. Thats fine at the mass affleunt, HNW end but for heavens sake, that won't work in working class housing estates.
It seems to me that there is a paradox. If,and its a big if, the 'Standard' is sucessful the target market that the PB wants will not be reached. On the other hand.....get the picture. MY guess is that the big sales volumns will come from two markets - cannibalisation of existing investments as these transfer, and spouses of the existing 'advised' marketplace. I'm opposed in principle to any price fixing in most marketplaces, and the 'Standard' is quasi price fixing. I'm for widely promoted voluntary benchmarks like quality marks and the like, but I'm skeptical of over meddling in market processes, because they are too complex for black and white solutions, eg the propert market, and Bacon etc.
But, hey, that's just my best view now in the aftermath of Savermark, and based on speaking to pan industry participants. What's yours?
<!--EZCODE ITALIC START--> Glossary
AA - Authorised Advisor
CAI - Consumers Association of Ireland
CM - A 4GL search engine unique to AAM (Askaboutmoney)
DSF - Direct Sales Force
HNW - High Net Worth ( i.e. a rich person)
IB - Industrial Branch (life assurance door to door salesmen)
Mith - Mithrandir (the author of this post)
Mithrandia - A rambling style of writing informative posts using acronyms in an effort to deter HNWs from using websites so that they will contribute to the coffers of AAs and help make those AAs into HNWs
NPPI - National Pensions Policy Initiative
PB - Pensions Board
PFJ - Personal Finance Journalist<!--EZCODE ITALIC END-->
The CAI Savermark was a voluntary scheme, without statutory power, and no intervention in the process of the free market. It did influence product pricing especially in deposit rates, and to a lessor extent it helped highlight investment costs.
But insofar as it influenced actual purchasing patterns I think it failed, ultimately because the market is overwhelmingly advisor centric. And advisor have to get a cut whether by fee at the HNW end, discounted commiisions in the middle, or full commissions at the low end.
There is little chance of the Pensions Board, who'll spend on advertising, and promote among PFJ's, reaching the high public profile of Savermark, I'd propose. It will face the combined marketing and sales power of the Life industry. And the advisory process of the market itself. Other than disclosure law, is it the case that benchmarks like the PRSA 'Standard' are likely to be doomed to fail?
The PB wants to reach the non pensionable. But these are the 50% who didn't take up the 'Free' money SSIA. And only at €12.50. These are the people who haven't taken up personal pensions. Tax relief is irrelevant if your on low income, making ends meet, or are just about comfortable but at a marginal 20%. Who sells at this end of the market, and how are they to be encouraged to sell more if Life Offices operate at the 'Standard'?
Already one large DSF has been told it will need to sell on a fee basis. Thats fine at the mass affleunt, HNW end but for heavens sake, that won't work in working class housing estates.
It seems to me that there is a paradox. If,and its a big if, the 'Standard' is sucessful the target market that the PB wants will not be reached. On the other hand.....get the picture. MY guess is that the big sales volumns will come from two markets - cannibalisation of existing investments as these transfer, and spouses of the existing 'advised' marketplace. I'm opposed in principle to any price fixing in most marketplaces, and the 'Standard' is quasi price fixing. I'm for widely promoted voluntary benchmarks like quality marks and the like, but I'm skeptical of over meddling in market processes, because they are too complex for black and white solutions, eg the propert market, and Bacon etc.
But, hey, that's just my best view now in the aftermath of Savermark, and based on speaking to pan industry participants. What's yours?