‘Conduct and culture’ is a phrase that has rarely left the lips of the financial services sector over the past year, and it was a major theme at ICNZ’s recent annual conference.
The conference explored a variety of perspectives when it comes to ensuring good conduct and culture, with attendees hearing from insurers, regulators, young professionals and, importantly, the brokers themselves. NZbrokers CEO Jo Mason outlined her own experience with brokers – first dealing with them from the side of the insurer, before gaining a deep insight into their practices as CEO of a major broker group.
“Until about three years ago, my experience with brokers had always been from the perspective of an insurer,” Mason explained. “Since 2016 as CEO of NZbrokers, my appreciation for brokers’ commitment to clients has grown tenfold.”
Mason says that the businesses she deals with are mostly local and owner-operated, with the typical New Zealand broker having grown up in the community they serve, and having maintained very deep ties to that network of people. She says this means that they are always fully invested in getting the best possible outcomes for their clients, as they are dealing with relationships that they have maintained over many, many years.
Read more: Finance Minister to advisers: “rebuild your social capital”
“These brokers have friends and family in that community, their kids attend schools and sports clubs along with their clients’ kids,” Mason said.
“Their current standards are likely to be compliant, albeit through informal practices – not the formal practices that will be required in order to demonstrate that the Code of Conduct standards are being achieved.”
“Very rarely in my role as an insurer did I believe that a broker acted in the interests of anyone but their client,” she said. “However, now, after having worked with a broker network for three years, I am even more strongly of that opinion, sometimes to the extent that the cost of providing their service is even more than the commission.”
Mason highlighted a case of one NZbrokers member, who spent around 3-5 hours working with a client to ultimately receive a commission of approximately $500. The motivation behind this was that the client-broker relationship was over 10 years old.
“It was one local businessperson helping another, and it was about getting the best outcome ahead of the immediate cost,” she explained.
“This is not uncommon behaviour, but it’s probably not as well documented as it needs to be for the purposes of demonstrating client interests. What will be the biggest challenge for brokers is the requirement to demonstrate what has already been so natural to them.”