16
Feature Ia oFFshore lIFe oFFIce roundtable
Key poInts
It was discovered that different
life companies often have very
different approaches around
permissible assets.
There were also divergent
approaches to soft
commissions and marketing
allowances paid by fund
managers and banks to
advisers.
Phil Oxenham, marketing
manager, Skandia international
nick Smith, business
development manager,
Clerical Medical international
Mario Ricciardi, executive
director investments and
business development, Canada
life international
they do not provide commission,
so it will be interesting
to see how they sell
in comparison to the ones
that do pay commission.”
Smith added: “This is
a shorter-term issue, in
that the RDR will do away
with a lot of pricing that
includes any kind of soft
payments or commissions.
“Our established process
is to rebate everything.
There are structured
deposits out there, where
if you do not take the
commission, they do not
rebate it. They keep that,
it is their extra 2% or 3%
profit for the fund manager,
and you have to look
at those and say, with full
client disclosure, do you
allow that payment. It is
something that will go
away and become more
transparent.”
l Impact of Kaupthing
Margaret Jago, Aegon
Scottish Equitable International’s
tax and technical
manager, said that
dealing with fallout from
Kaupthing had taken up
around 60% of her time
since last October, when
the bank collapsed.
Asked whether Aegon
SEI had changed its literature
in the wake of the
bank’s failure, for instance
to highlight risk warnings
or highlight compensation
scheme arrangements, Jago
said: “Kaupthing made it
clear that the understanding
among investors and
advisers of what was protected
– where things like
compensation schemes
applied – was not what it
could have been.
“So literature changes
are likely because of this.
But there is a difficulty
with that, in that a literature
change is something to do
with realising that things
have moved on, rather than
saying our literature was
inadequate. It is more a
case of strengthening it.”
Smith said that Clerical
Medical International had
not received an “onslaught
of complaints” over Kaupthing,
which he linked
to the company’s regular
communication with policyholders
over the issue.
Dodds added: “It is
mostly a case of events
overtaking us rather than
us being wrong regarding
literature and so on.
In terms of cash, perhaps
naively most people did
not think of it as an investment
choice. It was a safe
haven and how could that
go wrong? Well, now it
regular premium accumulation
%
100
80
60
40
20
IFAs/word of mouth
International Life Offices
(AILO) in the Kaupthing
crisis, as well as the willingness
shown by rival companies
to work together
to ensure a common message
was being conveyed
to the market.
l Platform approaches
There was lengthy discussion
on the various
approaches of different
life companies to permissible
assets on platforms,
whether open architecture
or fettered. This largely
focused on whether companies
should take a stance
over certain assets by
not allowing them – or
Limited range/single tie
0
’05 ’06 ’07 ’08 ’09*
*Q1 only. Source: Association of British Insurers
has, and people are realis- asking clients to sign waiving
there is no 100% safe ers – or if, provided such
investment anywhere.” investments met permis-
Jago said: “It probably sible assets tests, then pro-
shows up the real benefits viders should step back.
of advice. If you look at the Ricciardi was firmly
Depositors’ Action Group of the view that open
website, for instance, some architecture should be
of the stories you read, unrestricted.
with people losing all their “We sell bonds as open
savings – vasts amounts of architecture but if we are
wealth, and these people saying there is a specific
were perhaps not advised fund that, for whatever
in many cases. So there reason, we will not look
is clearly a real benefit to at, then you are starting
having advice and spread- to get into the realms of
ing your assets, whether advice. You are saying this
they are bank deposits or fund has risks associated
investment funds.” with it,” he said.
Participants in the “My worry is not the
roundtable praised the funds you are blocking,
role of the Association of but the funds you do allow,
because the minute something
happens in one of
those the funds, the client
or the IFA can say ‘You
let me into this fund. You
didn’t let me into this one,
but you let me into this one’
– so they can argue you did
due diligence, whether you
did or not.
“We know that certain
life companies, especially
on the Isle of Man, will
not allow certain types
of banks. By default they
are saying the other ones
are okay. That is the big
danger we could head
down if we start blocking
certain investments.
“If it constitutes permissible
property, then there
is no reason to block it.”
Blackburn said Royal
London 360º took a slightly
different approach.
“Each company has its
own governance when it
comes to investment,” he
remarked. “Unfortunately,
there are still mixed messages
when it comes to
some funds, where some
companies will accept
them and others not. But
it is up to the companies
whether they are willing
to do that and take on the
associated risks of that.”
l Other topics
Among the other areas discussed
on the day were
the advantages of using
offshore bonds versus fund
platforms, and vice versa,
the variable annuity market
and worldwide efforts to
stamp out tax evasion and
reduce avoidance.
There was also agreement
that the offshore
bond wrapper was becoming
increasingly commoditised
and that providers
were having to differentiate
themselves through
other areas such as investment
choice and flexibility
and service standards.
INTERNATIONAL ADVISER [www.international-adviser.com] AuguST 2009
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