“With time, we will end up with advisers who attach themselves to this style of remuneration and that is where we will get our momentum from.”
At the same time he has noticed the average net worth of clients is rising. “This is partly because fee value is in the high net-worth category and partly because the type of adviser who works well within our ‘transforming’ system will target high net worths,” he says.
“Our aim is to get to 1% on everything, and obviously if we get multimillionaires, then we will give them a deal.
“I see the commercial value of what we are talking about as being able to attack the private banks here, because they are nowhere near as professional as other parts of the financial services world,” he says.
What Kelleher would like to see next is some improvement in the services he gets from the product providers.
“If we’re talking about life products as versions of savings plans, we look to the important issues such as jurisdiction, asset choices, service and price. Generally, we do not look to products as a massive differentiator.
“Brochure colours change but that’s not a reason to choose one product over another.” However, he goes on to complain about the level of information provided by the life companies. “Most life companies are poor on service. Until the whole distribution line stops serving them, they will not provide reliable and immediate information flow.
“If we are right that clients expect good service, and I know we are, then why can’t life companies provide first-class information flow electronically?”
Change afoot
Kelleher is a veteran of the Dubai financial advice market and welcomes the recent moves by the UAE’s various regulators to tighten up the rules surrounding the products and services covered by the various licences in the country.
Mondial (Dubai) has been operating in the UAE since 1988 and has had a central bank licence since 1997. It is licensed by the UAE Securities and Commodities Authority (SCA), which means it can provide financial consultancy and financial planning advice but cannot sell life insurance.
However, the owners of Mondial also own another company called Expat Cover Insurance Consultancy, which has an Insurance Authority licence and can offer IA regulated products. The consultancy licence does not allow for commission payments.
The SCA and the IA have both recently announced proposals to tighten what can and can’t be done under their licences, with the IA looking to toughen the regulations around the way savings, investment and life insurance policies are sold by its licensees.
The regulator said it has been prompted into action by “an alarming amount” of complaints from policyholders.
The IA’s proposals include the abolition of indemnity commissions, a commission cap of 4.5% for any insurance savings product and a much greater level of disclosure on fees and charges.
According to Kelleher the impact of the changes could be quite dramatic. “If we are talking about the commission changes, that might reduce the number of advisers in the first instance. Salesmen might find other industries where the pursuit of a front-end commission is instantly rewarded.
“If we are talking about greater clarity on what each licence allows you to do, maybe the global players will become more interested in the region,” he says.
In the coming years, Kelleher expects there will be more professionals and fewer salesmen across the whole industry. “Overall, I think regulators will have a lot more influence. Otherwise, the pension market and the insurance scene cannot develop.”
