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Finance: Service your clients the right way

Legacy Phuket Gazette

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Finance: Service your clients the right way | The Thaiger

PHUKET: I often run across clients of other firms who complain that they receive absolutely no service on their policies. I understand how they feel, but having been in the industry a long time, I also understand why. It is simply a misalignment of interests and is inherent in the way many of the insurance companies allow the introducing and servicing firms to be compensated.

The main problem stems from a practice called ‘indemnifying commissions’, where the insurance company charges a management fee to the clients and pays the introducer a one-off upfront fee. Now, if things go well from here, an introducer can then expect referrals or additional business and thus interests are theoretically aligned. The problem however, lies in situations where things don’t go so well and a relationship sours. At this point, attentive service is probably needed the most. However, when a ‘troublesome client’ is almost certain to lead to no future revenues, interests are no longer aligned as the client becomes a lot of work with no future value. The situation then becomes one of damage limitation.

The above scenario is extremely common and leads to what I call ‘orphaned clients’, who are left with no service on their policies since the insurance companies do not step in to fill the gap (they still collect their fees, however). Half the time the original brokers fail and leave the industry altogether, and their replacement knows they are likely to get nothing but headaches from a given account. Thus, they ignore it. I have known brokers who have gone a whole year without a single paycheck and still spent hours every day sending emails and trying to smooth over relationships with disgruntled clients, only to be forced to leave the industry when their savings ran out. While there are many unscrupulous people out there, I think the problem is structural more than anything else, but luckily that means there is a very easy solution.

Insisting that there is no ‘lock in’ or ‘redemption penalties’ will avoid a situation where you get orphaned, as insurance companies will only indemnify commissions if they know they can get them back from clients via redemption penalties. The same is true of underlying investments, anytime there is any redemption penalty of any kind it means someone is taking an upfront commission. This means their business model is more dependent on finding the next commission, not providing great service and earning an ongoing fee. If they are compensated via an ongoing fee, this not only incentivizes them to give great service, but also builds them a steady income and ensures they can stay in business for the long term.

So what if you have an existing policy and have already been orphaned? You can always find someone to take over the servicing of the account for free, but this is usually a bad idea. Every time I have done this myself, the client turns out to be a lot of work because they still have a bad taste in their mouth from the original experience. Nobody wants to be on the receiving end of abuse, and this leads to an ongoing situation where the client continues to get poor service.

In this instance it is best to agree to provide the new servicing agent with some form of ongoing fee. It shouldn’t be exorbitant, but remember that you get what you pay for. Even then you need to understand that you cannot buy returns. You need to understand the risks of everything you do and remember that anyone who guarantees anything when it comes to a return above and beyond what a bank pays on an interest-bearing account is not being truthful. Paying a management fee simply ensures your account will get serviced, but it doesn’t mean projected returns will be achieved.

David Mayes, MBA, resides in Phuket and provides wealth management and life coaching services to expatriates around the globe, specializing in UK pension transfers. He is a regional representative of Faramond Group, located in Kuala Lumpur, Malaysia. Faramond UK is regulated by the FCA to provide advice on pensions and taxation. He can be reached at 085-335 8573Finance: Service your clients the right way | News by The Thaiger085-335 8573 or david.m@faramond.com

— David Mayes

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

Keep in contact with The Thaiger by following our Facebook page.

Never miss out on future posts by following The Thaiger.

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Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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