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And there’s more…

22 June 2004 Angelo Coppola

“It seems that Masthead and Old Mutual are misusing new legislation to scare the hell out of IFA’s, to get them to join Masthead, which they were unable to do through Tradewind and Navigator,” says Britz.

“It is clear that neither Old Mutual nor Masthead have done their homework on the other networks,” claims Britz.

“And how can an IFA enter into an agreement with an association that belongs to only one of the major role-players (75% belongs to Old Mutual). With Old Mutual’s 75% shareholding in Masthead they must be supernatural to keep themselves from being biased towards Old Mutual products.

“If Masthead is making a profit and that profit is passed on to the IFA’s they are contravening the old Article 28, of the long term insurance act, because they will get more than maximum commission.

“Hamilton started off in exactly the same way in February 2000.

“After a meeting with Deon van Staden at the FSB Hamilton and Vitex had to restructure their concept to make sure that no IFA in association with Hamilton will ever be in a position that someone can claim that these IFA’s earn more than maximum commission.”

Just to clarify matters, Britz says that neither Hamilton nor Vitex are charging any fee or subscription to any IFA.

“Hanratty’s assumption that networks currently operating in South Africa have a short lifespan and the offering is not comprehensive is inaccurate.

“Once again their homework was not done properly. Hamilton and Vitex started doing their homework in July 1999 and officially started operating in February 2000.

“Hamilton solutions was registered as a public company in May 2000. Vitex started to operate as an independent company, with its own directors in October 2002.

“We are not worried about the shrinkage in the IFA market. With our criteria, (one of them a minimum of five years experience) before someone can join Hamilton, we doubt it if we will lose one IFA.”

Editor’s thoughts:

· Those are fighting words.

· It seems that all is not as it seems in the networking environment, with lots of positioning going on. So when is a network not a network and when is it a service provider?

· Again, if intermediaries are unsure about which way to turn, ask the question: “how will I benefit and how will my clients benefit?”

· If it feels instinctively wrong, then it probably is wrong.

Quick Polls

QUESTION

The second draft amendments to Regulation 28 will allow retirement funds to allocate up to 45% of their assets to SA infrastructure, with a further 10% for rest of Africa; but the equity & offshore caps remain unchanged. What are your thoughts on the proposal?

ANSWER

Infrastructure? You mean cash returns with higher risk!?!
Infrastructure cap is way too high
Offshore limit still needs to be raised
Who cares… Reg 28 does not apply to discretionary savings
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