SUB CATEGORIES General |  Networks |  PROpulsion | 

Independence questioned

23 June 2004 Angelo Coppola

“Firstly, it's fantastic that Mutual has acknowledged the value that broker distribution networks can bring to the life industry in SA.

“Their involvement via "Celestis", an Old Mutual owned company, in "knowledge and services" networks such as Tradewind and Navigator has equipped them with some insight into what makes these entities work or not work and should be beneficial to the independent broker community.

“What they might still need to learn, a lesson being learnt by independent distribution networks such as IFAnet and Shared Vision, is the art of multiple product distribution and equipping their consultants with objective product promotion skills.

“The caveat to this view is the sincerity of the words "independent and independence" and the practicality of being an independent provider of services in respect of compliance and product evaluation.

“If I understand the structure correctly, Celestis will be the service provider to Masthead. If this is indeed so, Old Mutual will effectively be providing the services to the association of brokers and can hardly be expected to be independent in its assessment of competitor products.

“In the March issue of Money Marketing Rose Keanly, MD of Masthead, Navigator and Tradewind networks/associations herself expressed the concern that "the inherent danger of product focussed broker networks is that, whichever way their supporters describe them, they dilute and compromise the independence of the broker".

“Masthead Distribution Services sole source of income would appear to be the fees they are hoping to generate for distribution of the products of the "major players".

I assume Masthead has devised a plan to avoid the concern previously expressed?

This, despite that fact that the other networks are run by companies and individuals that have no affiliation to life offices and other product providers.

Apparently competitor companies will be offered the opportunity of purchasing an interest in Masthead Distribution Services? I guess this is to further establish the credibility of Masthead as an independent operator?

“That said, if Celestis remains an Old Mutual owned company and Celestis is the contracted administrator of the Masthead network, as is the case with Tradewind and Navigator, both of which have boards on which several product providers are represented, the independence of services could be regarded as questionable.

“In as much as we support distribution networks such as IFAnet and Shared Vision, amongst others, we support the Masthead initiative and look forward to seeing them delivering on broker expectations that they are creating.”

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