David Pine - Disclosure Statement
ADVISER DISCLOSURE
AS REQUIRED BY SECURITIES MARKETS ACT 1988 – INCORPORATING
NEW REQUIREMENTS FROM 28 FEBRUARY 2008
INFORMATION ABOUT DAVID AND MARGARET PINE
AND THEIR GROUP OF COMPANIES
February 2008
Services Offered
David and Margaret Pine are pleased to offer insurance and investment advice to you through their three companies: Pine Financial Ltd (fire and general insurance broking); Pine Premium Funding Ltd (financing of instalment premiums for fire and general clients); and Ownboss Ltd (broking of life insurance–based products and investments). The companies are collectively known as the Pine Financial Group.
Ownership of Pine Financial Group
David and Margaret are the sole shareholders and directors of the Pine Financial Group.
Qualifications and Experience
David has been an insurance and investment adviser continuously since 1973, first as an AMP adviser (until 2001) and subsequently as a non-affiliated adviser and broker. He is a past president of the NZ Insurance & Investment Advisers Association. This was the forerunner of today’s Institute of Financial Advisers (IFA), of which he is a fellow. David qualified by exam as a Chartered Life Underwriter in 1999. In 1988 he obtained a Bachelor of Business Studies degree from Massey University, majoring in Marketing. David is a life member of MDRT, an international organization of insurance-based financial professionals that helps its members to strive for excellence in the giving of financial advice.
Margaret is qualified by experience. Following 24 years as a kindergarten teacher, culminating in 9 years in a head teaching role, she joined David in the business in 1999 and has been managing the fire and general operation since then.
Pine Financial Ltd is a full member of the Insurance Brokers Association of New Zealand (IBANZ).
David participates in continuing education programmes offered by IFA and IBANZ to keep him up to date with changes and new information relating to the insurance and investment market place. Participation in these programmes is required by the various insurance and investment companies that he and Margaret represent through their companies.
Product Suppliers
Ownboss Ltd holds agencies with AIG Life, AMP, Asteron, AXA, Sovereign, Tower, NZ Funds, ING; and Sentinel (for reverse mortgages).
Pine Financial Ltd holds agencies with AIG, AMP General, Lumley, QBE, Vero, Axiom, NZI Marine, NZI Travel, Mike Henry Travel, Dealersblock, Herberts, International Underwriting Agencies, National Auto Club, and Star Insurance. Lloyds of London is accessed through International Underwriting Agencies and through Herberts.
Pine Financial Ltd has had its NZI agency withdrawn because NZI raised the minimum amount of business that a broker must have with them and Pine Financial had insufficient business. We now access NZI through another broker at no additional cost to our NZI clients.
Other fire and general insurers, notably Allianz and China, are accessed through other brokers.
Money Handling Procedures
For life insurance-based products and for investments, monies received from clients are passed directly to the company concerned, and are not banked into any account associated with the Pine Financial Group.
For fire and general products, premiums are banked into either the Client Premium Account of Pine Financial Ltd or, for instalment premiums, into the account of Pine Premium Funding Ltd. These monies are subsequently passed on to each insurer in bulk, on a monthly basis, on terms previously agreed with each insurer. The bank accounts are subject to random audit by IBANZ.
Payment for Services
1. Life insurance-based products. Payment is made to Ownboss Ltd by the insurers, in the form of commission. There is an up front payment on placement of the policy, and an annual renewal commission for as long as the policy remains in force. We usually choose to be paid the maximum up front commission and the minimum renewal commission, although we could choose a level commission which would pay more or less the same amount every year.
Either way, the premium that you pay is not affected.
Commission rates paid to us by insurers vary, but as an average, the maximum up front commission is around 80% of the first year’s premium, and the annual renewal commission is usually between 2% and 6% of the annual premium. If on the other hand we were to choose the level commission method, each year’s commission would be around 20% of the annual premium.
The up front commission is clawed back by the insurer if the policy does not remain in force for at least two years. If the policy lapses during the first six months, all of the commission is clawed back. Between six months and 24 months, a percentage is clawed back if the policy lapses.
Most life insurers pay us a one-off production bonus as well as commission on placement of a new policy. Rates vary widely. If payable, this bonus is usually paid up front. Typically it amounts to between 10% and 50% of the first year’s premium, and is subject to claw back as above.
Most insurers offer incentives such as overseas trips. We do not participate in these promotions. Sometimes insurers offer prizes in various sales competitions. We never aim to win such prizes, preferring to carry on as normal whether there are prizes on offer or not. Occasionally we win a prize anyway, through inadvertently meeting the criteria.
2. Investment products. Ownboss is paid a commission by the investment company concerned, except for NZ Funds, where we charge a fee instead. Rates of commission or fees vary between 0% and 5% of the amount invested. We are happy to negotiate these rates with you because unlike insurance products, the commission or fees on investments can impact on the return you receive, particularly in the early years.
3. Fire and general products. Pine Financial Ltd receives a commission from the insurer which is level rather than up front. Rates vary with the type of insurance. We receive 5% of the annual premium for commercial earthquake,10% for motor,15% or 20% for liability, and 20% for most other types of cover.
We do not receive commission on fire service levies, EQC levies or GST.
As a general rule of thumb, the amount of commission we receive from insurers is about 12% to 15% of the annual premium you pay.
Through arrangements with fire and general insurers, we retain your premiums in the Pine Financial Ltd Client Premium Account, for between 30 days after due date and 90 days after due date depending on the insurer. We are able to earn interest on this “float” during the time we hold your premiums.
Pine Financial Ltd charges a small fee when policies are set up or renewed. The fee is $5.00 per section of the policy with a maximum of $20.00 per policy.
If you choose to pay your fire and general premiums by instalments through Pine Premium Funding Ltd, we charge interest amounting to 7.6% of the annual premium, plus a one-off $5.00 fee per policy each year.
Independent Advice
We do not charge you for our time spent in discussions with you, preparation of quotations and recommendations for you, arranging policies and plans for you, and any other work we do for you. We prefer to work on a commission basis because this means that we are paid only when we create something tangible for you.
For all advice and products provided by the Pine Financial Group, we strive at all times to be impartial and to act in your best interests. We do not have any particular insurance or investment companies that we favour over any others. For us, any differences between companies in the remuneration they provide to us are insufficient to sway us one way or another in recommending a particular company’s products to you.
For these reasons we believe that we are truly independent. There is a view that where an adviser is paid on a commission basis, he or she cannot be independent. We totally disagree with this view.
Staff
We have chosen to keep our business model as simple and risk free as possible. For this reason we do not employ staff and have no intention of doing so in the future.
Professional Indemnity Insurance
David and Margaret and their companies maintain professional indemnity insurance of $1 million. This is with American Home Assurance, a subsidiary of American International Group. This company has an AA+ claims paying rating from international rating agency Standard & Poor’s.
In brief terms, professional indemnity insurance may provide protection for you if we should cause financial loss to you through giving incorrect advice or for omitting to give advice. We would be pleased to provide you with a full policy wording.
NZIJ Risk Management Ltd
David Pine is a 50% shareholder in this joint venture company, together with NZIJ Stockbrokers Ltd of Wellington. Through this joint venture the Pine Financial Group provides insurance advice to clients of NZIJ Stockbrokers. Commission on any sales is split 70% to the Pine Financial Group and 30% to NZIJ Stockbrokers.
Dispute Resolution
If you wish to complain about any aspect of our service, you should in the first instance contact one of us (see details below) and we will endeavour to resolve the matter to your satisfaction.
If we are unable to do so, you may contact the Insurance and Savings Ombudsman, on 04 499 7612 or www.iombudsman.org.nz
General
Neither David nor Margaret Pine have any of the following:
* Convictions or associations with offences involving the Securities Act, or dishonesty, nor have they been a director or principal of any organisation so convicted or associated;
* Incidence of bankruptcy or insolvency;
* Prohibition from management.
We would be pleased to discuss any aspect of this document with you.
Thank you for your interest.
David and Margaret Pine
P O Box 51 141
Wellington, New Zealand
Phone 04 499 2664
Fax 04 499 2665
Mobile 021 610 083
Email david@ownboss.co.nz or margaret@ownboss.co.nz
Location of office: level 17, Morrison Kent House, 105 The Terrace, Wellington
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