Yes, the day is almost upon you now, when you, oh illustrious member of the Knesset Finance Committee, will vote on the Bachar reforms. In recent weeks, you have been cajoled and canoodled, you have chatted with the great and the good, the heads of the banks, the treasury director general, and insurance agents have even been crying on your shoulders. Even Mizrahi Bank's chief Eli Yones you know, the one who, at Hapoalim, showed the door to 900 workers he assured you that the insurance agents have nothing to worry about.
So who do you believe? Who can you trust in that jungle of figures. Truthfully, you didn't really understand everything that was said, and it all got so confusing. So you'll have to rely on good `ole you. And ask these simple questions, while bearing in mind "is it good for Yossi on the street?"
1. How dare we force the banks to sell their mutual and provident funds!
Remember, every time you walk into the bank, and ask what to do with some spare cash, lo and behold there's an adviser that knows just the fund for you, and it's always a fund owned by your bank. So they maximize their profits, while your "impartial advice" has benefited you very little.
You can't really fault them. Who could resist the temptation of offering your very own funds? So let's get rid of this irresistible opportunity, and get the banks out of the funds.
2. Will the banks really get hurt?
They'll sell their funds, and get the full price for them. They may even profit on their improved reputation and integrity in the eyes of the public. That's what Citibank thought when it recently sold off its fund division to focus on investment advice.
And anyway, for the benefit of the public, getting unbiased advice from their banks it's worth the banks' suffering. That's what America believed when it decided in the 1930s to force their banks out of the mutual-fund sector.
3. So what if we let the banks keep a 5 percent holding in the funds?
Once you let the banks keep any holding, the conflict of interest remains. Every advantage of the reforms will be lost.
4. And what if the new fund managers pay for the banks' advice as well as the customers?
The moment a bank receives pay from the provident fund that he sells to his customer, then a conflict of interest can arise. The bank will favor one fund the one prepared to pay more commission above another. There are ways round this being proposed, but anyone can get around these restrictions. The best way is purely to let the customer pay, not the fund. It's a shame you've gone for the compromise.
5. Well, why are private brokers allowed to run mutual and provident funds?
Excellent, MK, you're finally on the ball. It's a good question, because the bill does not address this potential conflict of interest.
6. Wait, didn't we consider letting the small banks keep their fund holdings?
You did, and we can only pray that you'll quickly come to your senses. The small banks argued that, if it's competition you're after, they should not have to have their hands tied just because the two biggies dominate the market. But, hang on, Mizrahi's wanting to compete better with Hapoalim, for example, does not justify Mizrahi's continued opportunity to screw its customers with misleading advice. Let's consider giving the small banks longer to sell their fund holdings, and preferential treatment in selling insurance.
7. Insurance? But then the banks will clobber the insurance agents!
Oh dear, suddenly you're worried for the 1,500 agents and how impartial they are! rather than the 4 million insured. And if the banks move in, maybe finally they'll give the public better advice on the pension policies available.
8. But you just said they give dreadful advice!
But the banks don't own the insurance companies, and therefore their advice should be impartial.
9. What will happen to the insurance agents?
They'll learn how to compete, and service will improve.
10. Poor consumer, it's such a complex world out there!
Exactly, which is why he needs good advice, and if you can turn those bank clerks into independent financial advisers, looking out for the benefit of their customers, then millions of Israelis will benefit. That's what this bill is all about, so it's imperative that you don't make a balls up of this opportunity.
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