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Memory and financial prudence

This is what sparked memories spanning back to childhood and many points in between: APRA’s latest attempt to rein in bank bosses’ bonuses may just create new problems.

Growing up in wartime Britain, with most things rationed and many shortages or total absence of desirable goods, left me, personally, with an ability to postpone pleasures and enjoy anticipation to the full – however far distant was the rare pleasurable event!

After rationing ceased, we were comfortably off but far from wealthy, and my mother refused to buy anything on what she called ‘the never-never’ – now referred to as hire purchase. Her argument was that it was not a good idea to make use of purchases when we could not afford to own them.

I am now in a position where I turn that on its head. I have 2 credit cards and only occasionally use cash for transactions, but – and this is the important caveat – I only do so if I am, in any case, in a position to pay cash because the money is in the bank already!

What is more, I arrange with my credit providers (neither of which charges a monthly fee) to recoup the monthly payment in full from my bank account, meaning I can earn interest on my savings while enjoying the use of the purchase! That sort of flips the situation in my favour!

But that is an aside.

Fast forward to the time, in 1980, in Australia, when I had an opportunity to return to full-time work as a secondary maths teacher. I knew my marriage was ending and I needed to be completely independent financially, but the thought of teaching other people’s teenagers while living with my own three was not an inviting prospect!

So – I answered a blind ad!

As it turned out, the position advertised was as an Insurance Representative with AMP – at that time a Mutual Provident Society.

Over the years to date, but not in chronological order, I have completed study for two Bachelor degrees, two Graduate Diplomas, a Masters by thesis, accreditation as a Mediator, covered the first year for a Diploma in Accounting – and, on the job, learned how to be an insurance salesperson!

Actually, the two most important things about this last enterprise, which lasted three years, was that I learned a lot of personally useful information about insurance and superannuation while learning I am a teacher not a salesperson!

There was a lot of competition between insurance companies at that time and levels of ethical behaviour varied considerably.

I believe that, before it became an incorporated company, AMP was one of the more ethical ones. The reps initially received a small allowance from AMP but we were regarded as self-employed and received commission on sales. General insurance was regarded as a side issue, not to be a major source of income, and commission was paid soon after the policy was established.

But when it came to life insurance (which inflation had made less attractive) and superannuation, the company calculated that by the time the first two years premiums had been paid, they had covered their costs in establishing the policy. So, while we received half the commission within a month or so of writing the policy, the balance was withheld till the two years was up. If the policy did not establish within the 2 years, the initial commission was clawed back – which provided a strong incentive to ensure that you took care of your client!

I remember gossip in the industry about one company which paid all the commission up front, which encouraged their agents to sell life or super policies to young apprentices, many of whom failed to keep up payments and lost money they could ill-afford to waste. They got insurance a bad name, understandably!

When I returned to teaching, the withheld commission came in very handy in putting down a deposit on a house.

And that is where the link above comes in.

Most people would assume that, if you are in a salaried position, any bonuses would only apply if you had performed your job over and above requirements. In a sense it relates to paying overtime to wage earners who put in the extra hours.

Too often, nowadays, it seems that bonuses are a standard part of a pay structure which is really quite weird!

The suggestion of withholding full payment of bonuses makes a lot of sense because it ensures that the full effort continues to be put in, as opposed to going flat out to get the extra and then slacking off. And just think how much pleasure you could get out of planning ahead for what you could do with the bonus when you do receive it!

To work, the approach would have to be accepted across the system, to avoid the concerns expressed in the article over seeking a higher base salary to offset the deferred bonus.

I shall never be in the position of earning $1 million or more per annum and, to be honest, I find it difficult to imagine, given all the extra perks in social life enjoyed by the wealthy, the attraction of being a multimillionaire, with houses around the world, one or more private planes, a yacht or two and multiple sequential partners.

May be being brought up in a teetotal Presbyterian household, with “the Devil still finds evil work for idle hands to do!” as the background ethic, has influenced my outlook! Aided by the childhood restrictions mentioned above.

I actually feel sorry for people who can have everything because they will seldom if ever feel that pleasure that comes from a much-anticipated treat!


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1 comment

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  1. Rosemary J36

    I am now convinced that we do not need religion in order to have a harmonious society, but the ethics that underpin most religions, once you take a supernatural being out of the picture, are essential and should be instilled from birth!
    As for an afterlife – I appreciate that many people, who live in poverty and misery might cling on to the thought that a better life in heaven awaits them, but to hold out threats of missing out on it for failing to repent a sin, when that thinking is based on a denial of scientific fact, has no merit in my eyes, Israel Folau!

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