[Weekly wrap] A marriage and a divorce
This week saw two major industry bodies merge and two others part ways.
Friday, February 17th 2012, 8:13AM 1 Comment
by Niko Kloeten
The merger between the Professional Advisers Association and the New Zealand Mortgage Brokers Association, which had been in the pipeline for a while, was finally announced this week after a number of moves to bring the industry bodies close together, such as creating a joint board.
This move reflects what PAA chief executive Edward Richards told me recently about how, like businesses, industry bodies aren't immune to pressure to change. In a small country like New Zealand there will always be questions about how many industry organisations are needed in each profession.
After the merger was announced, NZMBA chairman Darren Pratley announced he is stepping down from the role. Here he explains why.
As two industry bodies became one, an organisation that was meant to provide a unified voice for financial advisers lost one of its key members. The Institute of Financial Advisers has announced it is pulling out of the pan-industry group Financial Advisers Association of New Zealand (FAANZ).
FAANZ chairman Robert Oddy said he was "disappointed" with the decision by the IFA to go it alone. The move dashes any hopes of FAANZ becoming the single industry body some advisers have called for.
While the NZMBA and PAA got married and the IFA and FAANZ divorced, NZF Group and Liberty Financial were in what could be described as a fight for custody of the kids. Liberty is suing NZF, claiming breach of contract on their Mike Pero mortgages joint venture.
NZF chairman Mark Thornton said the legal action was an attempt by Liberty to force a transfer of NZF's shareholding in the venture. However, Liberty said the action was in Mike Pero Mortgages' best interests.
Still on the topic of mortgage lending, it seems falling rates are causing greater interest in fixed rates. For a couple of years floating mortgages have been in vogue but it probably wouldn't take a big rise in the OCR for New Zealanders to resume their love affair with fixed-rate mortgages.
Local government bonds are also popular, the new Local Government Funding Agency's inaugural bond issue demonstrated emphatically. With bids worth $1.3 billion for $300 million of bonds, there is clearly plenty of demand for debt that is AA-rated but higher-yielding than central government bonds. Ratepayers might not be too happy with councils having access to lots of cheap debt, however...
The appetitie for fixed interest is also shown by a new ASB survey showing investors continue to believe term deposits offer the best return, although low rates are causing renewed interest in shares.
Meanwhile, Heartland announced a half-year profit near the top of its previous guidance but said low lending volumes meant meeting its full-year forecast would depend on its rural and business divisions.
In insurance news, Sovereign said new adviser regulations had impacted on its sales numbers in 2011.
Sovereign also copped flak from its former chief operating officer Naomi Ballantyne, now managing director of Partners Life, who spoke out against insurers who allow their products to be sold at discounted rates online.
Also this week, advisers were warned that 20 hours of continuing professional development may not be enough. Michael Frampton of industry training body ETITO said he was "disappointed" discussion about CPD seemed focused on the minimum 20 hours mentioned in the AFA code of conduct.
And finally, the call has gone out for the government to subsidise financial advice for KiwiSaver investors, after a study found members of the scheme were more likely to rely on friends and family than financial advisers for advice.
Niko Kloeten can be contacted at email@example.com
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