[Weekly wrap] Thorny issues for advisers
This week featured stories on two issues that always tend to generate debate among Good Returns readers: CPD and the RFA/AFA divide; also, insurance price cuts, cold calling and co-operation between boutiques.
Friday, June 1st 2012, 8:34AM
by Niko Kloeten
This week featured stories on two issues that always tend to generate debate among Good Returns readers: CPD and the RFA/AFA divide.
The most heated debate was around the issue of where the FMA should be focusing its monitoring of advisers in the early stages of the new regime: should it be looking at the authorised financial advisers (who have already had to prove their qualifications as well as character) or the registered financial advisers (who aren't as heavily regulated)?
As you would expect, responses were mixed on this tricky issue. On the one hand, it could be argued AFAs have already had to prove themselves to a much higher standard than the RFAs, therefore they are less likely than RFAs to have problematic conduct.
However, it could also be argued that it makes sense to look over the shoulders of AFAs to preserve the integrity of this class of adviser; AFAs have chosen to hold themselves to a higher standard therefore they can only expect tougher monitoring. And it would be a PR disaster for the government (not to mention the industry) if AFAs were found to be dodgy.
Another theme that always seems to get a strong reaction from Good Returns readers is that of continuing professional development. In the latest story on the topic this week, advisers have been warned to take their CPD requirements seriously or risk being forced to belong to a QFE or having training requirements forced on them.
The issue is a contentious one because while the qualification requirements for becoming an AFA are set in stone, advisers (including RFAs) are left to figure out what they need with their CPD. They need to do enough to ensure they have the competence to do the services they offer, but this varies depending on the complexity of what they do.
The current system places the onus on advisers to work out what sort of continued learning is appropriate for them, and that is surely better than having the government dictate what they need to do. This would cause CPD to be more of a waste of time than some advisers already think it is.
In other regulatory news, insurance advisers have been told not to panic about the Financial Markets Conduct Bill, which won't ban cold calling for insurance products. However, RFAs will still need to tread carefully, because they could find fall foul of the law if they later offer investment products such as KiwiSaver "because of" the initial call.
As with almost any new law, the effect of section 71 of the FMCB won't be known until it comes into force. However, given the finance background of Commerce Minister Craig Foss, who appears to have a good grasp of the issues, there is good reason to think any concerns of the industry will be listened to.
Regulation is also one of the reasons why a number of New Zealand boutiques (well, only Auckland-based boutiques at this stage) have banded together to form a new forum. It won't be like the FSC or other industry groups with websites and full-time staff, but it will give a united voice to a section of the market that is often drowned out by the voices of bigger players.
In insurance news this week, AIA New Zealand is targeting over-30s with price cuts designed to attract new business to the market. While lack of financial literacy is one reason for under-insurance in New Zealand, price is also a factor, particularly given the rising cost of living.
Also this week, Russell Hutchinson tackled the question of what it means to be a broker under the new rules as opposed to an adviser, and Sovereign launched new research to help advisers tap into the group insurance business.
In People news we have some new appointments at TOWER and Sovereign and this new job listing
$80,000 RETAINER, + RENEWALS, + COMMISSION Insurance Broker Auckland & Christchurch
Finally this week, Labour has floated the idea of preventing KiwiSaver members from taking their money overseas with them when they leave New Zealand permanently. Although this is just an idea and not an official policy (yet), it should be binned as soon as possible.
Niko Kloeten can be contacted at firstname.lastname@example.org
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