RFAs warned against ‘dangerous’ KiwiSaver game
Registered financial advisers who have kept hold of their KiwiSaver books need to make sure their clients are looked after, Professional Advisers Association chief executive Edward Richards says.
Tuesday, June 5th 2012, 11:42PM 2 Comments
by Niko Kloeten
The message comes as Fidelity Life launches a new KiwiSaver Advice Hub in collaboration with advice firm Saving Kiwis Financial Solutions, which “can also offer a servicing function to RFAs with existing KiwiSaver books or clients.”
According to Fidelity Life, Saving Kiwis “will provide this KiwiSaver-only advice and service function directly to your clients, allowing you to ring-fence them and preserve business value, which is critical in this highly competitive business climate.
“We encourage you to take up this offering and avoid losing new and existing risk business to competing advisors and companies offering KiwiSaver.”
Richards said this sort of arrangement is essential for RFAs who have kept hold of their KiwiSaver book, which they are now not allowed to advise on.
“The professional response is to have a written arrangement with an authorised financial adviser to handle KiwiSaver or investment clients if you have them.
“It’s dangerous to hang on to investment clients; you’ve got to be qualified to handle that. If you are a registered adviser and you have retained your KiwiSaver book and you’re not qualified to give investment advice, how would you feel if the FMA contacted you?”
Institute of Financial Advisers president Nigel Tate said some AFAs are annoyed that RFAs are able to keep their KiwiSaver books and trail commissions – “which won’t make anyone wealthy,” he said – but it isn’t an issue that is often brought up.
He said a number of RFAs have contracted AFAs in to provide investment advice during the “transitional phase” as they themselves work to become authorised.
“A lot of people are doing it the other way: an AFA who is not an insurance specialist bringing in an RFA to look after their insurance book.”
Niko Kloeten can be contacted at firstname.lastname@example.org
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