[Weekly wrap] Morgan's KiwiSaver pocket money
We end the week with news about how much Gareth Morgan pocketed for his KiwiSaver business.
Friday, August 24th 2012, 8:28AM
by Niko Kloeten
The details around what Kiwibank paid for the business are here.
This week saw a strong debate about the quality of continuing professional development (CPD) available to advisers; we also saw advice on workplace advice and surprise from a Cabinet Minister about KiwiSaver.
New Code Committee chairman David Ireland has confirmed the committee will be looking at the current "flexible" CPD regime, but he says advisers have the power to drive substandard providers out of the market by not using them. This market-driven approach is a refreshing change from some of the more bureaucratic aspects of the overall adviser regulation regime, but there are some complicating factors around QFEs and "coerced" attendance.
It's a common scenario when an industry gets regulated: the "good guys" are already doing much more than the minimum standards required by the regulations, while those at the other end of the spectrum will try to continue with "business as usual" until given a kick to the proverbial. The enshrining of CPD into law could be seen as a potential profit opportunity, and advisers need to ensure they think of their clients' needs when picking their courses.
Speaking of clients, is the workplace a good environment to pick up new business for financial advisers? There are some AFAs who think so, but they have warned advisers not to expect to make much money initially from visiting workplaces. KiwiSaver is a good starting point given its close connection to work, with employers having to contribute albeit a small amount.
There seem to be mixed views about how useful the workplace is as a forum for financial advice. For instance, people are generally unwilling to share their personal financial situation with other co-workers. There are also regulatory hurdles that make things more difficult and time-consuming for advisers. But the biggest obstacle may be employers themselves, particularly in a country dominated by small businesses that can't afford to close down for two hours for an adviser visit.
Not an AFA? Not worried about having being visited by the FMA? You might need to think again, according to the Professional Advisers Association, which says all advisers should think about preparing for a visit from the FMA in the future. The PAA has produced a new guide to getting ready for such an occasion.
This guide is useful but particularly for non-AFAs, given that AFAs have had it spelled out pretty clearly what the FMA wants from them. Although RFAs aren't bound by the AFA Code of Conduct, the basic principles they need to operate their businesses by are the same. The PAA's advice for RFAs to consider applying the Code to their businesses is a good idea as it imposes a discipline that should keep practitioners on the right side of the regulator.
Another story this week was around Commerce Minister Craig Foss's surprise at the lack of products on the market to help KiwiSaver members manage their funds once they turn 65 and are eligible to pull their money out. However, he didn't say he was concerned by it; the former finance man understands the market better than many others in Parliament and knows that these products will start to appear once providers think they can make money out of them.
We also saw the latest development in the saga over SPI Capital's Gloucester property syndicate, which SPI is planning to wind up after finalising an insurance claim on its condemned Christchurch CBD building. Not everyone is happy with the plan, with a group of accountants calling on investors to vote against it. However, at least investors are going to get their money back, unlike investors in a couple of other syndicates which have gone bust.
And the Serious Fraud Office has decided to appeal a not guilty verdict against two Capital + Merchant directors, a case the SFO says raises important points of law. It will be under some pressure to get a win on the taxpayer-funded appeal.
In insurance news, new business in the life insurance market has bounced back. Unfortunately lapses and surrenders exceeded the new business written by Financial Services Council members for the third quarter in a row. AMP has been hit particularly hard, while its new business levels have taken a hammering.
And finally in deposit news, Fisher & Paykel Finance has increased its profit while GFNZ (formerly Geneva Finance) has had its credit rating slashed.
Niko Kloeten can be contacted at email@example.com
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