Regulation is an adviser’s friend
Too many advisers are trying to avoid becoming authorised financial advisers (AFAs) rather than taking advantage of the benefits it can offer their businesses, a former regulator says.
Friday, September 14th 2012, 7:08AM 
15 Comments
by Niko Kloeten
Angus Dale-Jones, who was previously director of supervision at the defunct Securities Commission (now the Financial Markets Authority), now sits on the other side of the table as a consultant to the financial services sector.
Part of his job is helping businesses deal with compliance issues and he said people often react to regulation rather than taking a “front foot” approach to it.
“I do a lot of positioning work to help people stay a step ahead of the regulations. It’s about saying, let’s try and understand what business directives suit us and how can we structure the business in such a way we can operate in the regulated environment?”
A key point many advisers seem to have missed, Dale-Jones said, is that the regulations not only provide protection for consumers but for those who give the advice as well.
“There are 2000 AFAs but an awful lot of people have deliberately engineered their business to avoid AFA status. What they don’t seem to have realised is it gives them a protection they are missing outside of AFA status.”
This protection includes have reached a competency level agreed as appropriate and having a professional disciplinary committee to adjudicate on complaints, he said.
“RFAs are saying they’re better off without that but it’s like street fighting; there’s no referee to protect you. What’s all the energy about avoiding the regulatory space? Surely it has to offer you advantages.”
Dale-Jones said his client base had been shifting away from advisers and towards the wider financial services sector, reflecting the on-going roll-out of financial regulations including the Financial Markets Conduct Bill.
“The financial services sector is where the regulatory blowtorch is at the moment.”
Niko Kloeten can be contacted at niko@goodreturns.co.nz
| « Advisers told to get more involved | Fund managers call for level playing field » |
Special Offers
Comments from our readers
On 14 September 2012 at 9:32 am billy the broker said:
Who are you to tell me what is good for my business??Another scaremongering article. And for the record when I need an AFA, I have a very good one I refer my clients too when it is needed. As I cant be the be all and end all to everything they need!!I see Mr Dale-Jones did a great job in his previous employment in the regulatory area...bravo I applaud you!!! Go and consult elsewhere because I don't want it thank you. On 14 September 2012 at 9:45 am Curious said:
"Protect", how.... it has become very much , seller beware...I am not suggesting it is all bad but I will wait to see how advisers are the 1's also protected.. especially by folk who have never been advisers.
On 14 September 2012 at 11:26 am Amused said:
“RFAs are saying they’re better off without that but it’s like street fighting; there’s no referee to protect you. What’s all the energy about avoiding the regulatory space? Surely it has to offer you advantages.”
Will we never hear the end of comments like this from people such as Dale-Jones? Frankly RFAs are sick to death of the scaremongering that continues to persist from individuals or organisations that have a vested financial interest in seeing advisers become authorised (AFA)
Advisers can see right through the agenda been pushed here!
On 14 September 2012 at 1:08 pm Andy said:
I have done the study, as well as a lot of other far more important and relevant study and learning. I cannot see any advantage to me or my clients in actually registering as an AFA. In fact it will cost me significantly more, cost my clients more, drown them in paperwork, drown me in additional legal requirements and paperwork, and waste my time. It will also subject me to greater liability and scrutiny. While the scrutiny doesn't worry me, the cost of a full audit is ridiculous. On 14 September 2012 at 1:51 pm AFA and regretting it. said:
What is this guy on? There are NO benefits to being an AFA, only a higher level of compliance, as opposed to my fellow advisers. Avoid at all costs.
And yes I am an AFA.
On 14 September 2012 at 3:13 pm brent sheather said:
I had to waste upwards of 200 hrs of my life..significant when yr my age..to do the exams to become an AFA and what did i learn..nothing..has it changed my recommendations to clients..not one bit..is CPD a ridiculous nuisance,waste of time and money..absolutely..anyone interested in paying me what Carmel paid Huljich should ring immediately ..lol On 14 September 2012 at 3:34 pm Voluntary AFA said:
As a voluntary AFA I have to now say that I fully agree with Angus's comments. Although if you had of asked me 12 months ago (as an RFA)I probably wouldn't have. Let me explain, my decision to complete the Authorisation was based on, what is best for my clients? A legal obligation to comply with the code is a framework that does as Angus say protect both parties. Now having been through the process I would have to honestly say my advice process is better for my clients and me. Would I have thought so before I started the process? NO. I recognise and agree it is a costly process and not to be taken on lightly. I have learnt things I didn't know and are now doing to the benefit of my clients. This is after 20 years of providing financial advice. Eg. How many risk advisers are risk profiling their clients to get a suitable fit between client, insurer and the covers they settle on? If not how will you demonstrate that your statement of advice is fit for purpose? As a RFA I thought I knew enough to do a good job. As a voluntary AFA I admit I have made many changes and are doing a far better job. Who wins? My clients (better advice) and me (less advice risk). Can I do better and will I change the my advice process in the future? Absolutely. I am now an AFA advocate after being a rabid AFA critic. Knowing what I do now I would be very reluctant to employ an adviser who is not an AFA or buy a book of business from a non AFA adviser. Why are you in business? On 14 September 2012 at 4:36 pm Amused said:
I can't help wondering if the only people gaining any real benefit from AFA status are the compliance people (like Angus Dale-Jones) and the regulators themselves?
Please don’t tell me that regulation has spawned yet another “shadow industry” of compliance experts and training organisations whose focus is on growing their own businesses at the expense of the industry they are supposed to be working to improve.
On 14 September 2012 at 4:42 pm Independent Observer said:
I'm not sure what the fuss is about: if you want to play, then you've got to join the club.
On 14 September 2012 at 8:56 pm Mike said:
Like many others, I have met the requirements to register as an AFA (including investment papers) but have elected to NOT be involved in investment advice subsequent to the changes last year, I find Angus-Jones comments to be just short of downright insulting.
The imitation he makes is (supported by Voluntary AFA) that I cannot be providing an advice service pf sufficient quality unless I line up to pay significantly more than I currently do, bent over for a butt-smacking from time to time (or, more accurately, be forced to operate/work/LIVE in a culture of fear, and - most insulting of all - pay for the privilege!
What??????????
I don't know Mr Dale-Jones personal back story, but i do know he has (recently) come from a comfortable salaried position funded by the taxpayer.
I may be wrong in this assumption but I think it is a fair surmise. So, I hope he is successful in navigating his new regulated professional ocean, but his view is, in my view, worth less than mine because I - like many others In this business - have been operating on a basis that the recent regulation has only finally caught up with (!) - I have been putting ALL my advice in writing since 1994, and these new rules are no ore than a definition & refinement of what I've been doing anyway.
Bring on the FMA! As an RFA I have confidence in my advice process (and know it is light years ahead of that of several AFAs whose work I have been invited to review.
On 15 September 2012 at 10:45 am Bazza said:
Brent: The Exams weren't there to teach experienced advisers (Which I presume you are as that is what you promote yourself as) anything, they were there to prove MINIMUM standards for those wishing to meet the basic requirements of Authorisation.
Should it have changed your recommendations to clients?
No, not unless you were giving advice outside normal minimum standards as set by the regulator.
Is CPD a waste of time and money?
No, it is an integral part of being a professional and the key is to be able to identify what you don't know or need to keep updated on, and go do it.
But that must be really hard in your position as you already know everything.
On 17 September 2012 at 8:51 am brent sheather said:
Hi Bazza,I accept that your rationale for CPD is correct in theory anyway however I have had already incurred about $3000 in fees and associated travel costs for 2 CPD courses and they were,to put it mildly,worse than useless. So if you or anyone else are aware of any cpd that will actually benefit my clients I would love to hear about it and I'm not interested in courses that help in marketing. On 17 September 2012 at 10:38 am RFA and Proud said:
"This protection includes have reached a competency level agreed as appropriate". Is an AFA competent because they are an AFA? I have met several AFAs who I would not let loose with my pocket money let alone my retirement savings.
As a RFA I get tired of the AFA are better the RFA rhetoric. The Government deemed that you need to be an AFA to give investment advice and that is fine but it is not proof that an AFA is more competent at doing their job than a RFA.
As a tertiary qualified RFA, who has been in the insurance industry for my entire 38 year working life, I get tired of ex bankers, builders and the like who have changed into Financial Advisers and think they know it all.
On 20 September 2012 at 1:48 pm Bazza said:
Hi Brent
You are right it is a real challenge finding development opportunities that are at the right level and sometimes it is going to take time and effort just to find them. The first step though is the self-analysis of identifying exactly what areas you need and want to develop. The FSPB international body has done some excellent work in developing tools for advisers to help analyses their current competencies and those that need further development.
On 25 September 2012 at 7:43 pm brent sheather said:
yeah well..despite asking lots of people where I can do some worthwhile CPD I still find myself humming that u2 song "still haven't found what I'm looking for" Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
