About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Thursday, November 26th, 9:53AM
Latest Headlines

Ross collapse sparks wholesale debate

The collapse of Ross Asset Management will feed into the debate over whether wealthy clients require less protection than other investors, a financial services consultant says.

Wednesday, February 27th 2013, 8:10AM 4 Comments

by Niko Kloeten

An exemption in the Financial Advisers Act allows advisers with clients who are deemed to be “wholesale” investors to operate without having to become Authorised Financial Advisers (AFAs).

There are a number of different types of clients who are considered “wholesale” rather than retail under the Financial Advisers Act, including those with net assets of $2 million or more or annual gross income of $200,000 or more for each of the last two financial years.

There are also "eligible investors" who must certify they have “sufficient knowledge, skills or experience in financial matters to assess the value and risks of financial products and the merits of those services”.

Angus Dale-Jones of Knax Consulting said the Financial Markets Conduct Bill, which recently passed its second reading, had slightly tighter requirements around eligible investor status and some increased financial thresholds.

Dale-Jones said the distinction between wholesale and retail investors was a long-standing one that made sense in terms of improving ease of business for the financial industry, with the ever-present question being where the dividing line should be.

“The fundamental logic is that when you are dealing with skilled people, or who are skilled investors, from a regulatory point of view it might not be necessary to give them all the protection afforded to mum and dad investors,” he said.

“The problem arises when people distort that purpose and try to shoe-horn their clients under the wholesale banner.”

The changes to the wholesale definition and to the DIMS (Discretionary Investment Management Service) regime were proposed before Ross Asset Management hit the headlines.

Although David Ross was an AFA, Dale-Jones said the collapse of RAM would add to the debate over whether wealthy investors were more savvy, or required less protection, than other investors.

“With companies like RAM often a significant portion of their clients are wholesale investors,” he said.  “It’s a public policy issue; they might not necessarily want to be treated like retail investors.”

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« Default status attractive: FisherFund managers call for level playing field »

Special Offers

Comments from our readers

On 27 February 2013 at 8:41 am Actual wholesale investor said:
Hubbard and others have used the 'wholesale' investor excuse to try and mitigate their own responsibility to investors. Unfortunately the number of retired farmers etc who have lost fortunes will continue to grow until a greater level of robustness is put around the definition of 'wholesale'. That should not be solely based on a minimum dollar value.
On 27 February 2013 at 10:42 am The Captain said:
Rather than just increasing the dollar asset value height of the qualifying bar and effectively making access to some of the better risk adjusted and innovative products even more remote would it not be better to tighten up the oversight requirements ensuring that anyone taking in funds from the public provide an independent trustee and audit and valuation reports semi-annually and perhaps even go further to require issuers/managers to get an independent report that summarizes the fund offering and gives a brief summary of where the risks lie against the targeted/expected investment outcome.
Current legislation has through legal advice to issuers over the years has become cumbersome and confusing for the Investor to form get a clear picture of exactly where their money is being invested and the real value of those underlying investments. Typically the risk sections in the offering documents list every risk without any informed commentary as to quantifying which of those risks is really relevant to the proposed offering. All this confusion I believe results in Investor insensitivity the document being glossed over.
It should be about providing true transparency, informed independent review, good oversight and access for all.
On 27 February 2013 at 12:33 pm btw said:
To The Captain,
Bear in mind, you're just describing the regulatory regime that applied to the 27 odd fincos that collapsed a few years ago. You're not going to be protected by independent appointments as long as you have statutory trustees of the ilk of Perpetual or Covenant (both recently reaffirmed as acceptable by the FMA). The whole independent trustee regulatory model is fundamentally flawed (in my opinion) in relying on private profit generated entities such as trustee corporations to act as pseudo-regulators.
On 27 February 2013 at 10:44 pm Anthony Edmonds said:
I think where the end investor is an individual, then the requirements should be the same, regardless of how much they have to invest.

Abolish the concept that some individuals are deemed to be more knowledgeable than others, simply because they are wealthy.

Knowledge about investment matters and the level of an individual's wealth are not necessarily correlated (if they were/might be, then all the people reading this would obviously be wealthy........)

Sign In to add your comment



Printable version  


Email to a friend
News Bites
Latest Comments
  • MJW missed their chance
    “Let me summarise the argument: MJW (and banks): Commission paid to non-tied advisors is too high. Advisors: If MJW...”
    6 hours ago by b p
  • RFA standards set to lift
    “The other elephant in the room is the QFE's and their advisers (be they AFA'a or staff) (mis-)selling their products and...”
    7 hours ago by R1
  • MJW missed their chance
    “Excellent comments Michael Naylor. I often agree with your insights and analysis, although do hold different views occasionally...”
    22 hours ago by Tony Vidler
  • MJW report scores a D
    “Justalifeinsurancesalesman this is the type of detail the Minister would like to see. If you add some further details to...”
    1 day ago by AdviserMan
  • RFA standards set to lift
    “I do not want to hear anything Neilson might say, until the FSC takes a position on the MJW report. Quite frankly he...”
    1 day ago by Dirty Harry
Subscribe Now

Weekly Wrap

Previous News


Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.99 4.85 5.05 5.10
ANZ Special - 4.35 4.49 -
ASB Bank 6.00 4.85 4.99 5.25
ASB Bank Special - 4.39 4.49 4.49
BankDirect 6.00 4.85 4.99 5.25
BankDirect Special - 4.39 4.49 4.49
BNZ - Mortgage One 6.40 - - -
BNZ - Rapid Repay 5.99 - - -
BNZ - Special - 4.35 4.39 -
BNZ - Std, FlyBuys 5.99 4.85 5.09 5.19
BNZ - TotalMoney 5.89 - - -
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.45 5.75 5.75 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct 6.10 6.45 6.69 7.10
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heretaunga Building Society 6.45 5.10 5.40 -
Housing NZ Corp 6.49 5.19 5.49 5.59
HSBC Premier 6.10 4.25 4.49 4.99
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 4.25 4.25 -
ICBC 5.60 4.69 4.69 4.99
Kiwibank 5.90 4.85 5.10 5.25
Kiwibank - Capped - - - -
Kiwibank - Offset 5.90 - - -
Kiwibank Special - 4.49 4.49 4.85
Liberty - - - -
Napier Building Society 6.50 5.80 6.70 -
Nelson Building Society 6.35 5.20 5.40 -
NZ Home Loans 6.10 5.39 5.49 5.69
Perpetual Trust 7.70 - - -
Lender Flt 1yr 2yr 3yr
Resimac 5.59 5.24 5.29 5.39
SBS Bank 5.89 4.85 5.05 5.19
SBS Bank Special - ▼3.99 4.49 4.79
Sovereign 6.10 4.85 4.99 5.25
Sovereign Special - 4.39 4.49 4.49
The Co-operative Bank 5.95 ▲4.39 4.49 ▼4.75
TSB Bank 5.99 4.85 4.95 5.25
TSB Special - 4.35 4.39 4.79
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac 6.15 4.85 5.05 5.10
Westpac - Capped rates - 6.15 6.15 -
Lender Flt 1yr 2yr 3yr
Westpac - Offset 6.15 - - -
Westpac Special - 4.39 ▼4.39 ▲4.65
Median 6.10 4.85 4.99 5.14

Last updated: 24 November 2015 8:13pm

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%


About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
Site by Web Developer and eyelovedesign.com