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Boyle: Challenges ahead for advisers

New Zealand’s advice industry is at a major crossroads, the Commission for Financial Literacy and Retirement Income’s new GM of investor education says.

Tuesday, November 18th 2014, 6:00AM 8 Comments

by Susan Edmunds

David Boyle said there were big changes ahead.

“The big challenge around advice is New Zealanders understanding the value of advice and ultimately paying for it as well,” he said.

The industry also needed to get more people involved in providing advice, he said. “The industry is getting smaller, we need to ensure there is good quality advice. For a lot of New Zealanders, they need somewhere to go, somewhere to understand the basics and get a framework. Investment advisers and planners kick in as people have built up an asset or a substantial amount of money, so they can start planning what to do with that.”

KiwiSaver would be a catalyst, he said, as New Zealanders reached retirement with more money in savings than they had in the past.

“They will need a plan because at the moment they just blow it, spend it. Three’s a genuine need for good quality financial advice. The industry needs to show the benefits of advice and start promoting it so people see the value from it.”

With increasing regulation, such as that around DIMS, Boyle said many advisers might choose to sell their businesses or join a bigger provider

"They might decide to sell the business and think ‘it’s not what I want to do going forward, it’s getting too hard’. Second, they might align themselves with a product provider, that could be bank or other provider out there who will give them the range of research information and the platform they need to provide advice, but aligned to the provider’s product.”

But he said an area of growth could come from independent advisers with no alignment. “They will build a framework to provide that kind of advice for New Zealanders, it could be both online and could be face-to-face.”

He said there was an important role for good quality advisers in the market. There could be a place for advisers in the Commission’s programmes, such as dealing with workplaces.

« [Weekly Wrap] Some questions for the regulatorsIFA working on pro-bono offering »

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Comments from our readers

On 17 November 2014 at 9:59 pm Headmaster said:
David, it might be a laudable goal to want to increase the number of financial advisers (and 'independent' advisers at that), all remunerated on the basis of direct fees to consumers, but in New Zealand that is just an idealist’s dream.

Kiwis just don't want to pay for it.

You can say a lot and discuss a lot on this subject, hold conferences and have lofty panel discussions, but at the end of the day Kiwis don't want to pay for it. And they don't. The demand from New Zealanders for paid advice from financial advisers (those who were advising Kiwis before the finance company collapses were also known to them as financial advisers) is close to zero.

Yes, there is the odd person who will pay for advice, but not to the extent that there is anything resembling an industry in it.

Don’t think that swelling KiwiSaver account balances will come to the rescue and somehow provide the demand that does not exist today. That won’t happen.

Kiwis will look for other ways of matching products (and their mixes) to their circumstances, just as they routinely find other ways of solving problems in their everyday lives without using their tax-paid cash to uncover the answers. And sure as anything they will find them.


On 18 November 2014 at 9:29 am alan clarke said:
Good luck in your new role David

I very much support the concept of more financial literacy in NZ

I write weekly articles for APN

I have written 2 books that are also heavily tilted towards Kiwis financial literacy

Both books have had good reviews

I even sent my new book to the CLFRI about a month ago

Not even as much as a "thank you" came back

I am sure you will do better, and if I have time , I would be happy to write some material for you

My books are available to any govt dept that wants to promote financial literacy at cost + $1
On 18 November 2014 at 10:07 am R1 said:
I suggest the big problem is that they do not know what they would actually be paying in TOTAL fees and so feel like they may get ripped off, which many do. Let's get the need for transparency on disclosure of ALL fees enshrined in regulations and then people may be able to make informed decisions and be confident they are not being charged too much for they returns they can expect. Getting rid of commissions would also be a good step in cleaning up the image of the advisory business.
On 19 November 2014 at 2:19 pm John Milner said:
Headmaster, I wanted to hang myself after reading your comments. But just to spite a few people in the industry, I've changed my mind.

I have recently been brought in to clean up a client base. It's a really good example of why clients don't want to pay for advice. I've yet to come across any meaningful engagement with the clients, no goals and no purpose for the money invested. Who would want to pay for this!

I'm sitting here in Adelaide today, having a quiet beer on my own before the FPA Congress starts tomorrow and thinking about the NZ industry If this client base is anything to go by, and I believe it is, judging by the parasites circling, we as an industry are doomed.

It's time we looked at ourselves and asked; are we adding value in a rapidly changing market or just continuing to do what we have always done. Are we embracing technology before it embraces our clients directly, are we communicating to our clients that is meaningful to them and adds value, rather than the same dreary bloomberg graphs that nobody understands and the third hand cut and paste commentary from god knows who about god knows what.

For those of you I have described, and there are far too many, you are from a time that should have never been that need to step up or get out. Our industry's survival depends on it. Count me in.
On 20 November 2014 at 12:25 pm PeterWe said:
Ditto John Milner
On 20 November 2014 at 7:39 pm alan clarke said:
Here is an alternative to John's comments above

When I was flying for a living, the old pilots were more than happy to help all other pilots

In this industry, the opposite seems to be true - sad

Everyone, no matter who, can always learn more - AFA’s too

Where better to learn from than the experienced old “coal face” advisers – long termers such as John Milner and Brett Sheather

If we could get John and Brent to run classes, the resulting CPDs should be worth at least double of that of a fund manager at a conference - 2 CPD credits per hour.

Airlines have training captains - John and Brett could be "AFA training captains"

Best idea I've had all year
On 21 November 2014 at 9:33 am R1 said:
The obvious question your thoughtful comment brings to mind Alan is "Why are our education and training institutions not filling this need for advisors?" Short course papers and 1-2 day seminars on best practice topics, risk management, financial analysis, etc, etc would be a much better options than conference attendance for dubious CPD credits. Compulsory CPD without such resources undermines the whole value proposition of CPD I think and is a waste of time and money.
On 24 November 2014 at 7:33 am alan clarke said:
Here is my last missive for 2014 - end of year fatigue is present and my stand up paddle board and Pipistrel motor glider beckon.

My Dream 3 for Father Xmas – end of 2014

No 1

DIMS overkill - (an over action to David Ross) – where an adviser uses a platform like Aegis, the investors money is extremely well protected

All the FMA has to do is scrutinise those advisers who do not use a high quality wrap, and ask those advisers how they protect their clients money.

If the FMA are not happy with an adviser, thay can “ask” him to move his clients funds to a wrap.

I guess we are stuck with the overkill DIMS now, as regulators don’t like to lose face and back down

Hopefully though there will be a simple DIMs licence for those of us who use a quality platform, model portfolios and auto rebalancing

No 2

AML - another overkill

When I get to question 2 or 3 of my 60 question data collection form, money launderers run from my office

This whole issue could simply be covered in the AFA code of conduct – another clause that requires us to do in depth “know your client” interviews and report suspicious activities – we are already required to report other advisers who are not acting appropriately

Way better than time and money wasted on audits et al

No 3

Advisers who constantly criticise other advisers turn into “training captains”

Could you guys (you know who you are) please turn constructive.

Airlines have training captains - could you all seriously consider showing us the “error of our ways” by becoming "AFA training captains"

Each of you could run say 2 x 2 hour classses pa. for the rest of us. I promise I’ll show up and listen respectfully, with an open mind. (and claim 4 or more CPD’s)

Wishing you all the best for Xmas and 2015

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