News that GE is looking to sell or change its ownership of Wizard Home Loans is perhaps the first sign of many changes to hit the financial services market in New Zealand.

The reason, in a nutshell is that GE needs to get rid of some assets due to market issues back in the United States.

It isn’t the only one. We have seen many times before that when big multi-national companies run into troubles and issues, one of the first things they do is hock off, so-called, non-core assets, or, as it seems, the ones furthest away from home.

That puts New Zealand at the top of the list as it is on the other side of the world from Europe and the United States.

My take on this situation is that many more assets will be up for sale. This week alone I have heard that Asteron is on the market. (Asteron is owned by Suncorp Metway, which is not quite on the other side of the world). Also one has to wonder about AIG. Those who follow international insurance news will be well aware that the parent company is facing, let’s say, interesting times.

Although there has been little rationalisation and consolidation in the industry at the manufacturer level, the odds are reasonable that that may change soon.

As for the advisory, or distributor space, well it’s like musical chairs in the investment, insurance and mortgage broking spaces. More on that later.

It seems the financial services industry just got a bill it wasn’t expecting in the Budget yesterday.

As Good Returns reported the government is coughing up $9 million for the regulation of the advisory sector and is expecting the industry to pay an additional $4 million.

It seems that this bill has come as a surprise to the industry. What’s more it is unclear who is going to pay it and what the money will be used for. (If you have any ideas please let me know!)

I would have thought if the government decided it was going to go down the imposed regulation route, as it is doing, rather than the co-regulatory approach it had been traveling, then they should pay for it.

It’s just not good customer service to give someone something they don’t want and then bill them.

After years of discussion and consultation it seems that not a lot of positive progress has been made with tightening up the sector. It may look good that the government is making noise about “investor protection” but it all sounds a little hollow to some at the moment.

I know people from EUFA and the likes would certainly agree with the proposition that the government and officials don’t care, but I don’t go that far.

Things are happening, but unfortunately the wheels of justice are slow to turn, and the results often don’t help the investor who lost money.

With an election coming up later this year, I wouldn’t be surprised to see some politicians pick up on what has happened in this sector to push their own barrows.

My guess is that it will be attractive to Winston Peters. Many of the elderly people in Tauranga seem to have suffered with meltdowns in the finance company sector and with Blue Chip.

Also it’s not a new plank for Peters as I recall a couple of general elections ago he campaigned against advisers. Maybe the same will happen again?

It’s getting harder and harder to ignore KiwiSaver as the months roll on. Currently 600,000 people have signed up – two thirds more than predicted, when it started 10 months ago.

That’s pretty impressive.

As often happens when something like this grows successfully, we see the opponents come out with so-called “research”, bagging the policy.

This week it was the turn of right-wing think tank, the Centre for Independent Studies in a paper called KiwiSaver or KiwiSucker – A Critical View.

Frankly the paper and the quality of its analysis was poor and subjective.

However, it does raise some valid points about the overall cost of the scheme – the Retirement Commissioner has raised these too – and the “equity” issue. That is, it favours those who sign up.

Unfortunately, unless you move to compulsory savings, that is an issue which we have to live with. I would suggest that another example, or way of looking at this is with GST. While it is a universal tax, it benefits the rich. People on lower incomes have to spend all their income to get by and pay GST on all that money. People on higher incomes don’t spend everything and save some of their money. On this “unconsumed” money, they don’t pay GST.

One of the strange comments in the report was that some advisers suggest it is logical that people borrow on their credit cards to invest in KiwiSaver. I find this hard to believe – maybe someone can enlighten me here?

What is useful to watch is how KiwiSaver is changing the funds management industry. The latest numbers from FundSource, which we have on the site, show that money is starting to flow into these products and that other parts of the industry are seeing outflows.

To me, KiwiSaver and PIE tax changes are having massive influences on the shape of the industry.

Out in adviser land there are plenty of changes quietly going. I’m not talking about regulation here. Rather there seems to be plenty of movement going on amongst the different disciplines of advice.

What I refer to here are mortgage broking, insurance and investment advice.
There is no doubt that the former and latter are really struggling.

With such a massive slowdown in the housing market the easy deals for mortgage brokers have disappeared. The staple diet of brokering a deal and collecting commissions is disappearing. (Partly because there are far fewer house sales than a year ago, but also because banks have slashed commissions).

Now brokers have to look to new income streams and become more advice orientated.
There are a number of options brokers can look to for new income and these include advising on home equity release, commercial lending or life insurance.

The HER market has slowed, but has a good future. The commercial business is quite specialised, but still a healthy market.

What is interesting is that a great debate is developing as to whether mortgage brokers can become risk advisers. I give credit to some of the life companies, such as AIG and Sovereign, for trying to help brokers expand their businesses.

On the other hand there are plenty of voices which suggest it will be very hard for brokers to make the shift successfully.

This is something which we will watch closely.

Added to that though is news that a number of investment advisers, who have experience with life insurance, are moving back to the risk fold.

There are stories that risk advisers who sold Blue Chip are now back in the life insurance market. (This comes from a life company itself).

It’s all great news for life companies as they may get to write lots of new business. Also it may go some way towards this much-talked about problem of under-insurance.