Over the years there have been two firms, in my mind, that have been true innovators in the financial services industry and who have comfortably travelled below the radar.

Indeed these two firms have been the ones their competitors have tried to find out about, but generally failed. (We have had similar experiences too).

The two, NZ Funds Management and Grosvenor, have taken similar approaches over the years and have successfully shrouded themselves in secrecy.

But things are changing a little. Grosvenor has launched its dealer group Camelot which, in some ways, is similar to NZ Funds’ Lodestar group.

The difference is that Camelot/Grosvenor is opening up. Indeed the next issue of ASSET has a great profile on Grosvenor head Allan Yeo. Meanwhile, NZ Funds/Lodestar is becoming even more reclusive than usual, recently refusing to take part in any industry survey. Whether it is ASSET’s survey of planning groups, or Mercer’s wholesale funds survey.

My views on this are clear. I accept private companies have the right to keep to themselves, but on the other hand I think that people in the business of looking after other people’s money should be a bit more open about what they do and how they operate.

This secrecy isn’t restricted to these guys. Yesterday we sought more information from AMP on its results, however, like with the previous result, it declined to make anyone available. This is in marked contrast to other firms like AXA.

One thing is clear though, and that is the shape of the advisory industry is changing quite quickly (considering it has kept its same form for so long).

For years Money Managers and Spicers were the two big brand firms dominating the market with a bunch of second-tier players such as Broadbase and Vestar in the next group.

Now there are some challengers to the big space with Camelot and PIS having aspirations of being the biggest. (One can’t forget that players like Westpac and AMP continue to be significant).

Then this second-tier group is nearly disappearing and maybe, as some have suggested previously, won’t exist in the future. Maybe the future shape of the industry is a clutch of big corporate firms and a raft of smaller, independent advisers. If this happens, it suggests that many advisers, over the next couple of years, will end up with different firms.

Wow, it’s not often you hear a minister give a passionate speech at a conference, let alone a financial planning conference.

But that’s exactly what Commerce Minister Lianne Dalziel did at the PIS Conference this week. While she shared the platform on adviser regulation with the bosses of the IFA and PAA, Dalziel spent a good chunk of her opening getting stuck into EUFA.

This was fascinating. While EUFA is a good initiative and can potentially help investors, there has been a view building for some time that its MO is way off track. I know this from talking to other journalists and also being a recipient of its regular email press releases. The organisation is one of the most prolific emitter of press releases I know of at the moment and much of what it sends out is highly, emotionally-charged allegations.

Very few of these releases ever make it into print, which says something.

What is more important is that EUFA has clearly pissed off the minister big time, when really it should be bending over backwards to build relationships with her and other officials.

Dalziel, as I say, was extremely passionate in her criticism. Her main beef being that EUFA claims she has called people who have been caught up in the finance company and Blue Chip mess “greedy, stupid and naïve.”

Dalziel absolutely riles against this allegation. She says she has never used the first two terms, but has called some of these investors naive. There she is right.

She also makes a few other sound points. The government can’t take risk out of the market. Without risk there is no return. Do we really want to have nothing but government bonds to invest in?

She also says EUFA could actually be helping its members, rather than carrying on like it is. She says there are things EUFA can do to help people such as using the Securities Commission and the ombudsmen schemes, but, she says, it’s not doing that.

I hope EUFA take this as a major wake-up call and changes its tactics. Clearly they aren’t working.

So we have yet another change of plans for regulating the financial adviser sector. As we reported yesterday the latest recommendations from the select committee have a couple of key features.

The first being a return to the concept of tiered regulation, that is one level for simple products like term deposits, and the other for complex ones.

The other key change is that a Commissioner for Financial Advisers be established to work within the Securities Commission.

On first glance these ideas look good. Regulating advisers on a product basis makes sense. That way it is pretty clear what who sits where. I am sure there will be some fascinating outcomes such as how does it impact on a mortgage broker who is selling KiwiSaver?

I assume KiwiSaver is a complex product (although it is meant to be simple).

A concern I have had previously is that the Securities Commission was being put into a regulatory role over a sector it doesn’t appear to have a lot of in-depth experience about. (This is not a criticism of the commission, rather a reflection of the role it plays.)

A Commissioner of Financial Advice is a good idea. The caution is that the terms of reference and description of the role need to be absolutely tight. As one person said: “it should be as wide as a very narrow doorway.”

The appointment of this role is absolutely critical to the success of this regime.

A couple of other points worth noting are that it appears the “accredited institution” idea is still alive. As long as there is an alternative and these institutions have exactly the same rules and standards of the alternative then the industry can, I suspect, live with this.

Judging by the feedback to a previous post on this idea there is still some way to go in explaining the set-up and getting buy-in from advisers who don’t wish to be aligned to a particular institution.

As a bit of a footnote to this whole saga it has been fascinating to see how things have unfolded. In particular the role the Minister of Commerce, Lianne Dalziel, has played.

She has been willing to listen to ideas and get it right. While the process has been long it appears to be reaching a conclusion which is workable. Secondly, she has repeatedly said she wants the changes to happen before the election. A week ago I would have said little chance. Now, it is looking far more likely.

Finally Dalziel gets credit for openly acknowledging that the former idea of having APBs was the wrong idea.

What is perhaps most interesting, is that the former IFA president has gone on record saying that he always believed the APB model wouldn’t work. As the minister has said: why didn’t he tell her that?