by Rob Hosking
"And more importantly, did the financial advisers, were they in a position to understand what they were recommending?"
The dominant theme of this year's report is the need for greater financial education work, and the report's authors are complimentary about the Retirement Commissions' work in this area.
However Boyce queried the skill level of some financial advisers.
"It hasn't been helped, I think, by financial advisers who have not taken the time to understand the risk that comes in the wake of a rapidly growing finance company sector."
The growth in finance companies has led to a scramble for funds and some finance companies have been paying financial advisers generously for that.
KPMG notes the more in doubling in the number of finance companies since 2000 and Boyce says that in five year's time he anticipates the number of finance companies dropping back to the 2000 number.
"That's what a shakeout will mean."
Asked whether financial advisers had to bear some responsibility for a number of New Zealanders losing all or most of their savings in finance company collapses, KPMG chairman Andrew Dinsdale said "that would be a fair call, I think."
Boyce says there has been "an unhealthy tension" on the issue of broker and commission rates for placing funds with finance companies.
"Some finance companies have chosen to be part of that. That's a more important element than soft commission and things like that.
"And I think the fact that there weren't professional standards effective over advisers. …That's a fundamental issue there."
New disclosure rules announced by Commerce Minister Lianne Dalziel only 24 hours before the KPMG report was released would go some way to address those concerns, he says.
Other changes requiring membership of approved professional bodies should also help, although these are taking too long to implement, he says.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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