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Legislation: freedom of choice

What a difference a week makes, or does it? So now, after another round of extensive proposed changes to the Financial Advisers Act, we find ourselves trying to absorb the implications.

Wednesday, June 30th 2010, 11:30AM 3 Comments

The sheer volume of proposed amendments since the drafting process began has created uncertainty and complicated the decision making process, as we ask ourselves a seemingly simple question - which path to take?

As a result of the latest changes, the decisions you make regarding the scope of your future business, will determine whether you will be required to operate as an Authorised Financial Adviser or a Registered Financial Adviser. 

While many Advisers are already committed to realising the opportunities that being an Authorised Financial Adviser provides, in light of last week's changes, others may be considering paring back their services. 

To help make a decision regarding authorisation, we're encouraging Advisers to ask themselves the following questions about how they envisage practising:

To what extent does your business rely on your existing client base?  What proportion of this base is risk and mortgage business only?

How would your clients be serviced if you are not an Authorised Financial Adviser? Who, for example, will service your KiwiSaver, investment or investment-linked product clients?

What are the competitive implications of not providing advice on KiwiSaver? Does this leave your client base wide open? How do you plan to protect your relationships?

If you think you may prefer to offer a narrower service, for example provide advice on risk products only, will you be able to confidently operate within the tight parameters for a Registered Financial Adviser under the Financial Advisers Act?

What are your plans to market and brand in a competitive environment based on greater professionalism and expertise?  In this environment many Adviser businesses are planning to promote the enhanced quality status that being an Authorised Financial Adviser can give. If they do so and you can't, what might this mean for your business?

AXA supports the intent of the legislation overall. After all, ensuring customers receive robust advice from qualified financial professionals dedicated to helping their customers be financially confident and have confidence in the financial services industry, can only be a good thing.

This approach is consistent with AXA's long-standing position of following a Quality Advice Process, reflected in our investment in the AXA Academy.

Over the last three years, this major education and training initiative has assisted Advisers with essential qualifications, comprehensive business management training and development, and on-going support. Adviser participants benefit from AXA's global corporate knowledge and significant experience with Australian Adviser regulation. 

So what difference does a week make? We would suggest none whatsoever to committed industry participants - Adviser or supplier alike.

AXA will continue working alongside Advisers to assist them to future proof, and offer quality advice in a way that is compliant, competitive and commercial.

Finally, as a practical after thought, when making your decision as to your scope of service, you might bear in mind some advice you usually reserve for clients: think long term - becoming an Authorised Financial Adviser will not only future proof your business, but it might be a lot easier to qualify now than later on as Authorised Financial Adviser requirements mature.

« MED officials pushed for extension of QFE rulesGovt expect to take two months to consult over regulation changes »

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Comments from our readers

On 30 June 2010 at 12:17 pm w k said:
Whoever drawing up the regulations or in the committee, if they really understand the different types of business, should in the very beginning identify what they want in place for each of the practice, because they are all very different. Then decide the route advisors must take for each practice. Rather let us all advisors look for the two ends of a wire in a huge bunch of entangled wires.
On 30 June 2010 at 9:57 pm Independent Observer said:
I wonder if any of the rule-architects have investigated the consumer’s awareness during “The sheer volume of proposed amendments since the drafting process began”.

I’m not sure that the proposed title of an Authorised Financial Adviser versus a Registered Financial Adviser will count for much when it comes time for mums & dads to select their financial services intermediary.

[Apologies for being a broken record] – perhaps a principles-based-approach would solve these issues…
On 1 July 2010 at 8:29 pm Peter said:
It appears quite a simple decision. Either provide advice on a fee only basis or have an amalgam of income streams and do it the hard way.
Commenting is closed



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