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QFE will help write business: Sovereign

Sovereign rolled out its QFE this week and said that it expects around 85% of its new adviser distributed business will come from advisers who become members.

Thursday, March 17th 2011, 6:14PM 11 Comments

by Philip Macalister

Sovereign chief executive Charles Anderson says advisers can apply to join the QFE if they are prepared to use Sovereign's programmes and processes.

They will also have to agree to regular compliance audits and professional development reviews, maintain professional indemnity cover and suitable marketing controls

He says advisers who "are uncertain about how the regulations will effect them personally" can apply to join the QFE for protection.

However he stresses that advisers have to apply to join the QFE.

He expects some advisers who apply won't meet the standards set.

"If you're a maverick adviser then Sovereign isn't the appropriate home," he says.

Anderson is pitching the Sovereign QFE as being one of the best in the market and will provide advisers with tools and services to help them grow their businesses.

However as it is early days with QFEs it is "difficult to do competitive analysis".

He says these advisers will have to operate under the rules set by the QFE which includes how they write business, run their business and they would have to use the QFE's online planning tools.

The QFE has an arrangement with the ISO as its disputes resolution scheme. Sovereign would help any member if they end up in a dispute. This help would include reviewing files, making submissions and helping to find a resolution.

The QFE, since it takes responsibility for its members, would make any settlement. However there was an onus on the adviser to follow the QFE's rules and procedures.

While Anderson expects around 85% of Sovereign's business to come through QFE members that is the same quota as what Sovnet advisers adhere to at the moment.

The QFE has a recommended list of other products its members can use, however there are some limitations.

He says the list can't be too big as Sovereign is taking responsibility for the products QFE members use.

"We have to control the quality and process," he says. "If (the product list) was any wider our liability would balloon out."

It also puts the onus on Sovereign to have good products.

Anderson says there are around 650 advisers in Sovnet at the moment. He says around 230 have applied to join the QFE. Some can't join because they have decided to go down the AFA route while others will just remain in Sovnet.

Most of the advisers who have applied are ones who are considered some of the bigger risk writers for Sovereign.

He expects there to be around 300 members by July 1 when the regulatory regime starts.

The QFE will mainly appeal to advisers who write risk business. Sovereign hasn't decided yet whether it will include KiwiSaver as a recommended product in the QFE.

Anderson expects that the QFE will help Sovereign write more business, but not immediately.

He says because advisers will end up doing better needs analysis with clients than they do at the moment there will be the opportunity to cross-sell products.

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Comments from our readers

On 17 March 2011 at 9:24 pm vincent said:
Reminds me of that Simpsons episode when Bart sells his sole at low cost, without thinking about what that would mean down the line...
On 18 March 2011 at 12:06 am Bazza said:
A QFE is not set up to protect and grow adviser businesses. It is set up to protect and grow the QFE. If you want to protect and grow your own adviser business there are better solutions than joining a QFE. Better needs analysis than they do now..OMG!!!
On 18 March 2011 at 11:16 am Kev said:
"If you're a maverick adviser then Sovereign isn't the appropriate home," YEAH RIGHT
On 18 March 2011 at 3:54 pm Murray Chong said:
Why are are people thinking that Kiwisaver might possibly come under a QFE.

It clearly states that a that Kiwisaver products are to be cat 1 products and only for AFA advisors.

If a QFE adviser can still market a Kiwisaver product and that adviser is not a full AFA advisor then it just makes a mockery out of this whole regulation process.

The government needs to draw a line to make this black and white NOT GREY.

On 19 March 2011 at 10:05 am Bazza said:
Murray, a QFE Adviser can advise clients on cat one products that are issued by the QFE.
On 20 March 2011 at 11:13 am anon2 said:
Hey Murray - if you don't understand the legislative rules then don't comment.
On 20 March 2011 at 12:56 pm anon 2 said:
no doubt the comments throwing mud are from the normal commission club advisers.

to protect and grow your own business - stay your own business - no need to get suckered in by the aggregators who love to line their own pocket.

Regulation is fairly straight forward if you are to be an RFA (or AFA for that matter). Save the money you send to these self-promoting heroes of the adviser and use it on your own self-development.

No QFE is going to allow you to be yourself - they aren't allowed - so if you want to remain personable to your clients stay clear.

And Murray - before you state fact could you please learn to undertsand the regulations before commenting.
On 20 March 2011 at 5:55 pm Alastar said:
As Vincent and Bazza say there are consequences for advisers who align themselves and their business to a QFE. Whilst these advisers will still be able to offer their clients other providers products it’s only natural that the QFE in question is going to heavily promote its own risk and lending products over its competitors. From a business perspective it is logical that a QFE would seek to do this however the advisers themselves need to ensure that they retain their impartiality when it comes to future product placement for their clients. Otherwise the adviser risks becoming nothing more than an “employee”.

The stated goal of regulation was to improve industry standards and the advice given to clients. Personally I think that QFE’s overtime will actually limit the consumer’s choice as their adviser will be pushed to sell only what the QFE wants them to. This then appears to be a step in the wrong direction.
On 23 March 2011 at 9:13 am Murray Chong said:
Totaly agree with you Alastar
The last part of your comment is the whole point that i am trying to state
On 23 March 2011 at 2:17 pm Alastar said:
Yes Murray but as others have noted please know what you're talking about in future before commenting on regulation again. It's not a good look for authorised advisers in the new regulatory environment if you’re making statements that are false.
On 30 March 2011 at 6:23 pm WhiteKnight said:
Exactly Alaster you have your head on right! Regulation is all about the customer getting the best advice and right insurance.

In Murray's defense, those who are attacking him about Kiwisaver in QFE need to go re-read your lessons....

QFE's can advise on Cat1 products only if they are promoted AND issued by the QFE itself.

Sovereign don't issue their own Kiwisaver, it's issued via ASB therefore Sovereign QFE cannot give advice on it.
Commenting is closed



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