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Number of AFAs nearly doubles

Currently there are 1237 AFAs and 63 QFEs. Two weeks ago the number of AFAs sat at 733.

Friday, June 24th 2011, 7:16AM 8 Comments

The Financial Markets Authority says the big jump in the number of AFAs is because some of the financial service providers with lots of associated AFAs have asked it to process them ‘in bulk' at the last minute.

It says that it has just under 2000 applications and currently it is still receiving 10 to 15 new applications a week.

Some of these are from Christchurch advisers who have had their deadline for becoming an AFA extended until October 1. With the others they will not be processed in time for the start of the new regime on July 1.

The FMA says that of the outstanding applications many haven't got completed information to the regulator yet.

"As they do we'll get as many through as possible over the next couple of weeks. Assuming the information keeps coming in at the same rate as it has been over the last few weeks, we expect to have somewhere around 1650 AFAs on July 1."

« RFAs to be allowed to sell investment-linked insuranceAdviser investment statement text amended »

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Comments from our readers

On 24 June 2011 at 2:19 pm Where Have all the Little Guys Gone? said:
I have just had a quick look at the latest list of AFA's. By far the majority seem to work for banks, fund managers, sharebrokers, insurance companies and the bigger groups. What has happened to all the one and two person practices that used to exist? Has anyone counted the numbers in each grouping? From a quick look at the list, it looks as though the public will now be increasingly shunted into the products of these product suppliers from now. Or am I missing something?
On 24 June 2011 at 2:51 pm Nicole said:
No I think you have pretty much summed it up. Its getting far too difficult and costly for small advisory firms to be able to run and most of them are selling to the larger firms. I think the public will now have far less choice and increasingly will be put into products and will be a lot worse off than before regulation.
On 25 June 2011 at 12:04 pm Mortgage Broker since 1999 said:
I agree with the first 2 comments and feel that the comsumer will be totally unaware of this.
An AFA employed by a bank will only sell the banks products, and those honest advisers already know that these are not in most cases the best product for the client when you compare them with others.
On 27 June 2011 at 12:44 pm Frank T said:
That's a sweeping statement Mortgage Broker, a quick look at one banks investment products which are open to its AFA advises show that they have access to 20+ different fund managers ranging from AMP Capital through to the likes of AQR and PIMCO - hardly the banks "own products". I suspect that your thinking may have been formed in 1999 (at which time you were probably 100% right) however times have clearly changed and the options open are much broader. As such your statement is just plain wrong.
On 27 June 2011 at 8:33 pm Craig Simpson (Dentice Simpson Consulting Ltd) said:
Having just come out of a large Private Bank managing over $1.2bil. I can say that the banks at the high net worth level do not flog product and definately do not flog their own products.

I am not surprised that the days of the one and two person band have disappeared. The regulation has made it too expensive for the smaller operators to make a good living. My guess is that less than 10% of all AFA's would not be aligned to any fund manager/broker etc.

This is just a sign of the times I guess
On 28 June 2011 at 11:37 am pominparadise said:
If the regulators are so concerned about clients being shunted into poor products, maybe they should have thought more about regulating more of the products, like KiwiSaver. This reduces the problem considerably and will place less emphasis on the over the top regulations coming into force. Good products and good advice should be the mantra, not 30 page reports.This combined with an illustration highlighting the costs of the product through to maturity, so the client can see what they are paying for the 20 year term of the product and its effect on the return.
On 28 June 2011 at 11:43 am CJM said:
Be interesting to see how many AFAs will describe themselves (and the research they use) as "independent" as per Code Standard 3.

I suspect some 1-2 person firms may be able to say this.

But whether the vast majority of AFAs employed by firms that are also product providers will do so is the real test. Just how "aligned" are they to their provider and their products.

Perhaps that will become a point of difference between AMAs?

Or will all/none end up saying they are independent?
On 4 July 2011 at 9:44 am AFA Muggins said:
Surprisingly, there are in fact a number of us one and two man bands left, and in my case we are actually flourishing - significantly. The banks cannot provide the degree of personalised service that we do and clients are happily paying direct fees for it rather than fees based on funds under management. Everything is transparent.

You need to look at your value proposition with the client.
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