Quest to be the biggest and the best

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Thursday, March 20th 2008, 8:50AM 1 Comment

by Philip Macalister

The announcement last week of a strategic alliance between the IFA and the NZ Mortgage Brokers Association was both unexpected and fascinating. At a high level one must congratulate two adviser associations for working together. But, and there is always a but, it begs some questions. The most obvious is, was this alliance done for the right reasons? Or was it done for political purposes? There is a whiff of political purpose around this. Why? The Professional Advisers Association (PAA) has been quite open about its desire to grow its membership. It has suggested to life advisers within the IFA that it is the natural home for them, and currently it is running a series of roadshows offering mortgage brokers an alternative home. One way for the IFA and NZMBA to neutralise the PAA was to form an alliance. To me it was a surprise, considering some of the events and comments of recent years. A view I have expressed previously is that if two associations were to combine, the most obvious was the PAA and NZMBA. I believe life insurance and mortgage broking are more closely aligned disciplines than investment and either of the others. However, I am aware of significant tension between the PAA and NZMBA which is proving difficult to release. The other obvious alliance was the PAA and the Life Brokers Association (LBA), however the IFA successful scuttled that last year. All this leads me to the following conclusion. Competition between associations in the quest to be the biggest adviser association is counter-productive. I believe the government should review its approach to adviser regulation and move away from the idea of having multiple Approved Professional Bodies. There should be just one for all advisers. The government – or an agency like the Securities Commission – should set it up with help from all adviser associations, and then it should be left to the industry to run. Under the current model there will be multiple bodies, that isn't cost-effective, doesn't build uniform standards in the industry and is counterproductive. Plenty of other industries and professions have just one licensing body, why can't the same rules apply in financial advice?

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