Let's educate as well as regulate
Friday, October 16th 2009, 11:39AM 
6 Comments
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On 16 October 2009 at 2:16 pm John Winch said:
Absolutely agree here with some sound advice on education. We need our young people leaving the education system with a sound financial awareness.This is where it has to start. Education is the very building block & will go someway towards our young people achieving financial independence. Let's face it, governments around the world are not facing up to the problems of a demographic time-bomb in favour of putting off today what they can promise(& fail) to do tomorrow. Look what's happening to the Cullen Fund as just one example. We also need a strong regulator who can regulate effectively at the most complex end of the spectrum as well as at an individual adviser level. I stand up to be shot down here but NZ is in dire need of a single regulator & a single ombudsman to cover all product providers & advisers in the financial sector. After the ANZ/ING debacle investors are screaming out for some consistency. Let's also have some consistency in raising professional standards with a single industry recognised certificate of achievement & higher educational standards for those preferring to specialise. It doesn't need to be complex but the current system does need to change quite significantly if we are going to restore investor confidence anytime soon. On 16 October 2009 at 6:02 pm LPL said:
What is needed is not a collection of organisations, associations and complaints processes - but rather one unified approach. Regulation with the ability to register directly or through a QFE is a step in the right direction (but personally I believe each individual should be on a central register for public inspection and scrutiny).
The suggestion that there will be multiple complaints processes (possibly outside existing associations) fails I believe from a clients perspective. If regulation is truly for the benefit of the client then why not make it as simple as possible with one central complaints point. If this is not the case isn’t it clients who are going to be the losers? When they have a complaint, they must first establish based on who provided the advice where to complain. Then they are reliant on that complaints process to work. Who is going to regulate the complaints process?
It is an unfortunate reality that changes are going on when individuals feel dissatisfied with investment outcomes and most submissions are from product providers or existing associations. Vested interests prevail.
I hope that someone stops to say, if I was a client – what would I believe was in my best interest?
On 19 October 2009 at 11:47 am adam smith said:
Re a single place for consumer complaints - a large number of submissions to previous "White papers" suggested exactly that - 1 consumer complaints system. However Government and officials in their wisdom decided that there should be provision for competing EDRS's with a backstop of a default EDRS for the regulatees who did not want to join any of the competing EDRs. Ask those who made the original decision to go for competing systems to explain!
On another matter it is quite possible that there will be little market demand for adviser associations once the new regulation is in place, as all an adviser will need is to be authorised as an AFA in order to practice. [The existing bodies might well be hoping that QFEs make a prerequisite that their employees and contractors must belong to an IFA or PAA or NZMBA as part of their employment or contract.]
Adam
PS EDRS = external disputes resolution scheme (or service); AFA = authorised finacial adviser
On 20 October 2009 at 12:42 pm alan said:
About five years ago at the height of finance company popularity, I lost a client. This retired couple had been with me for about ten years and we had achieved an annual return of a little over 5%pa net of fees and tax. Suddenly, every time I went to see them, they confronted me with advertisements by finance and mortgage companies, cut from the papers, offering rates of 8%,9%,10% or more. Why can't we have some of that, they said. I argued that they were unacceptably risky investments for them, but not long afterwards, they dumped me and went to another adviser, presumably one who was prepared to do what they wanted. I have no idea how they got on with the new adviser but I hope they didn't lose too much of their savings. ( I'm not nasty enough to hope they lost the lot!)
I write this because it is an indication that even the best advised clients do not neccessarily understand what the adviser is doing for them nor what risk management is all about
Yes, educating the investing public is vital but it's hard and frustrating work.
On 3 November 2009 at 8:44 am Old risk Adviser said:
Interesting that so much of what is being written relates to investment - and quite properly so too.
But then, why does the all encompasing regulation rope in those who are solely risk writers?
On 4 December 2009 at 9:32 am Commissions: “Know me before you judge” - Phil's Blog said:
[...] commissions isn’t the answer. It’s investor education, as I argued here. Also it’s up to the product manufacturers to change the way they reward advisers and the [...] Commenting is closed
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