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[Weekly Wrap] The value of advice

One of the most interesting stories in the financial services space this week was the Institute of Financial Advisers weighing in on the debate about how advisers should charge for their services.

Friday, March 8th 2013, 11:58AM

by Niko Kloeten

Plenty of people inside the industry (and some outside) have views on how advisers should or shouldn’t charge for their services, but according to the IFA there’s no ideal way of doing it.  What really matters is transparency.  If an adviser explains his fees in a clear and understandable way and the client accepts, what does it matter what some other pundits think?

Another big story this week was the boom in New Zealand’s managed fund industry, which could see more products hitting the market and fees continuing to fall.  New Zealand’s managed fund industry was in a pretty poor state not too long ago but the introduction of KiwiSaver as well as the PIE tax regime has turned things around and advisers and investors now have better choice.

And PAA president Peter Leitch has warned that the FMA’s tone suggests it will be taking a harder line with non-compliant advisers.   The Financial Advisers Act has been in force for nearly two years and the regulator looks to be tilting the scales from education towards enforcement.  The Ross Asset Management saga will only increase its resolve to make sure any dodgy operators don’t slip through the cracks.

Meanwhile, the Commerce Commission has released a damning report into the Credit Sails fiasco that paints an unflattering account of Forsyth Barr’s role in the promotion of the failed product.  The product was too complex for everyday investors, as evidenced by the fact the US version of the product had a big disclaimer at the front warning it wasn’t suitable for retail investors.

Also, a fund ratings tool for KiwiSaver has been criticised by a provider who claims it favours the banks.  The story highlighted the age-old debate about how much weight should be given to fees versus performance.  The problem for investors, advisers and researchers is that fees can be predicted while performance can’t.  After-fee returns are what matter to investors.

This week saw fund managers question the benefits of mutual recognition, while AMP assured advisers a fraud was just a one-off.

And finally, rumours are running hot that Fidelity Life will buy Tower’s life insurance business.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« ComCom slams Forbarr over Credit SailsIFA working on pro-bono offering »

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AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
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BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
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BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
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Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
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Resimac - LVR < 80% 8.84 8.09 7.59 7.29
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Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
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TSB Bank 9.44 7.79 7.55 7.45
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TSB Special 8.64 6.99 6.75 6.65
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Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
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Median 8.64 7.19 7.17 6.65

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