Call to address gap between RFAs and AFAs
The gap between registered and authorised financial advisers is a concern that is likely to get worse, the general manager of the New Zealand Financial Advisers Association says.
Monday, September 16th 2013, 6:01AM 
6 Comments
by Susan Edmunds
The NZFAA has conducted a survey of 2500 people with the aim of increasing understanding of the public’s view of the industry.
The findings will be a foundation for the organisation to examine advisers' value proposition – the theme of the organisation’s first annual conference.
Ninety per cent of the NZFAA’s members are RFAs, mostly operating in the risk and mortgage space.
Chief executive David Yates said it was too soon to discuss the findings of the survey.
But he said the NZFAA was concerned about raising consumer awareness of the benefits of seeking advice, and the increasing gap between RFA and AFA advisers. “Proposed changes to the code for AFAs and talk about raising the educational standards for AFA qualification will exacerbate this issue.”
He said there was also a lack of quality structured professional development opportunities for RFAs and AFAs. “With proposed changes to the code for next year, it will become increasingly important for quality structured CPD to be available to advisers.”
Submissions on proposed changes to the Code of Professional Conduct for Financial Advisers closed just over a week ago. Yates said while many of the changes were positive, the proposals to make it easier for RFAs to offer KiwiSaver advice and changes to CPD requirements could lead to increased complexity in the industry, further confusion for an already confused public and increased compliance costs for advisers, particularly around the need to keep qualifications up-to-date.
He said consumer confidence in the advisory industry needed to be built up in the wake of high-profile cases such as Ross Asset Management’s failure.
“One of the key challenges for advisers is to understand that the value of their service proposition for clients lies, not in the products they sell, but the advice and services they are able to provide around those products. This is fundamental, particularly in the IFA space as distribution models evolve to take advantage of opportunities provided by technology. Our conference this year is designed around this theme. It is also a core element of our service proposition for members as we move into 2014.”
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One of the best ways of addressing a lack of confidence in whichever market you work in to is to raise the standards to be met, but also to have an efficient and effective way of monitoring these standards - on an ongoing basis. Every Airline Pilot had to prove they had a license when they started flying but continual, measurable testing means passengers are confident enough to get on a plane. Whilst it may not mean the difference between life and death in the same way for advice given by a Financial Adviser, incorrect or misleading recommendations can have far-reaching and sometimes devastating implications for the consumer. Raising public awareness of provable and robust standards and training upheld by our industry and the advisers within it can only be a good thing.
When the AFA mortgage module is more relevant to the advice I give, THEN I will take it. I have coached a number of advisers through it.
All I learned is that it recommends some bad practices, and it doesn't take into account the experience and outside qualifications that I have; qualifications and experience that are far more relevant to my clients and the advice I give them.
On top of that, the continuing education I take is far more diverse, and far more useful than most of the CPD courses offered by the current product providers.
Same as me, same as pretty much any financial advisor that doesn't want to provide "personalised" advice (broadly, financial planning).
There's quite a list of us actually. Why anyone other than a financial planner would bother getting an AFA is beyond me.
My point is, "we" shouldn't be trying to turn our registered status as FSPs into some form of qualification or license - cos it's not.
Just once, I would like the FMA to recognise my quals and the additional training I do every year.
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Two things in the article grate.
1. As I read the Code Committee's proposals, registered but not authorised advisers (commonly called RFAs despite that term not being used in the regulations) will still not be able to give personalised advice on Kiwisaver.
If the Code Committees proposal gets traction, they will need to get AFA-lite (Standard Sets A B and C plus a new Kiwisaver Certificate).
2. Can anyone demonstrate that there is currently insufficient opportunity to get Structured CPD hours?