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AFA market loses more than 100 advisers in a year

UPDATED There are concerns that the number of new AFAs being authorised by the Financial Markets Authority is not keeping up with the number who are terminating their authorisation.

Thursday, September 3rd 2015, 6:00AM 9 Comments

by Susan Edmunds

In June last year, there were about 1900 AFAs operating in New Zealand.

Over the past 12 months, 91 new advisers have been authorised and 122 have terminated their authorisations. There are now 1842 AFAs.

Terminations include people who have let their FSPR registrations slide or voluntarily removed themselves and terminated their licenses.

No applications have been declined.

Institute of Financial Advisers chief executive Fred Dodds said it was concerning. “There are 2.5 million KiwiSaver clients, who do they talk to?”

He said it had initially been suggested that the number of AFAs might reach 5000 but the highest it had ever got was 1963. “We are a fair way off.”

The IFA has had 56 new members in the past year, a mix of QFE advisers and independents.

Dodds said he had been talking to CPIT about starting a financial planning major for its Bachelor of Business Studies degree. Massey University had been mulling a financial advice degree but has put it on hold until the current regulatory change is finished.

Dodds said a university course might boost numbers because it would make young people consider a career in financial planning.

He said it would also be worth examining where the new AFAs were going to work. “How many have become nominated representatives in banks? It does be the question with the Commission for Financial Capability vision of everyone having a financial plan, who is going to provide that? Someone like Murray Weatherston will have to 13,462 clients and will have to embrace roboadvice.”

IBANZ’s Professional IQ College is also considering starting a four-day course for new AFAs or those wanting to upskill.


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Comments from our readers

On 3 September 2015 at 8:35 am Pragmatic said:
My suspicion is that accountants & lawyers provide a significant amount of financial / investment advice behind the protection of the current legislation
On 3 September 2015 at 9:00 am R1 said:
Less AFAs and the QFEs picking up market share. All going according to the government's/regulator's/QFEs' plan I would say.

Complex regulation applied to SMEs with larger firms not impugned is just what big corporates feed on. Just look at big pharma if you want to see where this is going. Complex and unfairly applied regulation creates a huge barrier to on-going viability of smaller players and a huge barrier to entry of new players. Learned this at business school 20 years ago.

Unless we and investors get angry and vote accordingly we can expect nothing to change; apathy is an insidious disease.
On 3 September 2015 at 9:23 am One of those rare AFAs said:
There is definitely a shortage of AFA's in NZ, and I agree the number is dropping, but without knowing more detail around who is deregistering and why I don't know if this is leading to "less advisers". One alternative could be that bank staff, who were not actual advisers (think adviser support) that have been previously AFA registered are now cancelling this due to a better understanding of the potential liabilities, or simply due to their leaving the banks. If this were the case then the "new advisers" mentioned above are actually a net addition as they are actual client facing advisers. Something to look further into maybe before drawing to may conclusions?
On 3 September 2015 at 1:11 pm NormanStacey said:
Why should Murray Weatherston have to get rid of half of his clients?
On 3 September 2015 at 2:51 pm Murray Weatherston said:
Hang on a minute Fred.

If I work 37.5hrs per week for 44 weeks (allowing 4 weeks vacation, 2 weeks statutory holidays, 1 week sick and 1 week to double achieve the CPD minimum standard) at 80% yield, and I meet all 13,462 clients only once a year, that will be 5 minutes and 53 seconds each which will be barely enough time for me to say "hello", do AMLCFT updates and then bid them "goodbye"
On 3 September 2015 at 3:50 pm w k said:
hey murray, have you included travel time or do you travel in a time capsule? you are also assuming that the 13,000+ clients queue up outside your office every day, right? did you factor lunch breaks, coffee breaks and toilet breaks into your calculation? :)
On 3 September 2015 at 7:07 pm traveller said:
who said Murray has 13000 clients? Isn't that a tongue in cheek comment?
On 3 September 2015 at 9:57 pm w k said:
@traveller: what do you think?

maybe when the number of AFAs drop to 1000, regulators say AFAs can't decline when someone come to you for advice. then you will end up with 25,000 clients. Maybe a few more with new migrants. :)
On 18 October 2015 at 10:35 pm trekboy said:
If you want to provide DIMs now it's more important that you join IOD than have a five year full time qualification like a Masters in Economics. Wish FMA had told me that before I wasted all that time at uni..... Mind you at my age there was no FMA back then.....

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