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Financial Advice NZ quality mark outlined

Financial Advice New Zealand has revealed the framework for its Quality Service Mark.

Wednesday, April 4th 2018, 10:30AM 12 Comments

The new adviser association said the mark was designed to be a mechanism through which it would “evidence and endorse to the New Zealand public” the professional standards of its members.

It wants the mark to become a recognised signal for quality advice, used by New Zealanders seeking an adviser and by advisers as a "mark of distinction".

The new code and regulatory requirements will influence specific elements of the mark but it will be available to members later this year and will launch to the public in early 2019.

It will be optional for existing members of the new association for the first five years. From then on, it will be a requirement of membership. There will be no cost involved in holding the mark.

New Financial Advice NZ members will be required to achieve the mark from 2021.

Establishment board chair Sue Brown said the aim was that simply being a member of the association would eventually be the mark of quality.

To support members attaining the mark, Financial Advice NZ will work with groups and service providers to build it into their audit review processes. Brown said advisers who were not part of a group would need an external check.

The mark will be an evidence-based verification of an adviser's professional standards, reviewed every three years.

It will cover professional promise, regulatory compliance, third-party references, professional development, advice process and a requirement to have at least three years' experience. Advisers will have to supply testimonials.

It is designed to complement CFP and CLU.

Brown said the mark was designed to highlight advisers who did what they said they would. "Our objective is to make sure that when the public deals with Financial Advice NZ members they know they are getting people who have met the standards."

She said advisers had been clear that there was a need to promote professional standards in the industry and advocate for financial advisers offering sound advice. The quality service mark would wrap up those elements.

Tags: Financial Advice New Zealand

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Comments from our readers

On 4 April 2018 at 10:45 am Pragmatic said:
Great initiative... although I'm struggling to see how it would complement CFP & CLU. Possibly replace these with a broader & more recognised symbol I suspect
On 4 April 2018 at 1:53 pm smitty said:
Having read the FAQ's and the associated information I will be submitting some feedback to FANZ. The move to create a quality mark is a great idea, except it had one already... well two to be exact. It seems that FANZ wishes to start its life with its own and I worry that the pinnacle of Financial Planning or Insurance Planning is to become relegated to secondary mark, but not really a NZ mark. All the time and effort will go into marketing this new compulsory mark (from 2023). FANZ, perhaps give up your claim to the CFP / CLU mark, allow another organisation to take charge of it, and give the holders of such the ability to choose to remain members of FANZ, or to move to the new organisation that retains it. Ps – Not sure how other Advisers feel about having their client files reviewed every three years, nor the client, guess the Privacy Act clause will need to be updated to reflect sharing of files to third parties for audit purposes. Testimonials every 3 years as well, from clients and FANZ member or Senior Staff in product provider businesses, sounds like a lot of detail around this needs to come out. So let’s see…
On 4 April 2018 at 2:24 pm AFA Muggins said:
I guess I'm struggling to see real benefits in this, unless Financial Advice NZ consider the Code Working Group and MBIE and FMA inputs are redundant after FSLAB....
On 4 April 2018 at 4:54 pm Richard Harden said:
Yes Smitty, you've made some valid points here, what's the point in introducing a country specific quality mark when we already have an internationally recognised mark of CFP & CLU, what is the point of this and whose goes to make the money here? will be interesting to see what CFPs do going forward.
On 5 April 2018 at 9:34 am Dirty Harry said:
Hey Smitty. IF the CFP and CLU designations are so well recognised why do so few punters know what they are and so few advisors have them?
And I mean average everyday punters, not the few who would seek a $2000 financial plan for managing the millions they got from selling a farm.

As to privacy, I don't know about you but I had three files reviewed to get Std Set C, and all I had to do was redact the names and addresses.
On 5 April 2018 at 10:19 am Ron Flood said:
Dirty Harry.

CFP & CLU designations require advisers to 1. Be members of IFA. 2. Undertake study, mentoring and require annual declarations around CPD and standards.

As these are not manditory but voluntary designations, they are limited to those IFA members who choose this route to exhibit excellence in their chosen field. Others choose different pathways such as Diplomas or Degrees.

I liken the designations as proof of being a specialist rather than a general practitioner.
On 5 April 2018 at 11:38 am Jenny Campbell said:
I think a number of commentators here forget that the CFP and CLU designations are not relevant to a large number of advisers - mortgage advisers for example.

I believe a quality mark would be a valuable badge for many advisers, but agree with Murray that is should not be called a QSM.

I am concerned however, that it appears that there is going to a mandatory requirement for Estate Planning CPD in order to attain the mark. This seems like a bizarre and irrelevant requirement for a mortgage adviser?

On 5 April 2018 at 3:02 pm smitty said:
@dirty harry, that’s my point. How long have the IFA had the ability to promote the CFP and CLU designation?

Granted we get a nice poster every year and a little CFP pin, but when you compare how CFP is marketed in other similar markets, say US, AU, UK, then you start to see some gaps in promotion, well that’s my perception anyway.

Mind you, perhaps as an experiment google AU CFP, US CFP, and then finally NZ CFP. See what comes up for NZ CFP, it’s not very marketing friendly compared to the rest.

@ Jenny, no they are not for the masses, hence the reason why they are called (CFP and CLU) - the pinnacle of your profession. No difference to that of a Certificate, to a Diploma, to a degree, to a Masters, to a PHD. There is always a level of differentiation to recognise skill, commitment and perhaps passion for your field.
On 5 April 2018 at 5:26 pm Dirty Harry said:
I generally appreciate and agree with your comments, and find your contributions on here to be well considered and useful.

But I'm not sure what the above adds to this discussion. Does not answer my questions. Besides, we all know what it takes to get one. That’s not my point.

I liken the QSM as being proof of being a good adviser. You don’t need a CFP for that. The QSM looks like it offers something into the market where currently there is nothing. Just being in the game under the new world post FSLAB is not a mark of quality or excellence. Neither is just being a member of an association. As the villain of The Incredibles movie said; 'When everyone is super, no one will be [maniacal laugh]".

Whether or not you’re a "general practitioner" (whatever that is supposed to mean – I’m an insurance adviser, that guy does mortgages, neither of us is CLU or CFP, or a GP) there is currently nothing other than the pinnacle marks that set the highest standards. Too high? Debateable. Too hard? Also debateable. But the reality is it’s a very small club for very specialized roles.

I do find it curious that many who look down on this QSM, or wish to be the first to criticise it, are holders of the CFP and CLU designations.

Where some fear the QSM has been set at a level that threatens to dumb down the industry or it devalues or takes the spotlight of CFP and CLU, I see it differently. It's something that the public can understand, and advisers can aspire to initially then be required to have after 2021. It also gives those others who have chosen different pathways a chance to have their qualifications, skills and experience recognised in a useful way.

The effect will be lifting the standards of many currently practising and that can only be good.

The common cry: Someone else should do it? Would that CFP holders had been prepared to form their own committee or sub committee and pay a suitable levy or contribution, or even make their own efforts toward marketing their special designations. Holders have had just as much opportunity, but have done far less than the IFA over the years, all the while saying someone should do something. It would be a fair question for the wider membership to ask why their dues should be put toward promoting something that only benefits a very small group.

Should any promotion that is done be limited to those holding a Masters? Or should there also be a quality mark that designates those who have appropriate qualifications and experience and passed some sort of quality screening?

How many mortgage advisers deal with inter-generational wealth transfers, such as mum and dad helping their kids with deposits for a house? People gifting deposits as early inheritance, or guarantees, family businesses, the implications of relationship property?
You see this stuff Every. Single. Day.

If you think it doesn’t apply to you, then that’s why you need some Estate Planning CPD. You don’t have to solve the issues, but it could be very important to your clients you know about them and refer.
On 6 April 2018 at 7:21 am mockingbird said:
1. Is the proposed QM yet another manner in which the same information is yet again being confirmed by an adviser? Are advisers not already monitored in these areas of process by the FMA through monitoring visit, annual FMA online returns, CPD requirements and the rest?

2. Is the QM perhaps (?) merely a "feel good"/"look good" marketing initiative for the new organisation?

3. Is the QM perhaps a revenue stream for ... who? Who exactly will perform these external checks? An internal arm of the new organisation, or external 'provider' such as Strategi?

4. Dirty Harry ... yep, most punters have no idea what a CFP or CLU is ... but more worrisome, most punters still don't know what/who the FMA is, continue to think KiwiSaver is an investment in and of itself (not a structure around an investment) nor how to identify the type of adviser they need for their financial issue.

5. Years have been spent developing policies and procedures under the FAA – I am concerned however how advisers remain confused, dis-engaged (due to burnout trying to keep up with all of this while running their businesses), burdened by increasing compliance, etc. while the average NZ is arguably no further along in developing financial literacy. Consumers need to be truly engaged; I believe the Government has not fulfilled their obligation on this front. Check out the online CWG Consumer Survey being distributed (though I have no idea how it is being distributed or to whom, having stumbled across it). With respect, its presentation is anything but clear and concise, with jargon and copy text that would leave most NZ consumers of financial services befuddled.
On 6 April 2018 at 9:39 am retired blogger said:
It is surprising to see so much comment on this relatively unimportant issue

the burning issue for advisers is the CWG and the MBIE

and the mess they are making of this industry

not to mention mum and dads NOT getting their interests put first either
On 6 April 2018 at 12:16 pm AFA Muggins said:
I think Financial Advice New Zealand is positioning itself as a quasi regulator, and missing the point rather than an association working for it's members. This is probably a reflection of it's genesis.

I can't think of any profession in New Zealand where the practitioner is required to get testimonials from clients at all, let alone regularly, to remain with a qualification (QSM in this case). Think Doctor/Lawyer/Accountant.

Imagine being asked by your medical professional / Specialist or Lawyer etc "Can I please have a testimonial so I can prove I'm up to a level required by my association membership"

My immediate thoughts would be - surely you are qualified or..... maybe you are not?

And where is 'Advice' in QSM. It's more reminiscent of the Qualmark rating used by the tourism industry.

As an association, Financial Advice should be working for the membership. We are under a regulatory environment that is increasingly demanding, why would anyone willingly pay to join an organisation that makes it even more burdensome?

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