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Dodds: Regulators 'attack on integrity'

Recent reports questioning financial adviser behaviour are an attack on the reputation and integrity of the industry, the head of the Institute of Financial Advisers says.

Thursday, May 24th 2018, 6:00AM 5 Comments

by Susan Edmunds

IFA chief executive Fred Dodds and PAA chief executive Rod Severn said recent negative coverage of the industry, including the FMA’s report into churn, its report on soft commissions, coverage of poor Australian advice practices and some of the commentary emerging in discussions about the new code of conduct and law changes, were at risk of suffocating the good work that advisers did.

“The majority of advisers do add value,” Dodds said.

“Aspersions on soft-dollar commissions and replacement business are seen as an attack on the reputation and integrity of all advisers. That’s not fair.”

He pointed to the handful of cases that had appeared before the FADC as evidence of a low level of poor behaviour. “And only 24 advisers were identified in the replacement business report – none went to jail. Let’s put the numbers into context.

"I think we should remind the regulators that one of their objectives is to promote public confidence in the professionalism of advisers."

Former president Nigel Tate said the recent regulatory action seemed to be an overflow from Australia.

“They are looking for something to hang a review on, in my view. Any decent adviser who gives advice – how they are going to get paid is between them and the client. It’s not up to a government agency to come in and start mandating how things should be done.”

Dodds said the message to advisers was that they needed to get out and tell people how good they were – that could be done by associations, individuals we are all in it together.

Severn said product providers could do better, too. "Insurance companies are bad at not divulging the amount of money they give back to New Zealanders to make their lives better when they’ve fallen on bad financial situation. No one talks about that. All they see is the bad. If more peopled saw the good they might stop and think maybe I should get some insurance.”

Severn said it would be good to get a community fund going to promote the good work of financial advisers.

Tags: FMA Fred Dodds regulation Rod Severn

« Minister 'encourages' providers to change soft commission structuresAdvisers 'should be next for regulator check' »

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Comments from our readers

On 24 May 2018 at 1:42 pm Bruce Cortesi said:
Some very valid comments by two astute gentlemen. If in the same vain as the FMA, MBIE and some Product Providers publicise the negative of the industry more was invested in promoting the good Advisers do we would have greater Adviser engagement. However, unfortunately the great Advisers become bad Advisers by default simply by perception and media. The exception would be existing clients of great Advisers. By default we become only as good as the weakest link. There are more rays of sunshine in Adviser world than clouds of grey. Thank you Rod and Fred for putting what I have said all along is the correct perspective into the open. We all have a big job ahead of us that is obvious.
On 25 May 2018 at 6:20 pm AlBean said:
Excellent comments Fred

We were at a meeting this morning where payouts on claims were announced from a provider which gives a family a life back which is what we do.

This is what needs to hit the headlines and should be a weekly if not daily report on 6 o’clock news
Come on media !
On 28 May 2018 at 11:55 am retired blogger said:
Beware dear readers

The FMA is trying hard to change the subject away from the banks and their $5 billions in profit

26% more profit in NZ than in Ozzie!

Whose pockets did that money come out of ?

The public of NZ have a right to know if the banks in NZ are overly voracious

On 28 May 2018 at 5:02 pm dcwhyte said:
With you, Fred, Bruce et al. The Soft Dollar Report contained false assumptions, misleading graphics, and unsubstantiated conclusions. The Churn Report selected Advisers already under review.

In both cases, these reports focussed on a minority segment of non-aligned Financial Advisers, with the clear inference that such incidences are proof of widespread Adviser wrong-doing. Other commentators citing these flawed reports as sources should know better.

Hopefully, FinAdvNZ will develop a strategy to publicise the benefits brought to the community by the vast majority of Financial Advisers and not let the regulator and ill-informed commentators ride rough-shod over the industry.
On 6 June 2018 at 8:30 am Rob Thumath said:
The churn report actually evidenced an ethical industry with only 2 advisors formally censured out of thousands of advisors.
It was the spin they put on it that told a totally different story.
As retired blogger said, the banks are reaping over $5b from their financial services and we're the bad guys.

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