tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, March 29th, 10:40AM

News

rss
Latest Headlines

Vertical integration: Financial advice sector's weak link?

Financial advisers are being told the industry needs to self-regulate if it is to regain or build customer trust – but vertically integrated organisations remain a problem.

Wednesday, June 6th 2018, 6:00AM 1 Comment

by Susan Edmunds

Maria Wilton, Australian CFA Society’s Diversity Committee Chair

New Zealand’s CFA Society last night launched a new associate membership option, aimed at financial advisers and institutions who want to lift professionalism in the sector.

It enables financial professionals who are not charterholders to come under the CFA Society and its code of ethics, to distinguish themselves from others in the market.

Maria Wilton, chair of the Australian CFA society’s diversity committee, said there was work to be done on both sides of the Tasman to improve the perceptions of the sector.

Wilton is former managing director of Franklin Templeton Investments.

Revelations of misconduct in the Australian financial services industry, which came to light through the Royal Commission of Inquiry, had been a shock, she said.

The Future of Financial Advice reforms had been designed to build trust and confidence in the Australian financial services sector but clearly had not achieved that, she said.

“Industry cannot rely on government regulation to solve its problems. There needs to be a response within the industry, setting standards, credentialing and making sure people are well-qualified.”

She said the Australian revelations did not come to light until the inquiry process was initiated – regulators’ “please explain” letters, much like those sent by the Reserve Bank and Financial Markets Authority in New Zealand, did not have the same effect.

She said, while there was no evidence that there was misconduct here – there had been repeated suggestions of problems in Australia before the Commission’s work began, it was hard to imagine that the two sectors were so completely different that there was no cause for concern at all.

“The industry needs to step up in order for it to rebuild trust. We need to ensure people in our businesses have the right skills and experience to be doing the job… at the end of the day you can’t regulate for conduct. You can’t require diligence and ethics. That comes from culture.”

She said vertically integrated organisations were an issue for the industry.

FMA chief executive Rob Everett said last month that in an ideal world, organisations that manufactured product would not employ advisers to steer investors into those products.  But he said New Zealand was under-served by independent advisers.

Wilton agreed it was an issue.

"You can put the most ethical person, the most client-focused person in the world, into an organisation where they are required to choose from a set menu of products and remunerated on the basis of selling those - and you'd expect them to come up with a portfolio that's going to look a certain way."

She said when people were incentivised, either financially or through the pressure to allocate within the same business, it created certain outcomes that were not always in clients' best interests.

"The industry needs to step up."

Tags: CFA

« PAA rules out legal funds for opposing membersMann on a mission to diversify financial advice »

Special Offers

Comments from our readers

On 6 June 2018 at 10:50 am Brent Sheather said:
Good to see that someone at the CFA acknowledges that vertical integration impacts behaviour and acknowledges that "you can't require diligence and ethics". If that's the case then how can the NZ CFA Society promote ethical behaviour but include in its membership individuals that manage and work for vertically integrated organisations. Ms Wilton says "the industry needs to step up" - not only the industry but also the regulator and the CFA Society.

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Weekly Wrap

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
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 - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 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 6.69 6.45 6.19
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 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
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 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 28 March 2024 9:42am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com