by Jon-Paul Hale
What I want to start with is some reassurance for you, the advisers out there on the coal face.
The New Zealand Financial Services Industry is undergoing some significant changes, the FMA, MBIE, and the Code Working Group (CWG), are listening to what the market is saying.
In the last two weeks; I have seen and heard a number of things from the industry regulators that should give advisers, and particularly RFAs, some comfort given the changes coming are focused predominantly on RFAs.
How it is panning out for us, professionals with good businesses and processes, should be relatively positive and painless as we work through the transition. We have had the AFA standards to measure against, even if we have not been AFAs.
Yes, there's likely to be change in your business, and there is going to be education requirements, or at least competency measures, you will need to meet.
It is possible that the education requirement, when it is all boiled down, may come more from your FAP, than the regulator, as the CWG will set minimum standards and your FAP may set a higher bar again. We will have to wait and see what the CWG come up with; I expect it will not be anything less than level 5 though.
Change is always a challenge, and often more often than not when things 'change' nothing about the 'change' is changed, it is more about the time needed for the people to socialise and accept that 'change' and work through and integrate it.
So strap it on and enjoy the ride, you are not going to be able to avoid it.
With that said, I have had the opportunity over the last few years to sit down with the FMA regularly and have some frank conversations; and what I am really pleased to be able to emphasise, is they are listening.
They are listening to all members of the financial adviser world, the big end of town and the not so big end of town. This is to ensure that they have a good perspective on what licensing is likely to do to our businesses, and how this impact can be understood and managed, to ensure that the advisers that we want to keep in the industry, stay in the industry.
While for much of what we have seen to date, there's nothing really in concrete yet, we need to see the final legislation from the government, based on what we know it looks like there is a solid strategy sitting behind it.
One of the big challenges for the FMA is the whole licensing piece, what it looks like, how to manage it, and also how to police it. It has been well debated in many forums.
The quantum of the licensing job is significantly bigger than what was needed for AFAs, with a conservative 5-6 times the population of AFAs to bring in for licensing as FAPs. If it goes as far as requiring all players giving advice needing to be individually accounted for, that challenge explodes to somewhere in the area of 25,000 people.
Add to this, the comments around the Code Working Group asking for advisers of various disciplines for an advisory subcommittee to the CWG. This seems to be being organised with the various professional bodies we have.
To me, this is the CWG listening to the market and responding positively, with the potential of involving RFAs directly in the discussion.
We will see what that looks like, and how that transpires, in the near future, I hope.
Now that I have used my allocation of words, I will sign off on this installment and come back to you with my real concerns with what I am seeing in our market. Watch out for Part Two.
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