Claim associations silent as advisers become casualties

The spotlight is on the sector at the moment thanks to the Financial Markets Authority (FMA) and Reserve Bank report into life insurers, and the Government’s plan to crackdown on sales incentives in financial services.

The regulatory crackdown was discussed at a recent Stakeholder Engagement Group (SEG) meeting, which brings together a number of adviser associations.

But adviser Murray Weatherston, who represents SiFA in the group, said no one seemed to want to take the lead publicly to fight in advisers' corner.

"I find it ironic at a time when the Reserve Bank and FMA, apparently without authority, have launched a massive attack on the industry, individual insurance companies and adviser organisations that represent mortgage brokers and life agents, who are so clearly going to be casualties of the attack, are just completely silent. That staggers me."

Another adviser asked what associations were doing, saying there should be "full transparency on an ongoing basis as to what our bodies are doing for us and the money we pay". "This silence and working behind closed doors has to stop - Industry bodies keep us better and more regularly informed and ask us our opinion and more importantly keep the consumer informed."

In a comment on Good Returns, the TripleA association said a key point was that there was no over-arching communications function. "One association can't speak publicly for the others."

"Most of the board members on these associations are advisers ... many put in a lot of voluntary hours in meetings and on submissions on behalf of advisers right across New Zealand."

Katrina Shanks, chief executive of Financial Advice NZ, said it was important that advisers knew the association was working on their behalf.

"They may not always see it but we are always working behind the scenes to help create a sustainable financial services sector for the future to help people understand what quality advice looks like and the importance of New Zealanders seeking that.

"We are talking to people, getting our voices heard. They are understanding what we are saying. They’re supportive of financial advice. No one wants to dismantle the financial advice sector."

David Boyle, of Mint Asset Management, said product providers, not advisers, drove the remuneration structures that were being criticised. He said advisers were being hung out to dry.

"My personal view on this one is the behaviour is predominantly determined by the manufacturers.

"Advisers also need to talk about the benefits of advice and so that customers see the value of it much like going to a lawyer or accountant. They get paid based on a transaction at the time so you know the work done. Advisers get paid of the benefit of future outcomes which is quite hard to show at the time."

Comments from our readers

On 21 February 2019 at 12:14 pm Brian Klee said:

I think many Advisers have failed to let their clients and prospects know how they operate, especially those funding their own offices and staff operation. Hardly anyone personally receives those commission levels being batted around.

Here is Life Info's article this month directed at consumers: http://www.life-info.org.nz/product-commission/

On 21 February 2019 at 12:51 pm LNF said:

What drivel from FANZ. The industry is being hammered by FMA and RBNZ and no organisation is speaking up. Life insurance is a grudge product. Very few people buy without some guidance. Unlike material damage or liability cover. We are copying Australia and over there the market is stuffed
. Trouble is, none to the people speaking up has a clue what they are talking about

On 22 February 2019 at 9:49 am regant said:

What and Who is the real problem?

I’m not quite ready to take down my website, and head to the WINZ office, though a couple of people have asked me about it!

Not quite.

Last week the FMA and Reserve Bank published a “damning” report into Life Insurer conduct and culture. Despite the Finance Minister’s statements, it was not about adviser commissions. The word “adviser” appears in that report 55 times. The word “commission” appears 47 times. The word “conduct” appears 265 times. The word “insurer” appears 446 times.

Advisers were not the target, it was a report about insurer conduct, which makes the recent focus on adviser commissions a weird tangent. Are advisers the problem? Has any Prime Minister of this country ever before held a press briefing to discuss life insurance adviser commissions? Curiously, on the same day we had the Prime Minister and Finance Minister talking about commissions, some data about Kiwi Build was released.

How’s that going, again?

On 22 February 2019 at 12:48 pm dcwhyte said:

Agree with regant. Much "definitive" comments appearing here while discussions, conversations, and debates are still to be had.

The UFAA in Australia emphasizes that a unified voice is more effective - they're right.

Individuals, or even individual associations, on their own, won't get enough traction to influence other stakeholders' thinking.

The SEG has many experienced advisers and industry people present and developing a broad message that covers all interests makes good sense.

This takes to do properly - to respond, rather than react.

Seeking an audience with the Minister makes good sense.

Keeping the lines of communication with FMA and MBIE open makes good sense.

But if there are other constructive suggestions to be offered, I'm sure SEG would be pleased to hear from you.

Claim associations silent as advisers become casualties

Associations are being told to be more openly vocal in their support for financial advisers.

Thursday, February 21st 2019, 6:00AM 4 Comments

Comments from our readers

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