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'If you expect advisers to work for peanuts...'

Some of those who did not want to put their name to their views about the proposed code of conduct for advisers made the most scathing comments.

Tuesday, April 16th 2019, 6:00AM 4 Comments

Submissions received by the Code Working Group throughout the consultation process for the design of the new code have been made public. 

The finalised code is expected to be revealed soon.

A submission, without any identifying details, said “if you expect advisers to work for peanuts you will end up with poor outcomes as quality advisers will leave the industry”.

The draft code suggested a level five qualification as a minimum standard for advisers.

“We should be able to sit a test to pass if experienced," the submission said.

"With the last regulation we were made to sit low level papers of a fifth-form level, run by people who couldn't make it in the industry and that taught us nothing. Total waste of time and insulting to our intelligence. I'm unaware of a service failing from advisers. There are some rogues in the industry (a lot less now) remove them. Most of the people in the industry do a great job.”

The submission said there was too much paperwork.

“I challenge you to demonstrate my level of financial knowledge. I'm willing to learn from people who know more than me - but you will appoint low-level people to teach us nothing. I'm all for raising standards in the industry 100%. However, I have never seen relevant training provided, just low level rubbish training for large fees. I suggest to be in Parliament you do financial courses to show that you can manage people’s money properly – that’s much more of a failing then the financial advice industry.”

One RFA insurance adviser, who also did not want to be identified, agreed the draft code provided inadequate acknowledgement of time in the industry.

“It is unrealistic to expect advisers who have been in the industry and who can prove competence to require further qualifications,” the RFA said.

“Restricting new entrants to those with university degrees may limit growth in the industry. A degree does not necessarily make you a good adviser and the majority of the good advisers currently in the market do not have these qualifications. There does need to be a standard but we do need to be wary of making this too high.”

The RFA said there were also some advisers in the market who should not be there.

“When an adviser has an agency cancelled by an insurance company for bad practices then this should put them out of the industry. They should not be offered agencies by other companies and allowed to continue to operate. This is where you see client bases churned.

“The banks need to be under the same policy replacement rules as advisers. So often we see clients change policies to the bank and they are not given a comparison of the two products.”

Another submission from someone who said they were not an adviser said inducements, rebates and cashbacks for advisers needed to stop.

“These are bad practices and will cause harm and damage to the industry plus these are not putting clients' interest in the first place.

“There should be mandatory training to be attended by advisers and the regulators must conduct courses and classes. If not what is FMA doing?”

Another RFA said there needed to be a minimum English competency requirement for advisers.

“All insurance contracts were written in English in NZ and all communication between the advisers and insurance companies were done in English. This includes submitting insurance applications, underwriting process and claims. So an insurance adviser needs basic competency of English to work in this industry.”

Tags: Code Code Working Group

« Code submissions revealed: Industry wanted changeFinancial Advice NZ: Aim for 3000 »

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Comments from our readers

On 16 April 2019 at 7:05 am John Milner said:
I’d like to suggest to the two providers of the above submissions not to take the code and education requirements as a personal attack on their industry IP.
The big picture view is for the industry as a whole be lifted and provide greater confidence to the public. This means we require at least minimum standards (entry level - level 5).
I attained CFP & CLU but also completed level 5 in 2007. And yes I did learn a few things from my level 5 papers. Education needs to be a continuing process to remain a professional. Industry battle scars from time in the industry don’t really cut it.
Give the new system a go - even old dogs can learn some new tricks.
On 17 April 2019 at 12:47 pm Unencumbered said:
Having gained Level 5 with no Financial Advice background and seen how low the bar has been set I was surprised, no appalled, by the number of so called experienced Advisers (the; you can't teach me anything club) that couldn't achieve the level of qualification. Level 5 is an absolute minimum standards and if Advisers can not achieve it they should be forced out of the industry.

It also provided me an insight into the ethics of some Advisers, while helping them complete some assignments. When the reason for providing the Advice is "that's what I sell to all my clients" one does question the Client focus.
On 18 April 2019 at 10:37 am First Time Caller said:
@Unencumbered... I think its a bit harsh to state "experienced advisers, you cant teach me anything, couldn't achieve the level of qualification"

I personally dont think its about them not being able to achieve it, they are reluctant to suck eggs and be regurgitate information that isnt actually applicable in the real world, remember these are advisers who are out their doing it in the real world.

I am young, hold a BCom and post grad dip financial planning and level 5 and been in the industry 15+ years so i see both sides. Throwing stones doesn't help mate.

What would help would be a level 5 that is relevant, because when i did it i don't think it was.
On 23 April 2019 at 3:24 pm JPHale said:
@Unencombered, you raise an interesting issue, that I also observed as a BDM, where the basic expected knowledge genuinely wasn't there.

When an underwriter comes to me and asks why does the BRA say for the reason for the change "Because Jon-Paul Hale my BDM said so". The adviser of the time was 20+ years in the industry and couldn't grasp the difference between a level term cover and a unit-linked cover that was crap.

At this stage, it made more sense for the client to transfer the existing life cover (life only on the existing cover) with no underwriting to a level premium product and take the difference in contribution into a separate savings plan or put it in their pocket. Either way, the client was going to be better off than putting money into a product with a negative cash value.

And this wasn't my only example, just the one that stuck with the underwriting questions. (because that was the only underwriting to be done, aka ticking the boxes)

@First Time Caller, while there are those who are hugely experienced who are pushing against the qualification piece who know what they are doing, many whom I have talked to directly, there are still long term advisers around who are having difficulty getting through the material and their understanding of the basics of our financial markets is lacking. There's also quite a number of newer advisers, less than 10 years, who are too.

And this is with the more recent form of level 5 that is more relevant in its examples of what we see every day.

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