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[The Wrap] Introducing the new type of financial adviser (Not)

One of the things which impacts on the standing of financial advisers is the dodgy people who pretend to be be advisers but work outside of the regulated market.

Friday, August 23rd 2019, 6:43PM 2 Comments

by Philip Macalister

This week we learnt from the New Zealand Herald there is a new class of adviser. Apparently there is now an Unauthorised Financial Adviser to complement the mix of those who are already authorised and those who are registered.

The paper's handling of the conviction of ponzi scheme operator Stephen Robertson shows there is a lot of work to do to raise the public perception of financial advice and it raises interesting questions around regulation issues.

Roberston was found guilty of dozens of charges relating to the misuse of client money and has been remanded in custody for sentencing.

The NZH story is also interesting as the original headline called Robertson a financial adviser. However he was not on the FSPR; he was neither registered nor authorised. I understand the FMA pointed out the error to the paper and the headline was changed to call Robertson an Investment Trader – whatever that is. The third iteration of the headline used the new Unauthorised Financial Adviser one.

Headlines like that in the mainstream media show an appalling ignorance about their understanding of financial advice. Also, to me, it shows how the media think financial advisers are a soft target who are fun to have a bash at every now and then.

People like Robertson also throw up an interesting area of debate as they work on what the regulator calls the perimeter and technically are outside the scope of the regulator's reach.

Fortunately the FMA has taken the stance that trying to police this area is something it should do and over the years has put a considerable amount of its limited resources into this area.

The reality is that this fringe, unregulated sector seriously taints the good work regulated financial advisers do. It also raises the question of whether regulations need to be expanded to properly capture these people working outside of the regulatory regime.

But regulated advisers also need to step up with a new regime looming.

One thing which worries me (and others), massively is the lack of engagement from registered financial advisers around regulation.

The conduct and culture session at the Financial Advice New Zealand conference arguably should have been compulsory for advisers who are about to move into a regulated environment. At the start of the session facilitator, Sue Brown, asked for a show of hands who was an AFA and who was an RFA. Nearly everyone in the room, bar a few were AFAs.

As FMA chief executive Rob Everett pointed out AFAs are already in a regulated environment and operate under a professional Code of Conduct.

RFAs have to get with the programme and engage in their future – or find a new job.


Tags: AFA FANZ FANZ annual conference Financial Advice New Zealand financial advisers FMA licensing Opinion ponzi registered financial advisers Rob Everett scam

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Comments from our readers

On 24 August 2019 at 6:28 pm JPHale said:
Not surprised with the conduct and culture experience, the life industry has proven in the past, and somewhat continues to prove, they have little awareness or regard for the oncoming train.

Sure there are quite a number that are, but it falls far short of the several thousand presently practicing RFA’S

And contrary to the reports I've heard, I was not at the conference, as I couldn't attend due to personal circumstances. Though it appears I have a doppelganger...

If we, RFA’s, don't lift our game we’re likely to find a very different environment to what we presently have... And that may not be too pretty.
On 25 August 2019 at 3:02 pm LNF said:
And for risk only advisers, the whole thing is total overkill

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