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: Thursday, April 9th, 6:09PM

Insurance

rss
Latest Headlines

Imagine being forced to give bad advice

It is not quite that bad, but this story – or cautionary tale – shows how a very restrictive approved product list affects advisers.

Thursday, November 28th 2019, 12:25PM 1 Comment

by Russell Hutchinson

One adviser I met recently had clients in an old investment product – but this story could equally well apply to several risk products I know.

Back when the product was offered it was a reasonable solution. Today, it is expensive and there are plenty of better options. The company that offered it kind of knew that – they closed it to new business. They did not replace the product. No upgrade pathway was offered to clients. No equivalent product suitable for the clients to transfer into was obtained for the advisers operating under a restrictive list of providers and products.

So, the clients were stuck, and the adviser was worried: the terms of his employment meant that he had no options.

It is a good illustration of how a professional adviser, limited by the choices of their employer, can face situations in which they are in a box – unable to give good advice. 

Good news: today he has options. It means that he is now systematically working his way through the clients to determine what the right course of action for each one is. All this time he has felt responsible for them, and only now has he been able to sort the matter out. I asked him whether he would go back to a situation where he had limited options. Of course, the answer was "no". 

A failure of the old regime was that an employer of advisers could have very restrictive employment terms and the adviser’s ability to give good advice could be compromised by those. The curious example of employees summoned to give evidence to the Financial Markets Authority when it was perhaps their employer who should really have been subject to examination underlined that for me.

But the problem was never fully explored. It was overtaken by the review of the old Financial Advisers Act.

The new regime is better designed to cope with an employer-employee relationship, but the control of providers and products will in most cases rest with the financial advice provider. Unless you are going to run your own FAP, your selection of FAP is an incredibly important decision. Whoever that is, you need to be satisfied that you will have the necessary product tools at your disposal to enable you to give good advice.

Tags: FAP Opinion Russell Hutchinson

« As Fred Dagg said: We don’t know how lucky we are5 trends to include in your advice service planning »

Special Offers

Comments from our readers

On 29 November 2019 at 10:51 pm JPHale said:
Here here Russell!

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
Insurance Briefs

Life and health insurance through the eyes of a pandemic
Partners Life’s Naomi Ballantyne calls on her 38 years in the industry to discuss potential trends for the industry through lockdown and what we might see moving beyond.

MDRT plans virtual annual meeting
The MDRT's annual meeting, which attracts more than 10,000 delegates from around the world, will be a virtual event this year.

ANZIIF cancels insurance awards
The Australian and New Zealand Institute of Insurance and Finance (ANZIIF) has made the decision to cancel the 2020 Australian and New Zealand Insurance Industry Awards.

Partners Life supports rainbow community
Partners Life is again supporting the Rainbow Excellence Awards.

News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com