|        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Thursday, August 13th, 9:41AM


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



Printable version  


Email to a friend
Insurance Briefs

Insurer nib backs Ronald McDonald House with $20k investment
Health insurer nib New Zealand and its nib foundation have lent support to Ronald McDonald House Charities.

Less stressed during lockdown
New Zealander’s health and wellbeing had surprising benefits from the Covid-19 lockdown.

Southern Cross supports new safe haven for at-risk pets
Southern Cross Pet Insurance has teamed up with Pet Refuge to provide temporary shelter for animals affected by family violence.

nib Foundation supports Lifeline to the tune of $150,000
To support the growing mental health needs of Kiwis emerging from the Covid-19 pandemic, Lifeline Aotearoa has increased its service capacity thanks to a $150,000 grant from nib foundation, the charitable arm of nib New Zealand (nib).

News Bites
Latest Comments
  • It starts with governance
    “@Adviser1 this is part of the discussion we need to have as an industry. It is also part of the message we have with the...”
    23 hours ago by JPHale
  • It starts with governance
    “Thanks Gavin, appreciate your comments. So by engaging a compliance consultant and having the necessary policies, procedures...”
    1 day ago by Adviser1
  • It starts with governance
    “Hi Adviser 1 -I don't think peer review will cut the mustard. There is more to it than someone having a look at you do and...”
    2 days ago by gavin austin adviser business compliance
  • It starts with governance
    “Who offers a governance solution for a one man adviser business or is adviser peer review the way to go? Cheers...”
    2 days ago by Adviser1
  • It starts with governance
    “Well said as usual Russell, you’re right governance is one of the things that has been missing from the discussion and...”
    2 days ago by JPHale
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