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Advisers 'will drop out'

Advisers who are new to the industry will be most likely to drop out due to Covid-19 economic disruption, industry commentators say.

Thursday, April 2nd 2020, 6:00AM 6 Comments

Fred Dodds

The New Zealand economy has been stunted by a level four lockdown response to the global pandemic.

While economists are predicting heavy job losses – Westpac expects 200,000 – self-employed business people, such as advisers, are also expected to feel the heat.

David Greenslade, executive director at Strategi, said the impact would be most obvious among new advisers who had not yet built “a good residual income stream”.

“Those advisers may choose to join a larger corporate advisory business.”

Financial Advice New Zealand chief executive Katrina Shanks said advisers would be no different to other businesses.

“Each advice strand – be that lending, risk, investment [or] financial planning will all feel the impact. Some advice streams more than others in the short term.

“Many advisers have seen this economic downturn before and have adapted their businesses over a period of time to ensure they are sustainable during this period.

“For new businesses this is slightly harder as they have not had the time to develop their businesses to this level. There is no doubt for a short period of time there will be a reduction in economic activity which will impact on those seeking financial products such as mortgages, insurance and investments.

“The most important thing is for an adviser to understand what levers they can pull and push in their business right now to help them through these times.”

She said Financial Advice New Zealand was running a webinar on Thursday to discuss the impact of Covid-19.

It has also launched a peer support programme in which senior practitioners have volunteered to support other advisers.

Former IFA chief executive Fred Dodds said the lockdown could be a chance for advisers to get ahead of what was required of them.

He said some new advisers, particularly in insurance, could struggle with months of little new business, particularly those with responsibility periods for business sold over the past year that could lapse as people lost jobs or encountered cash flow issues.

“But so many of the RFA community have been in the business for such a long time. The investment group are busy.”

People could take the chance to do the level five qualification within the next eight weeks, he said. “They could come out the other end with more knowledge.”

Tags: Covid-19 financial advisers lockdown opportunities Mentoring

« Fixed income 'not providing buffer expected'FSLAA overachievers 'could be collateral damage' »

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Comments from our readers

On 2 April 2020 at 10:29 am Pragmatic said:
Can someone please name 3 "larger corporate advisory businesses" that remain in business and are hiring?

I got to zero
On 2 April 2020 at 12:11 pm MediCare said:
I doubt that David Greenslade has got this right. After the 1987 crash, there was an influx of high quality new advisers to the industry because of limited employment opportunities elsewhere.
On 2 April 2020 at 1:36 pm Backstage said:
Pragmatic... larger practices were already pulling back on hiring advisers prior to this as a result of the flight to safety from advisers who are confused or not looking to FAP. The liability for directors of these businesses had already made them more discerning and careful!
On 2 April 2020 at 3:17 pm Andrew Scott GM Newpark said:
@Fred Dodds - with respect, focusing on your Level 5 qualification, or for that matter your transitional FAP licence, is the last thing any Adviser should be concerned about at this precise moment in time.

Livelihoods are at stake.

Unfortunately a lot of Advisers simply do not know what to say when faced with the COVID-19 'objection'. If the group you're associated with is worth its salt, it should have some answers at the ready for just this scenario. If it doesn't, well...
On 2 April 2020 at 7:18 pm gavin austin adviser business compliance said:
Interesting comments Andrew. I take it from your comment about Dgs being worth their salt that you've provided your members with a idea or two.

We here's mins for what it's woth(many advisers may have already had this idea so sorry to them). Number one avoid anyone who works in tourism/travel industry, builders (maybe) or anyone you think may have job secutiry issues.

Number 2 idea is obvious - approach more nurses, Dr's , hospital staff, vets, dairy owners, supermaket workers (exclude the recent hires), trusk drivers, couriers and anyone in an idustry thats an essential service.

Most of these essential services people will have higher levels of public contact and may feel they need to think more about life insurance. It's amazing that when our mortality is at risk we're more open to the idea of life insurance.

Keep safe out there everyone. Small business grants are not hard to get so don't be pround to ask- I did and it took about 5-10 days. Not ahuge amount but it will help my business through the next few months.
On 2 April 2020 at 9:39 pm Andrew Scott GM Newpark said:
@gavin austin - actually our focus is on getting Advisers to ask their existing customers "What can we do to help you?"

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