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Concern adviser outreach may be shackled by FMA ad guidance

Financial advice New Zealand CEO Katrina Shanks says that the FMA’s proposed ad guidance could constrain advisers' ability to connect with the public.

Friday, February 26th 2021, 6:23AM 10 Comments

by Daniel Smith

The ways in which financial advisers connect with prospective clients is about to change. New advertising guidance being put in place by the regulator are due in the coming weeks.

Financial Advice New Zealand, in their proposal to the FMA, have revealed several key areas that they believe could impact the livelihood of advisers if the regulator gets it wrong.

CEO of Financial Advice NZ, Katrina Shanks, told Good Returns that a key focus for the regulator needs to exclude “statements of advice” from being bound by laws relating to advertising.

“There is concern that the wording in the guidelines is too broad and it picks up statements of advice. We want to make sure that statements of advice are explicitly removed from the advertising laws, because if they were not it would be disastrous for the advice sector.”

Another point Shanks raised is that “short-form advertising”, the snippets of information that people most often encounter online, is central to the way advisers interact with prospective clients.

“We agree that ads shouldn’t be misleading in any way, shape or form. But we also believe that the requirement around advertising for financial services is very explicit about what you can and can’t do, and what you need to disclose when you communicate.

“The way that many people engage is through short-form advertising, where you have an image that captures people's attention and from there they click onto further information.

“These short-form ads are really just a pathway to engage with consumers. If we want consumers to seek more advice, if we want New Zealanders to increase their financial health, wealth and wellbeing, they need to be able to access more information.

“And if the way they access more information is by advertising on Google, Facebook or LinkedIn where you are limited to the numbers of words you can use on an image, then we don’t want these guidelines to prevent New Zealanders from accessing information.”

But Shanks is hopeful that the FMA will take these issues on board and create a series of guidelines that benefit both New Zealanders and the advisers trying to reach them.

“What we want is relevant, engaging, modern communication which attracts New Zealanders to learn more about their financial health. To do that we need to be able to communicate in a modern manner, and part of that is short-form advertising.

“To be excluded from that will only exacerbate the underinsurance and low take up of financial advice in New Zealand.

“But at the same time it has to be balanced with not being misleading. We believe that we can get that balance.”

The RFP for the FMA guidelines on advertising closed on the February 18. The regulator will be releasing their final guidelines in the coming weeks.

Tags: advertising Financial Advice New Zealand FMA Katrina Shanks

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Comments from our readers

On 26 February 2021 at 7:05 am Tony Vidler said:
I totally agree with Katrina's comments about the potential impact upon advisers ability to reach out to begin the engagement process with consumers. One of the primary objectives of the last decade of reform has been to increase the participation by consumers in the use of financial services and financial advice, and any legislation which creates a barrier to initial engagement needs to be re-considered.
On 26 February 2021 at 10:35 am All hat no cattle said:
Boy, they must think either A: our photo captions and 10 second videos are very very persuasive, or B: the public is really really stupid and easily led/misled.

Perhaps C: Both.

Remember though, if anyone knows anything about effective financial services advertising, it would be the FMA. After all, we still talk about their Cowboys ad campaign!
No, I will never forget that.
On 26 February 2021 at 6:48 pm JPHale said:
It's rather ironic that the first draft of this I read explicitly included SoA in the prohibited activities.

Makes a mockery of us being able to do anything other than saying

Hi, how can I help?
Sorry, I can't give you an opinion on that, you'll have to figure it out and then tell me what you want...

Opps. Hopefully, they will change it to carve out SoAor a guideline that we can do our job without becoming cannon fodder...
On 27 February 2021 at 10:14 am w k said:
i once asked a friend his opinion about setting up certain trust matter. below was his response:

"if you go hunting and need a single shot to take your target down, why use a machine gun?"

this is what i understood from what he said: if you know what you are doing, you'll be able to keep it simple - one shot is all that is needed. if you don't know how to do it (a very poor shooter), you'll probably need a machine gun.
On 1 March 2021 at 9:32 am LNF said:
No surprises here. And it will get worse. The theme all along was "bad behaviour" Suspect the then Minister was a bit anti - for whatever reason
Expect to see a change back to sole Agencies in time
F&G premiums are rising. I guess as a result of relentless hammering by 1 reporter plus RBNZ and FMA. Relaxed claims process and guess who pays for the extra claims cost. Unintended but totally expected consequence
On 11 March 2021 at 5:59 pm JPHale said:
@LNF "Unintended but totally expected consequence" often the reality...

We still listen to the grandiose while the practical operator gets ignored...

Sure there are lots we can improve, at the same time, the approach to bureaucracy gone mad is astounding in some of this.

The sheer level of disclosure required by the new rules means the consumer is overwhelmed before we even start talking about what they need.

I'm all for picking up our act, while we have the "not be confusing" bar to stay under, we have a real challenge to be compliant.
On 12 March 2021 at 8:04 am w k said:
"consumer is overwhelmed before we even start talking about what they need" = must explain how the clock works before telling the time of the day.

einstein: "if you can't explain it simply, you don't understand it well enough."
On 12 March 2021 at 6:17 pm JPHale said:
@w k, I agree.

However, the disclosure requirements are going to go one of two ways, either confuse the hell out of people or be completely ignored. Quite possibly the latter.

The overwhelm is around the level of info being divulged all at once with what is presently an uneducated public on this stuff by advisers yet to get their polished act sorted.

Probably a good thing we have a couple of years to get full licensing sorted ;)
On 15 March 2021 at 10:24 am w k said:
@jphale: just to clarify, comment was not meant for advisers, most who are already more confused than the uneducated public.
On 15 March 2021 at 5:58 pm JPHale said:
True that...

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