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[The Wrap] You can feel the change. But is it good?

It's hard to quantify, but you can just feel the change going on amongst financial advisers now the new legislation is in place.

Monday, May 10th 2021, 7:01PM 14 Comments

by Philip Macalister

Barely a day goes by now with signs that the financial advice world is changing - and changing significantly.

When the Financial Services Legislation Amendment Act finally came into force on March 15, advice, for all intents and purposes looked the same.

In the two months since then much has changed and many advisers have decided it is time to hang up their shingle. Two good examples in the life insurance world are Graeme Lindsay and Warren Duff. Between them there is more than 100 years experience.

While they are two we have reported on, emails come to us from advisers thanking us for the news and information on Good Returns and the quality of ASSET and TMM magazines. 

These messages invariably say that it's farewell time. For most it is compliance which has driven their decision.

We've also heard, but have been unable to get the hard data, that many life insurance companies had to turn off their accreditation for hundreds of advisers who had not entered into the new regime either under a transitional licence or someone else's Financial Advice Provider licence.

Sources within some of the companies have confirmed there is an exodus happening and companies are spending time on managing transfer of books of business to other advisers.

It's sad to see all these people leave and the invariable question is where are the new advisers going to come from to replace these people? After all one of the aims of FSLAA was to make advice more accessible for all New Zealanders.

Partners Life managing director Naomi Ballantyne made some interesting comments in her most recent appearance on Good Returns TV. The company has lost four business development managers and they are all becoming advisers.

There is talk that more people are leaving banks to become advisers, but there are not sufficient people filling the ranks of financial advice. Overall there is net loss to the industry.

And if there is not enough capacity amongst the industry to pick up some of these books then maybe life companies will end up providing more advice to clients. That sort of feels like a 21st century version of tied agents.

There is of course an upside. Now may well be a good time for people, not afraid of compliance, to enter the advice world. We all know that good advisers can earn considerable income (just look at some of the cars when there is an industry event on).

But in the here and now the regulations have seemingly failed in their goal of making advice more accessible to New Zealanders. Maybe that is only a short term situation. Time will tell.


Tags: Opinion

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Comments from our readers

On 11 May 2021 at 9:11 am Elephant1 said:
I find this an interesting article, just a few weeks ago a senior player in the market stated ,how well the transition had gone. And she had not heard of anybody departing. I thought really is she serious. My view is there will be a solid departure ,and there will be issues as recruitment is not easy and it is expensive. The FMA , has to seriously review the criteria, and allow the newbees to work and train.
On 11 May 2021 at 11:59 am Simon H said:
Interesting discussion. The way I see things, sole practitioners and small firms with less than say three advisers (let’s call these the “small players”) are spread along a continuum of preparedness. It seems clear how things will go at the extremes, but it is not yet that clear where the break point will fall.
At one end of the continuum are relatively proactive, well prepared, more professional small players. Most of these have been preparing for the new regime for years – and are ready to take advantage of the growth opportunities the new era will undoubtedly bring. They have little to fear.
At the other end are the largely reactive, less professional small players, who tend to be resistant to change, have tended to rely on a “wait and see” approach. Most of these will have to go – either out of the industry, or into larger (slightly larger or much larger) entities who can provide the support they will need – in exchange for somewhat limited prospects, and less professional freedom.
My guess is that about 20% of small players will be in this second group, and that over the next few years some of them will depart while others move into first group firms – contributing to healthy growth in this group; and to relatively static existing larger entities – and that the new environment will support the development of new business models to fill the gaps and perhaps see financial advice reach some currently unserved sectors.
On 11 May 2021 at 12:25 pm The Oracle said:
As an adviser, I am certainly feeling the changes that have taken place over the last twelve months, but not the one everyone is focused on being regulation. Let’s be honest, we have known about these changes for probably ten years.

To me what is currently missing is the business development support, sales training, lead generation, the motivational meetings and development days that were regular events in my calendar. I use to attend monthly study groups and even a top adviser forum that provided me with plenty ideas, support, fun and motivation at times when I will admit it was needed.
The peer to peer events for me is what’s missing, driven by the Kepa and Newpark’s of this world who have been cut down and dismissed, yet supported close to 1000 advisers in N.Z. The leadership in the adviser market is missing.

Override (Fapo?) is not being reinvested by advisers, who in most part are using this as a pay rise and still asking the market for free support. Provider production is down, cause no one is now driving sales with everyone’s focus on back office or compliance support, needed, but so is the other support… now missing, and the price is becoming obvious, and yes, I used the word “sales” and no, I don’t apologise.
On 11 May 2021 at 2:09 pm Backstage said:
Are still people pining for happy clappy clubs? This despite knowing that for 10 years you need to become a business, a practice? Do accountants have these lead generating, motivational meetings, and total sales focus and not work at being grown up and seeking real business direction? Isn't this stuff meant to come from intrinsic motivation? None of this needed an Oracle, defn: a priest or priestess acting as a medium through whom advice or prophecy was sought from the gods in classical antiquity.
On 11 May 2021 at 3:40 pm Adviser1 said:
@Oracle, you don't sound like an adviser you sound like an ex owner of a dealer group trying to justify value.

As for the rest of the debate I don't think it matters much whether you go solo FAP, join a FAP or somewhere in between - we have to get our systems, processes and educational requirements sorted either way...
On 11 May 2021 at 4:14 pm The Oracle said:
Backstage and Adviser1, no, I'm an adviser who enjoys mixing with other advisers. GR can confirm I'm an adviser whilst respecting my privacy. Please allow me an equal opportunity to express my views.
On 11 May 2021 at 4:23 pm JPHale said:
Change is here and it's having an effect, though why people the likes of those that have departed, Darren, Jeff, etc, would now start putting an oar in bewilders me.

They've moved on, and they commented rarely if at all here and not for a very long time.

I hope they're enjoying the fruits of their labours over the years, they helped get most of us here regardless of being part of their groups or not.

Change is here, it's been signalled for over a decade and a financial crisis and a pandemic haven't stopped it. We can gnash our teeth about it, or get on with it.

Chewing on dry mouldy cheese or chasing the new stuff is everyone's personal choice. The reality is the cheese has moved.
On 12 May 2021 at 10:01 am Matron said:
Indeed, the FMA has moved the cheese.

@backstage and @Adviser1 you're only embarrassing yourselves by denigrating something that other Advisers find of value, and in turn the value they have provided to their clients.

The Adviser community looks forward to hearing about what you will contribute to assist Advisers that do not have the benefit of 10 years experience.
On 13 May 2021 at 8:27 am Backstage said:
Of course you can have your say Oracle... i just have a different perspective, i dont need a Sharman and i am able to motivate myself. I am not looking for an industry leader or Sharman and feel a strong need to join 1000's of advisers for tea muffins or glasses of beer. The top adviser forums i saw in the past had a huge slant on how much volume of business one had written, not adviser quality leading to better client outcomes.. anyway, on with the future.
On 13 May 2021 at 8:30 am Backstage said:
Hi Matron.. i am certainly not embarrassed about my views and feel no need to hang out my medals and industry accomplishments for you to judge. There are still opportunities for those that want to form clubs to do so. Only it will not be the old amway type model where the adviser is getting clipped for being a member.
On 13 May 2021 at 10:04 am Pragmatic said:
Without 'siding' with either perspective, the reality is that the NZ financial advice industry is fragmented - both geographically and otherwise. It will be challenging for collaborations to agree on the appropriate path forward, despite Regulators angling for industry consolidation.

The key point from the dialogue above is the requirement for industry participants to have a regular forum(s) whereby they can exchange war-stories with peers. I would have thought that the industry associations are well placed to deliver these events - albeit that they have limited gatherings to regional or opted for less-effective technology connections. I'd encourage industry folks to support the (bi)annual events - not to listen to industry experts but moreso to hear what is working/not working amongst their peers.
On 13 May 2021 at 10:24 am Good advice is hard to come by said:
As an Adviser, I am struggling without the support I received from my dealer group.
When I was a newbie in the business, 7 Years ago, my dealer group helped the understanding the psyche of this industry. I believe learning from your peers in a group is the best way to learn - New adviser are not going to have this going forward - a shame really.
On 14 May 2021 at 8:01 am Backstage said:
Has it not been possible to meet other advisers independent of a group. Over the past 35 years i have made many friendships in the industry and i dont need a dealer group to get on the phone, call industry friends, meet for breakfast or lunch and discuss issues, thoughts etc. Do you really need your hand held and wish to pay for that? In saying that, i do believe FANZ can play a great role as a, non-tribal, professional industry body and feel they are doing good work to get there. I support that.
On 14 May 2021 at 9:15 am All hat no cattle said:
Indeed. If only there were an organised group of like-minded professionals working in similar roles. Maybe 1700 or so of them spread around the country, organised into regions and having the occasional get-together. Perhaps with lunch, and a speaker now and then. Perhaps a membership based group that was agnostic to providers and commission over-rides for funding. Yes, you do have to pay. That's because it's worth paying for.
FANZ sometimes gets a lot of smack talk on here, from folks with ideas of what they SHOULD be doing [screaming from a soap box at "the regulators"] .... this is something they do do. When your area has a thing on, try turning up.

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