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New FANZ head sees a "resilient" financial advice industry

The financial advice industry has been resilient in the face of regulation and the economic downturn and is focused on “positivity for the future,” says Financial Advice New Zealand (FANZ) chief executive Nick Hakes.

Wednesday, June 12th 2024, 11:00AM 10 Comments

by Jenny Ruth

Hakes is fresh from having toured 10 regions of NZ getting to know members of his organisation on the ground following his taking the reins of the organisation at the annual conference in March.

Hakes says he had “no presentations, no agenda – no hidden agenda,” but had wanted to listen to what members had to say and their current situations.

“It's helped inform our thinking as to what are the strategic priorities for FANZ,” he says.

Hakes has a webinar planned for Wednesday, June 19 at which he and Cecilia Farrow will discuss the evolution of FANZ's professional development framework

“There's positivity out there. A lot of financial advisers' time over the last couple of years has been internally focused with their business and implementing new regulations,” Hakes told GoodReturns.

Members had been focused on obtaining the now obligatory Level 5 of the NZ Certificate in Financial Services, building the appropriate processes into their businesses to ensure compliance with professional standards, he says.

With much of that work now behind them, advisers are now looking at how to build demand for quality financial advice.

Hakes also wants the NZ financial advice community to benchmark itself against how the industry operates in other countries.

“Compared to some markets, the ingredients we have here are overwhelmingly positive. There's a lot of good ingredients that exist here in NZ” that should enable the industry to thrive, Hakes says.

The new education standards act as a barrier to entry and that's positive, he says.

“Most advisers have gotten over that minimum.”

New minimum education standard

Hakes notes that when Australia implemented similar education standards there had been a significant contraction in the number of advisers but that doesn't appear to have happened to the same exent in NZ.

Since the level 5 requirement came into force in March last year, the number of licenced financial advice providers (FAPs) has increased to 1,466 from 1,360 in March last year. The number of licenced advisers is much greater because FAPs range from sole providers to entities with 500 or more advisers.

“There's no doubt that the industry is reflective of our population of advisers making retirement decisions,” Hake says. “If they don't see a future for themselves and their business, they can bring the retirement date forward, but that has knock-on effects” in that the number of consumers wanting to access financial advice is growing.

In The Mortgage Mag's most recent annual survey of readers, only 41% of respondents said they belonged to FANZ, down from 45% a year earlier and from nearly 60% in 2019 when FANZ, an amalgam of three former associations, was formed.

But Hakes clearly isn't ready to cut mortgage advisers loose to join rival Australia-based organisation, Finance and Mortgage Advisers Association of New Zealand (FAMNZ), which recently opened for business with former FANZ staffer Leigh Hodgetts as its country manager.

“We're an adviser representative body across the broad spectrum of advice,” Hakes says, noting FANZ has done a lot of work recently in responding to the Commerce Commission's draft report on banking competition which accused advisers of chasing commissions.

Comments at the ComCom's subsequent consultation conference showed “that there was a deeper understanding and awareness” of how mortgage advisers operate and ComCom has been “receptive” during the industry's consultation with it, he says.
ComCom's final report is due by Aug 20.

Tags: FANZ

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Comments from our readers

On 12 June 2024 at 12:42 pm Backstage said:
I note: Hakes also wants the NZ financial advice community to benchmark itself against how the industry operates in other countries, how is this helpful?

It could be a good idea for FANZ to benchmark itself and its offering against how the other industry bodies operate in other countries. This would assist advisers to consider the value of membership.

Is a representative body across a broad spectrum a plus or minus? Often if you want to broaden your market you need to narrow your focus and I imagine this is the aim of FAMNZ. I see sense in a discipline focused representative group. I would be more inclined to attend a say, risk/insurance only convention given this is my focus.

The ComCom are busy bodies that are easily put in their place with evidence. They are very similar to the TV show Target years ago, struggling to appear relevant and barking at the front door like a Jack Russell. They attempt to appear like experts on everything often with poorly researched arguments feeding journalists who are lazy with fodder.

I really hope FANZ can be relevant but my thinking is a member and an honest industry survey on what advisers really want would be helpful. We don't want a corporate feeling group that is grey and dull.

Another key driver for Aus' advisers leaving was the reduction in commission revenue.

Also, the Kiwis that claim they want financial advice do not understand what that means or what we do and could not afford premiums for the products they may want once we explain. They think that means budgeting advice. This is where the banks still have a place for those clients as an adviser practice despite how willing can not afford to take on those clients and the risk that follows.

On 12 June 2024 at 4:21 pm Amused said:
“We're an adviser representative body across the broad spectrum of advice,” Hakes says, noting FANZ has done a lot of work recently in responding to the Commerce Commission's draft report on banking competition which accused advisers of chasing commissions. Comments at the ComCom's subsequent consultation conference showed “that there was a deeper understanding and awareness” of how mortgage advisers operate and ComCom has been “receptive” during the industry's consultation with it, he says.

The (FANZ) chief executive saying that his organisation has been a proactive force representing the best interests of members who are mortgage advisers is not correct. As others have pointed out previously the focus of FANZ unfortunately has been primarily on their members who are insurance and investment advisers. The fact ComCom didn’t and still don’t to this day understand what role mortgage advisers play in the financial services industry (see recent comments made by ComCom chair John Small) clearly shows that no one from FANZ has been “proactive” in explaining what it is that we do for consumers.

FANZ has been but a shadow of the organisation that it should have been while the mortgage adviser industry was going through regulation. Mortgage advisers don’t handle client funds, yet we are now treated by the FMA like investment advisers. I never once heard FANZ say to the code committee and regulators at the time that our industry was unique in terms of the type of financial advice mortgage advisers provide and hence, we should not be thrown in the same boat as insurance and investment advisers. Given the above is it any wonder that only 41% of mortgage adviser respondents said they now belonged to FANZ (down from 60% in 2019).

On 13 June 2024 at 8:20 am Backstage said:
@Amused, I am an insurance only adviser and aside from some assistance through legislation change which was across disciplines I really do not feel value here. So, that leaves investment advisers who may feel value?

Industry specific speakers are helpful. Those who have grown practices in a specific field. Years ago many insurers had MDRT visitors speak, that was helpful. I am not really interested in paying to listen to Public Servants/Politicians/Regulators whose salaries I already pay. Why would I buy a ticket to listen to them?

Even most dealer groups now are run by ex-corporate employees who have not practiced in any of the fields mentioned, enjoy what was the corporate employee lifestyle and are struggling to provide anything relevant.

An association could go back to ground zero now and ask, what do we stand for or, what value are we trying to provide. Are or do they have adviser support and are a known active representative of advisers?

Or, are they a grey hang over of previous groups that have fallen by the way and now just want to do everything online and have dull speakers like economists, legislators and easy to get heard everywhere speakers?

My clients and many of us in business now, given the current economic climate are challenging the value on all expenses, all associations, subscriptions even paid for app's.

My suggestion for any new CEO would be the same for any new employee. In the first 90 days, get to learn the history, get to learn the current situation, get to learn the future strategy or possible direction. That will help.

On 13 June 2024 at 9:31 am Amused said:
@Backstage - well said.

I couldn't agree with you more.

On 13 June 2024 at 11:43 am JPHale said:
@Backstage, I generally concur; I feel that a lot of the FANZ activity to date has been either investment or mortgage industry-focused.

I know there's been a lot of background on legislation and submission in the risk space, but the adviser focus seems to have been more compliance or ra ra motivation-type stuff.

TBH, we're in life insurance; if we can't self-motivate, we don't survive. To be perfectly frank, I'm a bit tired of the ra ra without substance.

I understand the mortgage adviser view, too, as the tendency of FANZ seems to have focused on the investment aspects, aka, for mortgage advisers, the investment property side of the area.

I think part of the challenge is that the FANZ team is a small team, so it's difficult to combine the depth of skill with the multi-discipline focus for all factions to feel they are getting value.

It's been easy to focus on investments and mortgages as these involve money, either into funds or into property, which is tangible and well-understood by the masses.

The F&G people haven't said much, as they generally have their own aggregation/dealer group/association thing going on, and FANZ hasn't really done much that I have seen in this space.

Insurance is intangible, so the material is very intellectual in nature. It combines concepts with legal, medical, and financial skills. In these areas, most associations struggle to recruit people with the relevant skills if they haven't been advisers previously. Most with the needed skills for this remain advisers and don't run associations either.

Katrina did a pretty good job. In my opinion, she left when she was just getting her feet under the desk for risk. Although her legal background was a solid base, she needed a lot of extra knowledge to really get into the risk area at the level advisers needed.

Bruce Cortesi, who chaired FANZ through the transition into FANZ, did an excellent job of balancing things and, I think, did very well trying to accommodate the various disciplines. However, he, too, has an advice business he's running, and reliance on him to carry that on was unreasonable.

I don't envy those trying to run multi-discipline associations; I certainly wouldn't want the job!

The questions are: what flavour is Nick going to apply, and where is FANZ going to go?
On 13 June 2024 at 12:23 pm Backstage said:
JP I agree on the motivational comments although we have been spoilt. The young ones coming through may need some of that, they certainly need to learn some of the soft skills (insurance related).

A small team means nothing so I disagree there. Knowing what you stand for is the issue.

I agree, Katrina did a great job for the period we were in as it was relevant to Insurance/Investment/Mortgages. Now is a different challenge and other there are requirements. Has FANZ got the right set of skills for the opportunity, whatever the consider that opportunity to be?

Most educational, motivational, political comments I can acquire at almost no cost. I am open always to hearing from successful Insurance Practitioners who are happy to share how they grew and how they practice. The use of technology and automation and how to assist clients so we both have a good experience an excellent outcomes.

I really don't want to hear any more economists, at the end of the day they are just story tellers, I can do that myself. As for hearing more from Te Mana TaTai Hokohoko, I can get that online as well. More thought needs to be given by associations that want to charge members for being apart.

On 13 June 2024 at 1:57 pm Good Hamish said:
I reckon watch this space, Nick seems like he knows what he is doing. The work with Comcom I think was a lot more nuanced but firm. The approach was fresh in that it moved the conversation from one part to many other aspects of what we do as advisers.

I know that from FANZ, the leadership and committees spent a lot of time preparing and presenting to Comcom.
On 13 June 2024 at 2:01 pm JPHale said:
@Backstage, I don't disagree. Some of those soft skills could be improved with us older advisers too ;)

I'm going to sound old and cynical with this... :D

We need more that is about expanding skill sets, striving for better and not just making sure people are meeting the minimum.

Part of the reason I haven't taken up the trusted adviser thing, it is recognition of the basics not the exceptional, which is the mixed message for consumers that comes from it as a result.

It feels like the endorsed gold star stickers winemakers can buy for their wine bottles. It takes some effort to get it, but it's still hollow in its reality. It undermines the very trust it's supposed to be promoting.

I think we've lost the rigour we've had in the past. Participation trophies undermining the strive to be better, and mediocrity is becoming the norm rather than the exception because of it.

Sure, incentive-based sales measures are problematic, but that doesn't exclude professional review and independent certification. They come with a cost, and they're open to abuse. aka S&P and friends through the GFC bit in the US.

As much as I rail against Consumer, they have a good idea with their trusted business approach as it has a level of rigour around assessing and evaluating the business to qualify.

However, it's not tailored for smaller operations like most advice businesses. And it has expectations we can't provide for with financial services, aka guarantees on outcomes, etc that you can provide with tangible services.

I'm interested to see where this goes, as it needs to be different.

On 14 June 2024 at 8:22 am Pragmatic said:
Firstly: I applaud FANZ recently getting on the road to meet the industry. This has been a long time coming. I’m hoping that many of the commentators above had the opportunity to meet with Nick Hakes to share their concerns & expectations of their industry body.

Second: the NZ financial services industry needs a unified voice. The challenge with this is bringing together the specific needs of the investment, insurance & mortgage communities. Whilst tough, this beats the alternative of a fragmented approach which unfortunately gains less traction with both members & other stakeholders.

Finally: If the NZ financial services industry is to be taken seriously then all dispensers of advice (investment, insurance, mortgage) need to back & help shape their industry body. Otherwise don’t be disappointed when the regulators and product manufacturers decide it on your behalf.
On 14 June 2024 at 12:34 pm Amused said:
@Pragmatic - with all the additional costs advisers and their businesses must fund annually now to legally provide advice to clients if we’re going to also voluntarily belong to an association that "industry body" needs to be demonstrating real value. After 20+ years as a mortgage adviser I'm still yet to see an association demonstrate significant value as a proactive advocate for our industry and also have members financial interests ahead of its own.

Those of us with long memories will recall what the NZMBA did to mortgage advisers about regulation. They wanted us all to become an AFA and have the role of been the sole organisation tasked with the training/educational requirements. I ask you, whose financial interests did they have at heart? Their own members or themselves? Little wonder that they don't exist now as a standalone industry body. Maybe investment advisers are getting value out of belonging to FANZ? but it seems clear at least from the comments above that mortgage and insurance advisers are questioning what value FANZ are adding to their businesses and hence the decline in membership numbers.

I’m all for mortgage advisers having and belonging to an industry body that can be a strong advocate for us. The reality is though FANZ just like the NZMBA before them has not been in our corner with the lenders and the regulators when we needed them. That the mortgage advice industry has been overregulated and advisers must spend time away from helping their clients now unnecessarily ticking boxes to keep Wellington bureaucrats employed is an absolute travesty. Consumers who engage the services of a mortgage adviser have not been the primary beneficiaries of regulation. Instead, it’s been the compliance and education sector that have seen the benefits which are primarily financial. This is not what regulation is supposed to be all about.

I would like to see FANZ and newcomer FAMNZ both taking some initiative now making an approach to David Seymour and the new Ministry of Regulation once it is formed to discuss the level of overregulation that has been imposed on mortgage advisers. I am sure the same can be said also for insurance advisers and what they have to do now when making a recommendation for cover to clients. Underinsurance is a huge problem for New Zealanders and overregulation is not making things any better. Unfortunately, I believe that the above suggestion will simply fall on deaf ears as the culture that exists within many industry bodies nowadays is to use regulation as a convenient way to increase their annual revenue.

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