Call for more prescriptive adviser regulation
Brent Sheather, an Authorised Financial Adviser for Private Asset Management, said the financial adviser regulatory regime is very focused on compliance issues but has little to say on how advisers actually go about aspects of their business including building a portfolio.
He said New Zealand should follow Britain, where the Financial Services Authority (FSA) plays a greater role in telling advisers what they can and can’t do, including on return forecasts.
“Under the FSA’s rules you can’t say your portfolio is going to do 10% and they tell you to forecast 3.5-4% returns for bonds and about 5% for equities. In New Zealand you can have idiots saying ‘we’ll aim for 20%’,” he said.
Sheather said to improve the quality of advice in New Zealand commission should be abolished and the Financial Markets Authority should broadly define “good advice” and publicise examples of bad advice.
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