A New Era Dawns
The emergence of Financial Advice NZ, heralds the start of a new era in the country’s financial services industry. For the first time in NZ history – and possibly for the first time in the OECD territories – there is a real opportunity to develop a united representative body aimed at embracing advisers from all parts of the industry.
In the past, there have been divisions, challenges, and obstacles that have proved insurmountable, despite the best efforts and goodwill of those involved.
But this time, it’s different.
Faced with a rapidly maturing and constantly evolving regulatory environment, advisers have sensibly recognised that there is now more that unites them than divides them.
Regulators world-wide are adopting consistent approaches to the implementation and supervision of their various regimes, and the free exchange of concepts, issues, and ideas, among those national regulatory bodies simply cannot be ignored.
However, the emerging unification is not to rail against the regulator – in NZ’s case the Financial Markets Authority (FMA) – but to establish an effective and representative voice developing standards, creating advocacy on behalf of members, and promoting the case for professional financial advice to consumers.
Let’s be clear on this, Financial Advice NZ is a member organisation, and the responsibilities of the new body will be clearly focused on adviser interests.
Consumers are a fundamental component in the equation as their interests – and those of the Financial Advice NZ members - are entirely aligned.
New Zealand consumers, to use the term employed by the FMA in their literature, aim to be “better off”. Advisers aim to make New Zealanders better off by engaging in mutually beneficial relationships, either to grow wealth or to protect stakeholders on their wealth creation journey.
In this context, the new body will promote the use of advisers to the general public as a source of quality advice and guidance, and act on behalf of advisers in the ongoing relationship with the regulators and the Government.
For my money, the best structure to deliver on this strategy is to form columns, pillars, or colleges – choose your preferred term – of the different adviser disciplines, risk, mortgage, investment, and, if possible, fire & general advisers.
Each column has its own governing body and each ‘column’ sends representation from its individual governing body to the Board of Financial Advice NZ.
The content of the Board and the frequency of meetings, etc., are for the ‘column’ leaders to decide once elected.
However, it would be my strong preference to see professional, independent, and industry experienced Directors on the Board in order to deliver proper governance on behalf of all members.
Now, this does not preclude practicing advisers being present on the Board, but the governing documents of the body need to ensure that no one ‘column’ can dominate proceedings at the expense of the others.
We’ve seen this elsewhere in the industry, and there is inevitably discord, disunity, and controversy, all of which only distracts from delivering on the stated objectives.
The draft legislation, the amended Code of Conduct, and the increasing obligations on financial advisers to comply with the provisions of the regulatory environment combine to make membership of Financial Advice NZ a must for all those who wish to be involved in the advice industry.
For those outside of either of the two main bodies, I would issue a call to action to join when appropriate and have your say on how the body develops going forward.
To those existing members of both bodies, I would urge you to step up and take an active role in establishing the framework for an effective and successful representative body.
The future of the industry and the financial fate of the NZ consumer lies with you – apathy and “she’ll be right, mate” are simply unacceptable responses.
Beware the lot of your Australian and British colleagues – stifled, overwhelmed, and over-regulated – to the ultimate detriment of their clients.
Don’t let this happen in NZ – step up and provide active input and support for Financial Advice NZ!