Half of all life insurance advisers in New Zealand have a shock coming says The Adviser Platform’s Ryan Edwards.
He says the changing regulatory environment, due to start 29 June, will be positive for the industry and that it’s no secret New Zealand is lagging behind other countries when it comes to regulation.
Edwards, managing director of The Adviser Platform, says change always brings uncertainty and that there are “some segments of the market that are not as prepared as they would like”.
He says while half of all life advisers will have to lift their game to stay in the market, at least 10 per cent will need to find something else to do.
“These incoming changes aren’t negative,” says Edwards. “It is a way to encourage advisers to run their business like a business.
“Half of all advisers are going to be in for a rude shock because the value of their client base may not be as much as it was three or four years ago.”
He says that while people managing a well-run business probably have little to worry about, there is a large segment of the market that is good at providing advice, but their back-office systems – from a regulatory perspective – have been lacking when it comes to compliance, data management and record keeping.
“None of this is scary; in fact it is a huge opportunity,” says Edwards. “And that’s why we have put The Adviser Platform together.
“For advisers, meeting these new regulations will come down to resourcing and capability. The baseline requirement of work is going to increase. Advisers are going to have to do more paperwork themselves or resource that part of the business,” he predicts.
Edwards says the changes will help raise the standard of advice across the board.
“It will help the consumer have a better understanding of what’s going to be involved when they engage with an adviser,” he says. “I think it’s going to improve the level of advice.
“For example, there’s nothing wrong with replacing business as long as it’s done for the right reason and the client understands what’s being put in place and why. And that’s a conversation that’s happening across New Zealand as we speak – just a lot of the time it’s not documented very well from a consumer’s recollection of what’s taken place.
“A lot of advisers are inadvertently leaving themselves exposed…by not dotting the i’s and crossing the T’s. It’s not necessarily malice, more like a lack of attention to detail.
“We can all see this increased workload coming and advisers are going to have to make a choice. ‘Do I see that extra client or do I stay in the office and do all my paperwork?’
“If we can send advisers out to see five more clients a year and run a better business from a compliance perspective, not only is the consumer getting a better outcome but the business is actually worth more.”