Brendon Neal, CEO of licencee services firm Kepa, says advisers need to carefully consider the shape of advice practices in the future – and seek robust support options to help them achieve their goals.
Kepa launched ‘Fit4Licence’ in 2017 and is now well advanced in its transformational programme and licensing preparation…
It was clear to us then that the future role of dealer groups in the value chain of advice had to continue to evolve. We determined to take a lead in providing high quality licensee services to financial advisers regardless of whether they operated under their own FAP or wished to operate under the Kepa licence.
The degree of transformation required to build a FAP-ready dealer group has been significant. Foremost we needed to ensure we had the right mix of people, with the right set of skills and experience and in the right roles to manage the licensed business properly. We have appointed new roles in L&D, Risk and Compliance and Technology as well as extensively retraining existing team members on NZCFS Level 5 and in compliance.
We’ve made changes to our structure, drafted new adviser agreements and selection criteria, built new staff and adviser induction programmes, built a new learning management system, reviewed and overhauled key systems, developed a new fit of purpose risk management framework, a compliance assurance programme to challenge the design and operation of processes and controls, overhauled governance frameworks and much more.
We have just started our first round of due diligence on adviser businesses seeking to join our transitional licence as authorised bodies. Demand to join our transitional licence has been very strong and we expect that once guidance has been provided on full licencing conditions, especially if these are broadly analogous to existing standard licence conditions, then the hurdle will have been raised significantly higher for advisers and that demand for support and the benefits of scale will only grow stronger.
Demand to join our transitional licence has been very strong…
Kepa chose the authorised body designation because it is our view that this is the best vehicle to provide the oversight and infrastructure to support the advice services being provided while allowing businesses to maintain their independence in the way they run their enterprise.
Our members will maintain their own brand, client ownership and revenues while using Kepa’s compliance expertise and support to comply with their obligations. It’s not a surprise that many advisers are seeing the benefit of partnering with us so that they can focus on their core strengths of advice and customer service while leveraging the scale and expertise of Kepa.
Other structures in the market are much more head office ‘command and control’ based. However, our view is that a synergistic relationship with an oversight entity such as Kepa will allow for businesses to have a greater degree of flexibility in the way they present themselves to market and will assist them to build more robust (and valuable) businesses in the process.
Advisers will benefit from a relationship with a reliable and secure licensee who will be one of the few large FAP’s that will cater for all types of financial advice; i.e personal and business insurances, lending, KiwiSaver and investments.
The barriers and complexity of adding new advice channels to a small advice business in the new regime without experienced guidance and support could prove to be very challenging and a detriment to future business diversification and growth. We consider this a critical area that advisers should be considering very seriously before making a licencing decision.
…providing financial advice under the new regime will require advisers to spend additional time attending to their business…
Kepa also recognised early that some of our member businesses were well suited to applying for and operating under their own licence and so we have launched a separate offering, The Advice Hub, which has been designed to provide services and support to those businesses.
We have already supported more than 100 advisers to undertake Level 5 training via the Hub offering and commenced compliance reviews for some of our larger brands. We’ll be adding new advice audit, compliance checks and other tools through the early part of 2020.
Put simply, providing financial advice under the new regime will require advisers to spend additional time attending to their business and licensing requirements – and ensuring that their business and any financial advisers they engage – are meeting new requirements.
Advisers need to carefully consider not only their own and their business’s capacity, expertise, scope, and relevant costs of operating under their own licence – but what the shape of advice practices could be in the future. Then seek out a home that best supports their aspirations.
Kepa is excited about the challenges and opportunities ahead and is looking forward to working closely with advisers and industry to help improve standards and access to independent advice for New Zealanders.
A leader in financial services, Brendon Neal has more than 20 years’ experience in life insurance and wealth management. He is the CEO of Kepa – an industry leader that provides high quality licensee services to financial advisers. The firm provides a range of adviser benefits including Advice Audits and Compliance Checks, Adviser Training & Development, Templates & Tools, Technology & CRM support. For more information visit https://kepa.org.nz