Attendees at the Auckland leg of the FSC’s Get In Shape summit heard that consumers need the sector’s help to understand the value of financial advice, that all advisers will be held to the same set of standards from 15 March, and more could be done to recruit people to the sector.
Sharon Corbett, Manager Financial Markets, MBIE, said a lot has changed in the last year and that 2020 illustrated the value and importance of financial advice.
“ As soon as Covid starting hitting our shores I was getting calls from industry associations, and hearing directly from financial advisers, about the impact that Covid was having on the sector,” she said.
“And above all, what I was hearing was that financial advisers, at that time, needed to focus on their clients – answering their questions about insurance cover, for example. We now know that those people who were getting financial advice were ultimately better off.
“Financial Advice New Zealand did research that found that almost half of those who had advice said they believed they were better off financially and better able to deal with the effects of Covid-19 than they would have been without that advice.”
Corbett told the audience that she’s confident about the future of the advice sector over the coming decade.
“When I look ahead and think about the financial advice sector in the next five to 10 years I feel great optimism,” she said.
“And I know that preparing for this new regime has been an enormous undertaking.
“But from March 15, the message to the public can be really clear and simple. Everyone giving advice will be held to the same standard. Gone are the days of those mind-boggling permutations of different standards depending on who you go to for advice, the product they are advising on, and whether of not the adviser is taking into account a person’s personal circumstances.”
Richard Klipin, the FSC’s CEO, said consumers get “huge value” from advice.
“We as a sector need to respond and put ourselves out there more regularly,” he said.
“Financial advice is transformative. The challenge for us as a sector is how do we continue to tell that story? How do we use this regulatory change to do it more? And how do we engage with New Zealanders at different stages of their lives? These are the challenges we have as a sector.”
Derek Grantham, Principal Consultant, FMA, said it’s a myth that only certain people can benefit from financial advice and that seeking advice must be normalised.
“No matter what walk of life you come from, no matter how successful you’ve been, all of us can benefit from financial advice,” he said.
“We need to normalise getting advice, we need to be talking more and sharing more stories about money in our lives.”
Grantham also said the sector needs to do more to attract people from other industries to work in the financial advice sector.
“The sector needs to do more to encourage more people into the industry,” he said. “This is something I’m very passionate about.
“As a sector we need to think about some of the things that we do that might discourage, rather than encourage, people to join the sector.”
Grantham said there’s a tendency in the sector to have a “closed shop” and that more could be done to help people join the industry.
“My experience is that some people are not prepared to share information about the sector in case someone else eats their lunch,” he said.
Figures from the FMA show that 60% of today’s advisers aged 50 or under, 30% aged 51 to 65, and 7% are aged over 65. Sole trader adviser businesses currently make up 52% of the industry.
The regulator also says more than 2,200 businesses are licence-ready, consisting of 1,512 approved transitional FAP licenses and 780 authorised bodies. This represents 9,642 financial advisers and 12,022 nominated representatives.
The deadline to apply for a transitional licence is 15 March, after which time applications will open for full FAP licenses. Anyone intending to provide regulated financial advice to retail clients by then must either already be licensed or work for someone else with a licence.