Adviser fee levels unfair

Financial advisers are paying more than their fair share towards the running of the Financial Markets Authority, industry players say.

Thursday, June 20th 2013, 6:34AM 1 Comment

by Susan Edmunds

New PAA chairman Bruce Cortesi said he was concerned that advisers were funding the industry but then being asked to do the bulk of the education work, as well.

He said advisers were chipping in a lot, whether that was through levies to the FMA, dispute resolution provider fees or by selling products.

“Yet the industry relies heavily upon these financial advisers to educate the public, as I am yet to really see some dynamic and consistent education to the public that starts to add value to the vital part you and I have in the financial security, literacy and growth of New Zealanders.”

Massey University’s Claire Matthews said, on the face of it, banks paid more to register with the FMA and with every renewal. “But on a per-adviser basis it's a lot less.”

Financial advisers pay $1144.89 to register and then $572.45 to renew, on top of criminal history checks and dispute scheme fees. By contrast, QFEs, which can have many AFA members, pay $4886.22 to register and $4600 to renew. ASB has 40 AFAs within its QFE, BNZ has 60 and Kiwibank has 25.

IFA president Nigel Tate said: “The QFE fee for 10 advisers is peanuts. The IFA promoted the view that all advisers should pay a set fee but through a QFE get a 25% discount.”

He said AFAs in QFEs were somewhat tied because there was oversight of their activities, even though they were not a tied adviser force.

He said the AFA fee was higher than it should be. “It’s not something we should let go and accept. There’s some inequities there. The FMA is funded by the industry. We could say we’re self-regulated but we don’t control the regulation.”

Tate said the AFA fee when first proposed had been about twice as much as it is now. “We got them down a long way by showing them a different way of obtaining what they needed.”

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Comments from our readers

On 20 June 2013 at 11:10 am w k said:

I always believe that any licensing of advisers should be on the individual basis, the same as any other profession - doctors, lawyers, accountants and mechanics cannot practice just because they work for a "big" organization. All advisers, whether a one-man band, operate in a broking firm or a big organization should be paying the same fee for the same type of license. The will create a more level playing field. Under the current FMA fee structure, advisers not working under QFEs are in fact subsidizing fees for their advisers due to FMA. And I do not think advisers who are not operating under QFE have any less compliance to meet. Why is FMA doing this? Care to explain?

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