This week it finally happened. The Parliamentary Select Committee reported back of the Financial Services Legislation Amendement Bill. The new law, if passed as recommended will make changes to the way financial advisers are regulated.
Reaction from financial advisers has been clear. The don't like what is being proposed and feel that the committee hasn't taken on board the key issue, the differentiation between sales and advice
It was nice to see that advisers finally got a voice via their new Financial Advice NZ association. Chief executive Katrina Shanks was pretty clear here that the MPs didn't take on board the issues around sales v advice. [Here is what she said].
David Whyte, who represents some advisers groups and is also a former CEO at AIA, was pretty blatant too....in his view that the consultation process was a waste of time.
Interestingly I sat through the final day of hearings, which were held in Auckland. There were, as you'd expect, a good range of views and it seemed some of the MPs, had a handle on the sales v advice issue.
However, the whole thing was summed up by one of the last comments of the day. National MP Melissa Lee made a comment along these lines about acronymns and learning new things. Right at the end of proceedings she asked what was FSLAB. Fortunately Chairman, Jonathan Young, was sitting next to her, picked up a copy of the bill they had been hearing submissions from and waved it in front of her nose.
In many ways that sums up why we got the result we did this week.
One story which really interested me this week was that some of the shareholders in wrap platform, FNZ, are looking to exit. FNZ flies well below the radar in New Zealand. If you walk down Lambton Quay in Wellington, and look carefully you may find its front door. However, FNZ is one of those great unsung success stories. The business started here in New Zealand but now is a massive player providing administration services in the UK. FNZ powers the Zurich, Standard Life Wrap, Elevate, Embark and Aviva platforms in the UK while back in New Zealand customers include BNZ, Fisher Funds, AMP and First NZ Capital.
Apparently a sale could realise between $2 billion and $4 billion. FNZ is a real success story.
KiwiSaver continues to be a big source of news at the moment and that reflects the importance this savings scheme across many parts of the industry. It is great to see new players, like JUNO which launched this week, challenging the bank behemoths. While it is not likely to change the way the big players approach the market they are giving consumers another choose. Judging from the success of another new-comer, SImplicity, there is market demand for alternatives.
Simplicty CEO Sam Stubbs told me this week the fund has around $550 million in FUM and is now cash-flow positive. You would have to say that is a remarkably good achievement.
There was another story floating around where Milford said now KiwiSaver members can see fees, it was seeing more switching to its funds. Pretty interesting when that is coupled with this story.
Fees are important to consider, but I'd much rather focus on net returns.
For the latest on KiwiSaver returns you can find out more here.
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