Financial Forecasts 2004
Predicting what lies ahead over the next 12 months is always a difficult job, particularly when it comes to markets.
Monday, February 9th 2004, 12:52PM
Predicting what lies ahead over the next 12 months is always a difficult job, particularly when it comes to markets.
This year when we asked experts for their views on issues that are going to impact on advisers in New Zealand and the wider financial services industry, some clear themes emerge.
One thing which is clear is that advisers are going to have to work hard towards achieving business nirvana of best practice and to ensure they have a path of continuing education.
New Zealand is not alone in this area. A major issue in the Australian market has been that regulators have placed huge burdens on advisers to upskill on the education front and there are much higher regulatory hurdles to leap.
FPIA chief executive Phillip Matthews says it can be taken as a given that these two things will form the basis of any regulatory regime in New Zealand. However there is a view that any changes in this country will be far less prescriptive and onerous than those across the Tasman.
On the plus side of the ledger it is clear fund managers see this as part of their value add to advisers these days, as most recently evidenced by Tower’s 2004 initiatives such as the P3 programme.
The other issue which is getting more traction is fees and how advisers are remunerated, particularly in the area of soft dollar commission.
Again one looks overseas and sees that this area is snowballing in terms of attention. With the proposed changes to disclosure laws advisers, fund managers and life companies are going to need to review what they do in this area.
The other fee issue is how insurance advisers get paid. The days of massive upfront commissions are nearing an end – so most people say, however a couple of life companies actually increased initial commissions last year.
Risk advisers are going to have to think about “re-engineering” their business so it operates on on-going commissions for business that stays in force.
Financial planners are going to have to get more aggressive this year, according to Fundsource executive chairman David van Schaardenburg.
Last year it was possible to make money in most of the growth sectors.
The New Zealand sharemarket had a great year and the MSCI performed well, yet an analysis of fund flow figures shows that most of the money is still going into income assets.
While it may be hard following a three-year bear market, advisers need to sell the shares story once again (maybe not as strongly!).
Matthews also has a warning not to be complacent. While advisers may have done well at keeping hold of their clients during the past three years, there is a view that many clients may consider bailing once their portfolios recover their losses.
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