Long-serving adviser thumbs nose at authorisation
The legislation remains murky as to whether ‘pure' life insurance advisers will need to be authorised under the new regulatory regime, though one veteran's adamant he will not need it.
Wednesday, April 7th 2010, 1:00AM 
14 Comments
by Paul McBeth
Strategy Financial Services' Graeme Lindsay, who has 40 years in the industry, says he has yet to get a straight answer from officials overseeing the implementation of the new regime, but last week's draft code of conduct has convinced him that advisers who deal solely with risk-based life and health insurance products will not need to be authorised.
When assessing a client's needs, "someone working in life insurance doesn't do complete analysis, they only analyse a component of a person's financial affairs," Lindsay told Good Returns. He says that provided life insurance advisers do not venture into the realm of savings and investment advice, they will not be advising on Category One products and should not need to be authorised.
Lindsay warns that if advisers like him are caught under the new regime, there will be an exodus of experienced people, who do not see the need to go through unnecessary training.
Vance Arkinstall, chief executive of the Investment Savings and Insurance Association, agrees there is a lack of clarity about life insurance advisers' need to get authorisation, with the main area of contention being whether needs analysis will be classified as financial planning.
If there is a greater number of advisers who need training, Arkinstall is concerned that they may put too much pressure on the training providers, and create a bubble that will not be able to be filled by the end of the year when the regime comes into effect.
Still, Angus Dale-Jones, director of supervision at the Securities Commission who has helped oversee the implementation of the new regulatory framework, says those advisers who only deal with Category Two products in a sales capacity will not need to be authorised. However, if they want to be able to offer a full financial advisory service, and help boost the industry's standing in the public eye, it is in their best interest to meet the higher requirements.
He also reiterated that the final definitions of products as they fall in the categories had not been finalised, and that the process was still in the select committee stage.
Paul is a staff writer for Good Returns based in Wellington.
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Comments from our readers
On 8 April 2010 at 4:00 pm David Samuel said:
Angus Dale-Jones' reported comments do not address this issue. Do life insurance advisers need to attain AFA? Talking about Category Two and confusing this with the analysis needed to offer proper insurance advice is not helpful. Life Insurance advisers have expressed frustration at the lack of clarity and clarity is what they need right now! Graeme Lindsay's assessment of the effect of needing AFA on older, more experienced insurance advisers is not a valid reason for exempting them, if AFA status is what is eventually decided. The credibility of the whole industry is at stake, not the needs of a section of the Practioners working in it. On 9 April 2010 at 8:11 am Bazza said:
David, 'if AFA status is what is eventually decided.' that boat has sailed fella, This isn't the financial product sales act it is the financial advisers act. If you are giving financial advice, no matter what the product, that could affect the clients financial future, you will need to be Authorised. Unless you are only order taking, and therefore adding no value, in which case you'll be competing with the banks and the warehouse. On 9 April 2010 at 11:09 am Mike said:
I'm amazed that any reputable adviser would want to shun accreditation. Doesn't that tell you something about the adviser? I couldn't agree more with John's comments. Unfortunately many Risk Advisers think that a basic "Fact Find" used as as a sales tool to determine "new" cover levels makes them compliant. ALL advisers should take this opportunity to resharpen the saw or upskill in areas "you didn't think you had to know" and give your clients confidence in not only you but the industry you represent. On 9 April 2010 at 2:06 pm gerard said:
Graeme has some analysis tools on his premium comparison software. If he uses this himself or anything close to it with any of his clients he is neck deep in the definition of providing a financial planning service.
I have great respect for advisers of long service (my father has been one for nearly 40 years himself), but long service doesn't mean you are an expert and my father would admit what he does is how he's always done it but that doesn't mean its right.
I attended a meeting some weeks ago with aroung 65 advisers, many claiming to be finacial planners and beacons of the industry, Bazza asked for a show of hands around various educational standards, amazingly, no one from memory had completed anything up to the level of the National standard level 5 and no one was even in the process of doing anything about it. I came into this indistry 9 years ago and the catch cry from every BDM was regulation is coming start your education track now. I listened and will complete my graduate diploma later this year and apply for CLU status (I'm not trying to toot my own horn here, merely pointing out there are alot of advisers who have sat on ther buts not bettering themselves and giving average advice for a long time).I heard the cry and did something about it.
Bring on regulation, we may have a new breed of advisers who look at what they do in a truly professional manner.Until then no doubt we will here more from advisers of long standing protesting and huffing and puffing!
On 15 April 2010 at 8:38 am Frank said:
YOu guys are in wonder land if you think 10000 advisors are going to be accredited AFA or registered. Many advisors wont be. They can see no benefit for them or the clients we will rebel, I wonder what the securities commission will do when there is to many advisors to prosecute. Have you seen the fees that some educators are charging and the exam fees, WOW $10000 and for what. Most advisors I know can teach the educators something...... See you on the otherside of accrediation and may the many show the few how to deal with Government regulation. On 16 April 2010 at 7:19 pm Graeme Lindsay said:
John - thanks for your comments. I disagree! I attended (most of) the Code Committee meeting this morning, and reamin convinced that I will not need to be an AFA. I don't disagree with your comments about what life (and associated) insurance does, or is supposed to do, My point in what I wrote for Good Returns is that I don't do an analysis of the client's complete financial situation. I certainly do an analysis of his/her needs and wants in the event of death or illness/injury, and where appropriate, make recommendations about appropriate products to meet the needs! I believe that this does not meet the definition of "financial planning service". The Code Committee Chair, Ross Butler, agreed with my conclusion in a prvate discussion after their meeting concluded this morning.
Don't get me wrong - I wholeheartedly support the need for competence, comprehensive fact finding, analysis , written advice, etc and have been operating this way for many years. I don't think that I need another set of alphabet soiup after my name to be a competent adviser in the limiited area on which I give advice.!
It was interesting this morning - Ross talked about the requirement for competence - I am not competent to advise on Cat 1 products, and have no desire to be! I believe that I am competent to advise on Cat 2 products and am willing to be tested accordingly!
Cheers
On 16 April 2010 at 7:24 pm Graeme Lindsay said:
Responding to David Samuel:
I am not suggesting that we grey-haired advisers be exempted! Rather, I believe that those of us who are not competent to advise on Cat 1 products, and accordingly, only advise on Cat 2 products, and in doing so, follow best practice, i.e. comprehensive fact find as it applies to ascertaining needs and wants for the products that I am competent to advise on, analysis of the needs and the products offered to determine the most appropriate, presenting the advise in writing, etc do not need to become AFAs!
Refer to my response to John for comments on the Code Coimmittee consultation meeting this morning.
Cheers
On 16 April 2010 at 7:27 pm Graeme Lindsay said:
Bazza - I disagree! I think that if an adviser is only competent to advise on Cat 2 products, then following best practice (refer response to David Samuel) doesn't mean that he/she need become and AFA. Time will tell! On 16 April 2010 at 7:35 pm Graeme Lindsay said:
Mike - you might be amazed, but this adviser, with 41 years continuous experience, doesn't see that 'accreditation' will add any value to my clients! Don't get me wrong! AFA and all it entails is clearly needed for those advising on Cat 1 products! In your amazement, you might be interested to learn that I have, for many years, been an advocate of the need for advisers to have properly documents processes - i.e. follow 'best practice'.
My clients are ususlly introduced by a colleague (of theirs) or one of their advisers. They are introduced because the introducer believes that my advice will add value to their friend/client!
I can't speak for all risk advisers, but the ones that I know are generally good people, competent to give advice on the products that they offer, and, unless they offer Cat 1 products, won't get any benefit form AFA! and nor will their clients.
Cheers
On 16 April 2010 at 7:42 pm Graeme Lindsay said:
Gerard
I have addressed your first point in other responses - I believe that you are wrong and that your view has grown from scaremongerers who perhaps stood to gain!
Your comments imply that those of us who have gone before you haven't acted in a 'truly professional manner'. Now, whilst there have been some crooks in the insurance (and financial planning) world in the past, there are the great majority who have done a professional job for their clients with the products offered by the insurers at the time.
Your final remark is not worth commenting on!
On 18 April 2010 at 3:35 pm billy the broker said:
remember the days when the new type of computers came out(ala dg1s at provident life back in the late 80s) and the old type brokers still went with the rate book? didn't want to change because they were set in their ways. "why fix it if it ain't broke" they said.
seems this scenario is repeating itself again!!Get over your special needs analysis software that you have and try to flog to all of us. move with the rest of us and comply with what the government wants, or is the pedestal to high!
On 18 April 2010 at 9:30 pm Alex said:
While I can't call myself a veteran in this industry, I have had the privilege of working alongside some outstanding "grey-haired advisers" and their high standards of ethical behavior and professionalism has set an example for me to follow. I only know Graeme by reputation but I am confident he knows more about risk products, the financial services industry, and delivering expert professional service to clients than I do. This is despite my degree, diploma, and Adviserlink courses I have completed. I'm not amazed that experienced advisers regard more hoops to jump through and letters after their name with some disdain. While I agree that enforcing standards ensures a higher base line, an honest, experienced adviser is far more valuable to their clients and our industry. It would be a travesty to lose such people in pursuit of "ensuring adviser competence" Thanks Graeme for your outstanding service to our profession. On 19 April 2010 at 2:29 pm Graeme Lindsay said:
Thanks for your kind words Alex - I do agree that we'll lose too many grey-haired advisers if AFA becomes mandatory! I know of about 6 so far.... Commenting is closed
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Life insurance takes care of debt and ongoing income needs for lifestyle and retirement planning, education and sucession.
Income protection keeps the mortgage in place and allows people to protect and keep in place lifestyle and hard earned assets
I don't need to go over the other areas
The point is if you are giving best advice you WILL be analysing a clients complete financial situation and looking at protecting all the assets, investments, lifestyle choices, while not necessarily giving advice on the management of these.
Your advice has a huge impact on a clients financial security and therefore should justify and in depth analysis.