Aon selling KiwiSaver through RFAs
Aon has developed a unique way of promoting its KiwiSaver scheme, giving Registered Financial Advisers a disclaimer that allows them to inform clients about the scheme without advising on it.
Tuesday, March 27th 2012, 6:00AM 19 Comments
by Niko Kloeten
Good Returns has obtained a copy of the disclaimer, which asks clients to acknowledge that the RFA they spoke to only provided them with "a copy of the AonSaver KiwiSaver Investment Statement and/or factual information about the scheme".
Clients are also asked to confirm their adviser "did not take your particular situation or goals into account when providing you with any recommendations or opinions in relation to joining the Aon KiwiSaver scheme."
This is because under the Financial Advisers Act, RFAs can provide "information" on category one investment products such as KiwiSaver but they can't provide personalised "advice".
Aon's disclaimer also recommends clients seek professional advice from an Authorised Financial Adviser (AFA) which takes into account their personal circumstances before making an investment decision.
In conjunction with the disclaimer, Aon has provided guidelines for RFAs including step two: "Establish from client if they are in KiwiSaver and if they know that Aon has a KiwiSaver Scheme".
Step three says: "Offer to provide information on the AonSaver KiwiSaver Scheme and give the client a copy of:
a. The AonSaver Investment Statement;
b. The KiwiSaver in a Nutshell brochure;
c. Morningstar performances - Independent from Aon; and
d. Any other authorised marketing material available at the time."
Advisers are also told to "Only provide recommendations or opinions in relation to the AonSaver KiwiSaver Scheme based on your own preference for the Scheme, i.e. why it is your preferred KiwiSaver Scheme."
Amanda Beeslaar, sales manager for AonSaver, said the disclaimer had received a positive response from RFAs.
"RFAs appreciate the ability to provide information on KiwiSaver to their clients without giving advice. The Disclaimer ensures the clients are aware of the restrictions on RFAs and that they are unable to provide "personalised advice"."
She said the wordings for the disclaimer and guidelines were developed after "extensive discussions" with Aon's legal advisers (law firm Chapman Tripp).
"Advice is not personalised merely because a client comes within a class of persons having pre-defined characteristics and the RFA takes the fact that the client comes within that class into account.
"So long as the advice is not personalised in respect of the particular client, and that is made clear to the client, our legal advice was that an independent RFA can provide non-personalised "class" financial advice under the FAA."
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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Comments from our readers
AON also needs to ask, whose interests they are putting first, AON’s, RFA’s or the clients?
If AON believes clients should seek professional advice from an AFA, then they shouldn’t be looking to create short cuts and cheats to get a leg up on other KiwiSaver providers.
I say shame on you AON.
Refer http://www.goodreturns.co.nz/article/976497078/aon-accused-of-churning-insurance-customers.html
I suggest it might be worthwhile for both Aon and Chapman Tripp to review the obligations of any financial adviser under the new legislation with this 'guideline' in mind - particularly in reference to 'flogging' KiwiSaver to unsuspecting clients.
Do you think it is clear that the obligations on a registered financial adviser as compared to an AFA are actually going to be that different when the issue is in front of a court or disputes tribunal?
Point 2: Making access to KiwiSaver easy is important for ensuring take-up of KiwiSaver.
Point 3: More RFAs providing information about KiwiSaver and reinforcing to the client that they seek personalised advice where they need to understand the best scheme to invest in, is a good outcome.
Point 4: People need to take some responsibility for their future and keep a track of how their scheme is performing and switch when risks and returns are not favourable. KiwiSaver is not lotto; it’s like a drop of rain that goes to make an ocean. It is a slow and long term saving.
I would rather prefer it be this way, then making access to KiwiSaver difficult.
The issue for me would be if the RFAs displays misleading conduct and does not proactively make the client aware that they speak to an AFA & direct them to one for personalised advice in their quest to sell a particular scheme over the other.
Mike Shaw, to state that another professional organisation is taking shortcuts and cheating is disgraceful. I have no association with Aon, but they have taken the correct approach by obtaining legal advice from a top-tier law firm and applying that in their day to day practices. Now, who is acting professionally here, and who isn't?
Frustrated, the only thing that shouldn't exist are AFAs. Time and again they demonstrate such a poor understanding of the law that they should not even be in the industry.
Bazza stated that "I would have thought the test of personalised advice would have been what the client thought they were getting." That statement is plainly incorrect, and I pointed out that fact.
The test for personalised advice comprises the whole of s.15(1) of the FAA, not just a subsection of that provision.
In that context, I struggle to understand why direct enrollers need personalised advice to enrol in KiwiSaver.
In that context, I struggle to understand why direct en-rollers need personalised advice to enroll in KiwiSaver.
The problem has always been that the arbitary Cat 1 & 2 classification focused on product rather than the advice process. There will be plenty of future wealth destruction from bad decisions made by Kiwisavers whether they get there via auto enrollment or an RFA product flog.
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