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[Weekly wrap] Diminishing prospects

The biggest story on Good Returns this week involved a law that could make prospecting for new clients much more difficult for advisers.

Friday, May 11th 2012, 3:15PM

by Niko Kloeten

The biggest story on Good Returns this week involved a law that could make prospecting for new clients much more difficult for advisers.

Section 71 of the Financial Markets Conduct Bill, which deals with "unsolicited offers" has been highlighted by Chapman Tripp's Tim Williams as potentially problematic for financial advisers and product providers.

The section would prevent AFAs and QFE advisers from "approaching" anyone other than existing or former clients with product offers, while non-QFE RFAs would have to sit around praying for people to walk in the door saying "I've had an epiphany about the need to be adequately insured and I decided to talk to you about it."

It's hard to know what politicians were thinking when they came up with this particular gem (if they were thinking at all) but it is clear it needs to be re-written because leaving it up to the Financial Markets Authority to sort out the mess later through its own regulatory powers would be an unsatisfactory approach.  Bad law shouldn't be written in the first place.

The Institute of Financial Advisers has raised concerns about this particular part of the Bill, saying consumers would ultimately be the losers if financial advisers were restricted in who they could talk to.  As Nigel Tate pointed out, New Zealanders are already underinsured and have low financial literacy.  Few people contact advisers; advisers contact them.

Financial advice is one of those services where the people who need it the most tend to be the least likely to get it.  Making it more difficult for financial advisers to offer their services to these people is surely counter-productive.

As I argue in my latest blog, this particular quirk of the Bill may be an unintended consequence but it is part of a wider issue: New Zealand politicians' belief that people are so stupid they need to be protected from anyone trying to sell them anything.

In other news, AMP has made a warning about constant tinkering with superannuation.  Although the comments refer to changes to Australia's compulsory savings scheme, they are relevant to New Zealand, where KiwiSaver has been chopped and changed in almost every budget since it was launched in 2007. 

It's interesting to note that Australia is still tinkering with its system after 20 years, suggesting that the constant changes to KiwiSaver are unlikely to stop any time soon. 

Meanwhile, insurance adviser Nicola Hambly has criticised insurers and adviser bodies for failing to provide adequate support for those entering the industry.  This is an interesting issue because insurance advisers tend to have a high attrition rate in the first few months. 

Some argue for a Darwinian selection process, while others side with Hambly.  Ultimately the insurers lose out if their lack of support means potentially good advisers drop out of the industry.

Still in insurance news, insurance advisers can now access client-specific product research ratings from price comparison website QuoteMonster.

Also this week, QROPS providers are facing frustrating delays as they wait to discover whether they have passed muster under the new regime.

In investment news, a fund manager has joined the chorus questioning the benefits of the SOE floats, saying New Zealand's dividend obsession and lack of growth listings is hampering this country's stock market.  Also, an economist has a warning to those talking about a 'paradigm shift' with regard to commodity prices.

And in this week's mortgage news Shaun Riley has confirmed his resignation as Mike Pero chief executive; ANZ and SBS have cut home loan rates; BNZ says it's winning market share in deposits and mortgages; and the Reserve Bank has offered its reasons for the dramatic slowdown in credit growth since 2007.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« Don't tinker with super: AMPAdviser book values boosted by sales drought »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 4.94 - - -
AIA - Go Home Loans 7.49 5.79 5.49 5.59
ANZ 7.39 6.39 6.19 6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.79 5.59 5.59
ASB Bank 7.39 5.79 5.49 5.59
ASB Better Homes Top Up - - - 1.00
Avanti Finance 7.90 - - -
Basecorp Finance 8.35 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.54 - - -
BNZ - Rapid Repay 7.54 - - -
BNZ - Std 7.44 5.79 5.59 5.69
BNZ - TotalMoney 7.54 - - -
CFML 321 Loans 5.80 - - -
CFML Home Loans 6.25 - - -
CFML Prime Loans 7.85 - - -
CFML Standard Loans 8.80 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.69 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 6.95 5.79 5.59 5.69
Co-operative Bank - Standard 6.95 6.29 6.09 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 5.99 5.89 -
First Credit Union Standard 7.69 6.69 6.39 -
Heartland Bank - Online 6.99 5.49 5.39 5.45
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.15 6.50 6.30 -
ICBC 7.49 5.79 5.59 5.59
Kainga Ora 7.39 5.79 5.59 5.69
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.25 6.69 6.49 6.49
Kiwibank - Offset 7.25 - - -
Kiwibank Special 7.25 5.79 5.59 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 7.94 5.75 5.99 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.49 6.95 6.29 6.29
SBS Bank Special - 5.89 5.49 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 4.94 4.89 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.39 - - -
TSB Bank 8.19 6.49 6.39 6.39
TSB Special 7.39 5.69 5.59 5.59
Unity 7.64 5.79 5.55 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 7.70 5.95 5.75 -
Westpac 7.39 6.39 6.09 6.19
Westpac Choices Everyday 7.49 - - -
Westpac Offset 7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 5.79 5.49 5.59
Median 7.49 5.79 5.69 5.69

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