Copycat association for RFAs

Making CPD points compulsory for RFAs is "debatable" at best as it is NOT a requirement of the Financial Advisers Act but then neither is membership of a professional body for that matter either (at least as far as an adviser been an RFA).

Let’s not beat about the bush on this subject. This all boils down to associations making a dollar off advisers under the cover of “professional development” This phrase is currently been thrown around a lot at RFAs and its worth remembering again that RFAs are not the primary focus of the Financial Advisers Act as it currently stands. It’s the AFAs and the “investment” advice that they give to their clients that the FMA is monitoring closely.

Let us not forget that the whole reason the industry was even regulated in the first place was because of certain investment advisers recommending the likes of Bridgecorp etc. offering 14% p.a. when the banks were “only” paying depositors 9%. There was a reason for the difference folks as hindsight has shown us.

Again only a small portion of the investment adviser fraternity were at fault but unfortunately the rest of us were caught up in their mess and consequently we all had regulation forced upon us. This was especially annoying for mortgage and insurance advisers who had and still do have nothing to do with investment advice. What followed was a huge push by the regulators (and professional bodies etc. who saw a training opportunity) for ALL advisers to become AFA but thankfully the Government (lobbied by the banks) saw through the “spin” and made AFA status only voluntary for mortgage and insurance advisers. Investment advisers had already lost the Government’s trust given the bad headlines making the front page of most newspapers each day so they were always going to be made to be authorised.

Much to the annoyance of many professional bodies and training organisations (ETITO etc.) who had “banked” on all advisers becoming AFA the vast majority of mortgage and insurance advisers elected not to become authorised. Fast forward 12 months now and we are continually seeing a campaign by various professional bodies, training organisations and the regulators themselves to push RFAs to become AFA under the cover of “professional development” even though this not a requirement by law.

Sorry for the history lesson folks but it’s important to remember the above when you look at your own business and what advice you do and don’t give to your clients. Whether you want to focus on completing CBD points (when they are not a legal requirement for RFAs) keeping professional associations employed is your business. Personally I would much rather focus my energy & time instead on my clients and looking after their needs.

So endeth the lecture.

I can smell the fear on the IFAs breath, the fear of RFAs leaving the IFA for the NZFAA. If this occurs, I doubt the AFAs left on the IFA membership books will want to double their annual dues to pay for the on going viability of the IFA.

I doubt the FMA will be the white knight to charge to the IFAs rescue either, with some sort of compulsory professional membership obligation.

I imagine for many RFAs, the NZFAA offer will be a welcome relief, after all the scare mongering about being lesser professional beings. Also the education providing scare mongers’ will quickly realise there is another gravy train coming into the station and will no doubt also want to back the NZFAA.

Amused. History lessons are meant to reflect what actually happened, not reflect a scenario to suit your own argument. For those of us who have been involved in the regulatory process since 2001, the history of the introduction to regulation is quite different to that described by you.
Initially the Labour Government of the day decided that our financial markets needed to align more closely to overseas
markets. Initially it was proposed that all financial advisers, risk, investment, mortgage etc would need to belong to "An Approved Professional Body".
This model was mooted for some time with the Government happy that the industry could be self regulating under such a scheme.
It was sometime later that this was revisited and a decision made to have a more prescriptive, licensing type model based on category's of product rather than being occupation based.
The Government decided that there needed to be a Code of Conduct of for Authorised Financial Advisers providing a "financial planning service". Personal advice on Category 1 products could only be provided by an AFA.
The resultant Code Committee formed an opinion that a "needs analysis", regardless of what category of product it related to, constituted a 'financial planning service' and this then captured risk advisers and mortgage brokers.

Submissions to the Government from many sources, not confined to the banks (read the submission from the LBA and realise how passionate they were in fighting against RFA's being authorised),led to the definition being changed to "An Investment Planning Service".
Although it may seem that regulation came out of the GFC and Finance Company debacle, it didn't. It was conceived years before but just took 10 years to come into effect. The shape of the end product may have been influenced by the finance company collapses but that in itself is not the reason regulation came about.

Disclaimer; These are my person views.

@ Amused:
What Ron Said. And let me add that there was, and still are plenty of cowboys in the lending space too. Your point was lost when you started blaming investment advisers, when the worst ratbags are a little closer to your home base - the lending area.

@ Forthright:
Are you serious? NZFATNPPLBAAA has yet to establish its credibility or define what it really stands for. If its value proposition is about being easier to live with than the IFA then it's doomed. EG IFA requires 60 hours CPD over two years. The code stipulates 20 a year.

RFA is not a qualification. Neither is ARA or CRA. AFA and AFP/CFP are. Many prefer RFA perhaps because they are just doing the minimum IE not professional, best practise etc just staying 'compliant'. What this whole thing is about is providing a home for them - more of that 'de minimus' attitude. "relief" from those lofty ideals such as best practise, professionalism and a commitment to hold yourself, and be held, accountable.

I think the predicted exodus from the IFA will not eventuate.

Ron. I'm not twisting anything. Regardless of the original origins of regulation my argument is sound. It’s important that when we discuss the subject of "professional development" RFAs actually know why all this has been thrust upon us. There are plenty of people who are very quick to pool the wool over advisers’ eyes if it means making a few extra dollars off them.

With you been a Past President of the LBA I guess you are ideally qualified to comment on the above story. Care to share with us all then your "personal views" on the proposed merger of the two associations and the future longevity of the IFA? As forthright rightly says above the IFA will clearly feel threatened by this development but given that RFAs are seemingly viewed by the IFA as been less “professional” this may have been a natural consequence.

I don’t know what the value propositions for the IFA or TNPPA are, nor do I care – as I’m not a member of either. I am a member of the only compulsory club in town known as the Regulator. Their value proposition is easy to remember: "screw up and you’re out."

As far as the other industry bodies go; internal competition for the discretionary industry income will only lead to further disenchantment (both at an investor level, and within the industry), and highlights the rationale for an adult to preside over the financial services industry.

As an industry we’re still a long way off from even being considered as a profession, with very little effort by any organisation towards reinstating the confidence of investors / savers.

@ Dirty Harry.

As I stated, only a very small portion of the investment adviser community were at fault but these individuals have consequently ruined it for the good operators. The vast majority of financial planners and investment advisers would never think to do the wrong thing by their clients but they are now “forced” to be authorised because of these bad apples. If I was an investment adviser or financial planner I would be understandably annoyed (not to mention a little pi..ed off) at the added inconvenience regulation has bought to my business. What’s the saying? The bad people always ruin it for the good ones.

The worst rat bags are in the lending area?? Perhaps you’re referring to the loan sharks who aren’t even on the FSPR? Maybe the FMA (Sheriff) will get around to running these real Cowboys out of town one day? Last time I checked it wasn’t lenders who cost ma and pa investors their life savings on the promise of a better return than what the banks were offering. Yeah we've had the Kerry Buddle saga to endure (hopefully she ends up in prison) but by in large most mortgage advisers have kept their noses pretty clean. If they hadn’t the Government would have made authorisation compulsory for this group also. They haven’t.

And for the record, for the umpteenth time….. an adviser does not need to be an AFA to demonstrate that he or she is professional! You are never going to win that argument.

Amused, I will share my personal views to try and take some of the emotion out of the equation. I am a member of the IFA and hold the designation of Chartered Life Underwriter. As you know I am also a member of the LBA and will remain a member of any organisation associated with the LBA.
I personally believe that the proposed new body will offer something different to the offering of the IFA and thus I will remain a member of both organisations.
With regards longevity of any organisation, this will be determined by both the offering of that organisation and the participation of it's members. I can't foresee that being a problem with any of the organisations currently operating in our space.

Boys, boys, boys... It is clear that there are several different opinions and beliefs out there, based on our own personal circumstances (and possible grievances). Let us just accept that regulation is here, for better or worse, and we should embrace the good parts, and not let the bad parts get us down. It also seems there are a few misconceptions out there - such as the origins, and reasoning.
I am only an RFA, but I am still qualified; more suitably qualified for my role than the current AFA status offers me. I am also a member of 2 other professional bodies (one that very few of you will have heard of). I actively engage in all training offered (regardless of CPD) points as they help me deliver the best service and advice to my clients.

I don't care what associations or affiliations are doing out there. I choose to vote with my feet and choose an association that will give me the best bang for my hard-earned bucks.