9 Comments 9 Commentsby Niko Kloeten
Meanwhile, the IFA has said it is open to working with the new entity, which is to be named the New Zealand Financial Advisers’ Association (NZFAA) if TNPPA members vote in favour of the merger at a special meeting on November 9.
TNPPA chairman (and former Professional Advisers Association chief executive) Dave McMillan said despite operating largely in the Registered Financial Adviser (RFA) space, the merged vehicle wouldn’t be a direct competitor to the PAA, which has “quite a different value proposition” to what the NZFAA will offer.
Instead he compared it to another industry organisation, the IFA, saying it would aim to provide similar services in terms of professional development except targeted mostly at RFAs.
“That’s a really good comparison; what we’ve really done is taken the standards of the code of professional conduct [for AFAs] in terms of professional development and made it compulsory for an RFA,” he said.
He said discussions between the LBA and TNPPA had been driven by members, a number of whom belong to both groups.
Several years ago the LBA was close to merging with the PAA, however that proposal was scuttled by some IFA members.
McMillan said the LBA/TNPPA merger would provide much-needed scale with more than 200 members combined.
For TNPPA members it would give access to long-standing LBA offerings such as the Corporate Club and its awards programmes, while LBA members would be able to achieve TNPPA designations including Associate Risk Adviser and Chartered Risk Adviser.
IFA chairman Tony Vidler said a group that had compulsory CPD for RFAs was a positive move in an industry where “professionalism is voluntary”.
He said the IFA would be happy to collaborate with the new group if and when appropriate; however, he said in the longer term there was only room for one professional association in the financial adviser industry.
“You cannot have competing and different standards and still call it a profession,” he said. “I think we need some guidance from the regulator; it’s an area where either the industry works it out together and comes up with a single body or regulators need to intervene.”
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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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.