50% more advisers this year: Claim
One financial services pundit predicts the number of authorised financial advisers could swell by 1000 this year, but others say such an influx is unlikely.
Thursday, January 31st 2013, 9:05AM 
7 Comments
by Niko Kloeten
Clayton Coplestone, who promotes fund managers through his firm, Heathcote Investment Partners, has predicted that there could be 3000 AFAs in New Zealand by the end of the year.
There are currently just fewer than 2000 AFAs, so their number would have to increase by 50% in only a year for his prediction to come to pass.
“My perspective is that pre-regulation there were arguably 7000 people out there claiming to be financial advisers. Regulation scared a lot of them off; some retired and some went to QFEs,” he said.
Coplestone said a continued improvement in market conditions would likely prompt a number of advisers operating under the safety of QFEs to strike out on their own as AFAs.
“When markets rebound there’s natural optimism and enthusiasm at market level and at consumer level people think ‘maybe I need to be in the market’. People will be more disposed to take on financial advice,” he said.
“Also, interest rates have fallen to a level where lifestyles are being affected. People can no longer rely on term deposits to provide adequate income so they have more incentive to seek advice.”
Professional Advisers Association chairman Peter Leitch said he would be very surprised if such an increase in the number of AFAs occurred this year.
“Share markets have improved although there needs to be more sustained improvement in underlying factors for people to go out and invest a whole lot of money and if they did, would they do it through an intermediary? I don’t see that happening at all,” he said.
And Leitch said an avalanche of advisers moving out of QFEs and into the AFA space was unlikely.
“Are there people within the QFE environment who could be AFAs? Yes there are but what people in those environments don’t have as much exposure to is what is the reality of an AFA in terms of the cost and pressures of being in business,” he said.
“People aren’t exactly busting down the door to become a financial adviser in New Zealand so it’s hard to see where they’ll come from. I don’t think there are going to be 500 people currently RFAs who decide to become an AFA.”
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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Life does and has moved on. Clients with genuine diversified portfolios that are genuinely tailored to meet their individual long term needs are doing just fine.
You appear to be an adviser that got it wrong and got burnt or a client that could do with an adviser.
www.stuff.co.nz/waikato-times/life-style/.../John-Milner-c-1838-1866...
Believed to be the oldest burial site in Hamilton East
If anything, some AFA's who don't do any investments might choose not to renew their AFA qualification to avoid the additional cost and legislation.
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As advisers, we always say, never invest on past performance, similarly, one should not dive into becoming an AFA because markets have performed well, briefly (markets are only in catch up mode from the hammerings of 2008-10)
I realise your commentary is an opinion, but let's look at your language: "My perspective is that pre-regulation there were arguably 7000 people out there claiming to be financial advisers".
It appears that you view the 'super set' of 'financial advisers' as potential AFAs. I believe you are making the same mistake as the 'education providers' who apparently geared up for a massive influx of advisers whom they believed would rush to become authorised rather than registered. As we know, it didn't happen.
Now, let's look at this: "a continued improvement in market conditions would likely prompt a number of advisers operating under the safety of QFEs to strike out on their own as AFAs."
So now, after all we've learned and is standard fair:"invest for the medium to long term" now becomes - plan your career because of some short term 'catch up gains'. People will not 'change' their career or status(???) simply because markets appear to have revived.
Anyone worth their salt questions whether this 'revival' is sustainable (Cash stuffed, new bond issues stuffed, property fully priced re p/e ratios and relative to bond prices and thus stuffed, Equities, well, let's wait and see and International equities, hmmm - chased by investors who have the option to buy international cash @ 0%, bonds @ 2%, property at, well, negative whatever. Not to mention FIF tax and if unhedged, undue currency risk. If hedged, just make sure markets perform to cover the hedging costs.
We haven't even gone into macro events such as the extreme danger in the EU, the QE in US, Arab Spring, Japan?, China? Australia...NZ?
No worries, Clayton, she's all good. We've just gotta remain diversified and follow the defensive, conservative, balanced and aggressive 'splits' our esteemed research houses recommend. TUI"S!!!
Why the heck someone would want to become an AFA and expose themselves and building a business from scratch in this environment. They would need their heads read. In your opinion, another 1000 would need such a service. Of course......there's another opening for the "education providers".