The return of big planning firms

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Big financial planning organisations such as those that disappeared from the New Zealand market over the past 10 years are likely to return as the investment advice market grows, says the chief executive of NZ Funds, Richard James.

Thursday, August 8th 2013, 6:57AM 2 Comments

by Susan Edmunds

There are still some large risk-based groups but he said almost all the big investment players had disappeared. The industry had been smashed by the financial markets for two or three years, then regulation for another two or three years, he said, so practices had shrunk and any growth plans had been put on hold.

“In the advisory industry generally, there are very few who have had the time or the space to work on their outward-facing proposition because they have been so preoccupied with looking after their existing clients and meeting all the regulatory requirements.”

But he said there were not enough advisers to cater for New Zealanders’ KiwiSaver needs. Overseas experience showed that, left to make their own decisions, most people would not make good ones. “Investor returns will be different to investment returns and that is due to behaviour. It will cost them dearly.”

He said investors needed to be given the opportunity to access advice when they wanted it, in the form they wanted.  “The challenge to the industry is to define advice not in the way they want to deliver it but how the client wants to receive it.”

People did not want to pay thousands of dollars just to get started in investment, he said. “The challenge is to deliver advice in a way that is progressive, so they get more advice as they go on. There is going to be a massive and growing need for advice.”

Adviser Jeff Goldsworthy said many people’s ambitions had been shifted by regulation – they no longer wanted to have the big client books they might have been striving to build five or 10 years ago.  “You need to have a big team to manage that correctly. Advisers that have large client bases are a cross between putting out fires, juggling hot potatoes and juggling paper. Advisers need to work on what they can offer, who to, and be selective on who they deal with.”

James said investment  advice would be a massive growth industry long-term in New Zealand, as it had been in the US and Australia after the advent of Government superannuation schemes.  “The same thing will happen here. It has to.”

But he said while he expected to see many more big operators, there would still be room for smaller adviser firms because many people liked to deal with an adviser they saw as a reflection of themselves. “They want to deal with someone they can relate to.”

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