Regulation inhibiting advice
Advisers are so worried about breaking the rules that it is an impediment to customers accessing advice, says the former general manager of the PAA.
Tuesday, September 24th 2013, 6:56AM 
4 Comments
Jenny Campbell has stepped down from her position after fighting breast cancer last year.
She said there was still a lot of work to be done in the regulatory area, and many members did not realise the extent of the work that went into keeping up with proposals and changes.
But she said it was vital that every consultation paper and meeting be dealt with because advisers were vulnerable to changes.
“There’s a strain between speaking out on behalf of advisers and maintaining a relationship with the regulator. It only take a stroke of the pen and the industry could be destroyed overnight, we’ve got to be so careful.”
But she said regulation had the opposite effect of what was intended because it was now harder to access advice.
“And the public still doesn’t have a good perception of advisers. They don’t understand the difference between non-aligend and bank advisers and I’m worried that bank and insurers are moving more and more towards direct sales, to the detriment of the public.”
She said advisers needed to keep promoting what they did, and work on getting good news stories out, to counteract things such as the Ross Asset Management fiasco.
“In some ways it’s quite exciting, there’s a huge opportunity. One of the biggest struggles is for the public to understand what we do and putting a value on the advice.”
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Comments from our readers
On 24 September 2013 at 10:13 am traveller said:
It's been a fact for years if not decades that only a very small percentage of New Zealanders are prepared to pay for financial advice. Sadly, many of these rely on their lawyer or accountant for such advice and that advice has often not been particularly good over the years with the likes of contributory mortgages and in-house trust deposits. I wonder how advice from those two sources would stack up today against the process that AFAs have to go through? On 24 September 2013 at 1:51 pm billy the broker said:
Well said..funnily enough my local golf club has lost half their cash resources due to money being invested in these contributory mortgages at the advice of the local golf member/lawyer...and no comeuppance for him for the poor advice. If anything it was kept quiet for 2 years before members were told about it...where is the justice in that....it makes a joke of everything!! Anyone got advice on this one?? On 24 September 2013 at 2:02 pm Kev said:
A better way to promote the advantages of using an adviser could be to promote the dangers of not using one. Go to the disputes resolution services and ask them for examples and stats of non-disclosure, bad advice and declined claims. Then associations like the PAA could promote them on behalf of all advisers...? On 24 September 2013 at 5:00 pm Brent Sheather said:
Isn’t it ironic that that many of the worst deviants who recommended finance company debentures and such didn’t have to sit many of the AFA qualifications by virtue of their association with the IFA and a good few of them and others managed to sell their businesses and are now kicking back oblivious to the harm they have inflicted upon everybody who is still an advisor.
But regulation isn’t all bad. I particularly like the rule that says you can only advise on those areas where you have expertise. This is a great “get out of jail” card which I regularly play whenever I can’t be bothered advising on anything that isn’t specifically investment related. Previously I used to offer this advice for free so you know who loses from this rule, at least as far as I am concerned.
Regards
Brent Sheather
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