DIMs and Adviser Return - Make your voice heard
If you are a non-aligned AFA then you should read this Opinion piece from one of your peers, Carey Church.
Monday, April 7th 2014, 5:57PM 
9 Comments
Of the 1900 AFAs registered with the FMA only around 500 are 'non-affiliated' to a large provider. There are a number of reasons that we have all chosen that status. For me, it is for 'independence' and so that I can assist my clients without any 'product allegiance'. It is also so that I can run our business in the way that I want to. The other 499 AFA's will have their own reasons.
But the reactions on Good Returns to the recent propososed changes to DIMs and the Adviser Return indicate that many more people are planning on becoming 'affiliated'. Personally, I believe that would be a shame and mean that the consumers have far less real choice.
We are already seeing less and less choice available to investors. A colleague shared a story last week, where she was the third adviser that a new client (with significant assets) had visited as the other two had proposed the same investment portfolio to her.
Do you want to retain your 'non affiliated' status? I certainly do. And I am not going to make the mistake that we all made in 2007-2010 of not letting my voice be heard.
Yes, we are small businesses. Yes, we do have a lot on our plate, juggling all the demands.
But that is the price we pay for the privilege of being self-employed. The development of the Financial Advisers Act 2008 saw very few 'small business' businesses heard. That is why we have the legislation we have now. It is heavily influenced by the 'big players'. Remember, the banks and large institutions have the ability to have dedicated teams inhouse, or contracted legal experts to make submissions for them.
Do we want this to happen to us again?
Many of our financial planning clients are senior Public Servants, senior policy analysts or policy analysts. We have talked to them at length about their jobs. These are the people that give the advice to the Minister about what to put in the rules, regulations and legislation.
The important thing is - they aren't the experts. They can only write rules, regulations and legislation based on the information they are provided with. If the only information that they get is from the banks and big players, t be heard.
Our clients tell us that they do read each submission.
They also tell us that the submissions that make a difference are those that give good reasons, that make alternative suggestions. But having said that, a volume of responses that voice concern against something will also have an effect. We have seen that with the submissions on the reporting requirements for AFA's. There were 38 submissions (plus 5 confidential submissions.) A number of these were from advisers saying that they couldn't understand why we should report our income. Now this requirement has been taken out of the reporting. It works!!
Your submissions doesn't have to be a novel. It doesn't have to erudite. But it does have to be polite, and make sense and if you can - give reasons, so that the policy analysts and people who are reading it at the other end can understand where you are coming from.
I personally believe that these two issues - DIMs and Adviser Return are really important to my clients and business going forward.
Yes, like you I am really busy. But I have set aside the time to read the documents, do my research and put in my return.
Why don't you do this too - if you want to retain your non-aligned perspective?
The more of us that make a submission, the more submissions have to be read. We might make a difference.
Here are the links
DIMs consultation
Adviser Reporting consultation
Carey Church
Authorised Financial Adviser, CFP, CLU, F Fin
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Comments from our readers
I live with and work for the mums-and dads
but just look at some bank bond & pref share issues, and what they mean for mums-and dads
ASBPA & PB's, ROBHA's - they traded badly at 70 to 80 cents for a long time - a big loss to mums-and-dads if they needed cash out
The new ASB 6.65% issue even got an an FMA warning ! Good work, FMA - in time, I think it will trade at a nasty little discount too
We need to be the advocates for the mum-and-dads
They need help in many ways - e.g. deciphering the risk inside these junk issues (Brent Sheather said junk)
There is an endless procession of offerings to the mums-and dads and some are not at all good, or loaded up with performance fees, etc etc etc
That's where the small non-aligned or little adviser can live
Helping the mum-and-dads
Even protecting them - we should all know how now, since we've all lived through the GFC
And adhering to Code one - putting their interests first
Could someone please explain to me the need to have class and personal advice? What's behind it!
I suspect the reason is to create extra revenue for the FMA?
Or is it in response to the Ross Asset Management situation? If so these changes will not address the issue of dishonest advisers.
Or are the banks and insurance companies the puppet masters behind this as they want all advisers under their banners?
Frankly I just don't see the point of this. We all went through hurdles to become AFAs' and now they want to change the rules! Why?
I hope you are actually not as confused as your post above is.
As an AFA you should know the difference between class and personalised advice as it is a fundamental building block of the AFA/Rbnafa divide.{for those wondering, Rbnafa means Registered but not authorised financial adviser)
Given your post is in a DIMS thread, I am assuming that your comments about class and personalised refer to the DIMS definitions for these terms, which are unfortunately not the same as the Financial Advisers Act definitions in terms of advice.
Simply stated the new rules are that if you offer a class DIMS, you need a MBIE financial markets DIMS licence. Once you or your business has one of these licences, you can offer either class or personalised DIMS.
If you are an AFA and don't have a DIMS licence, you can apply to FMA to be authorised as a personalised DIMS provider.
The problem is that FMA hasn't yet published the protocols for authorisation applications and approvals. However they have said that they don't think that they will be handing out many AFA personalised DIMS authorities and they have indicated that the rules are likely to mirror the requirements for getting a DIMS licence anyway.
Ross, if you do offer DIMS (i.e. a client gives you authority to make investment decisions on their behalf) then can I respectfully suggest that you seek advice to help you through the new rules as they affect you.
This is not intended to be a put you down. I just think those of us with roles in adviser bodies have a responsibility to ensure debate is conducted within the confines of what the rules actually are.
No I am not confused. I may be near pension age but not quite incompementus just yet! You missed my point and lectured me the difference between class and personalised advice instead of answering my question.
While my comments were intended as a bit "tongue in cheek" I still question the motives behind these changes. Perhaps Susan Edmunds last sentence in her article in Good Returns dated 3/4/14 "FMA offers guidelines for license applicants" where she states "A class DIMS licence application will cost $3565 but the FMA can charge more for more complex applications" is probably closer to the mark! Perhaps the FMA has to produce a profit to the Government?
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Homogenous offerings are differentiated by price & brand, as they become increasingly more commoditized. Personally I believe that there is a unique opportunity for financial intermediaries to differentiate themselves with bespoke advice. As observed in other jurisdictions, clients will pay a premium for a tailored solution. The alternative to this will be financial resellers who have customers rather than client relationships.