Hard to find right advice fit

New legislation is helping financial advisers move from a product focus to a relationship focus for their businesses, ASB’s general manager of wealth says. But despite increasing demand for good advice, finding the right advisers for the job is tough going.

Monday, July 4th 2016, 6:00AM

by Susan Edmunds

Jonathan Beale said the introduction of the Financial Markets Conduct Act, which deals with the governance and robustness of products, alongside the Financial Advisers Act, made it clearer that advisers needed to focus on coaching and planning for their clients, not dealing in the technical details of the products they were placing them in.

“There's advice and product. The new legislation is taking care of that separation. A lot of times advice has been ‘this is a great product, this is what it does’. But the important thing is the advice, how well they get to know clients and understand their situations," Beale said.

Beale said research showed that strong financial coaching from advisers could add about 150bps of returns to client portfolios every year. Asset allocation decisions would make up another 3 per cent. “The coaching element, how well you understand the client, and what they are trying to achieve, and talking them down from decisions makes a big difference to the long-term outcomes.”

He said that had been proved over recent weeks when the surprise Brexit result put the markets into turmoil.

“That’s when advisers come into their own,” Beale said. “It’s not about ‘I can give you 10% return per year. People are looking for advice, how do I achieve what I want to achieve.”

ASB focused more on finding people with the right people skills than technical knowledge, he said. It did not require new wealth managers to be AFAs before they were hired.

What was important was that they could get on with clients, building strong relationships, ask good questions and listen, he said. “We can teach them about the products. We look for the customer focus skills.”

The bank was also trying to ensure it had the same demographic spread among its advice force as it did with its customers, including male and female advisers of different ages, ethnicities and speakers of different languages.

Beale said it was tough to find the right people. In the last 18 months, only four had been hired. But there was strong interest from the public in getting financial advice, he said, particularly in a low interest rate environment when cash returns were unsatisfactory for many people.

“We believe we need quite a few more wealth managers but the challenge is finding the numbers we want.”

ASB has now been granted an MIS licence.

Tags: ASB financial advisers Financial Advisers Act Financial Markets Conduct Act