Dale-Jones: Financial advice different to other professions
Financial advice is different from other professions because the skills are not necessarily held by the individual giving the advice, the chairman of the Code Working Group, Angus Dale-Jones says.
Wednesday, May 16th 2018, 6:00AM 
13 Comments
by Susan Edmunds
Angus Dale-Jones made the comments at the Select Committee considering submissions on the Financial Services Legislation Amendment Bill.
He said the Code Working Group had a significant task ahead of it to develop a new code that could deal with a universe of 30,000 advisers, not just the 1800 "high end" advisers currently operating under a code.
The new framework would focus on entities but allow for individual professionalism, he said, which switched the balance of legislation.
The world of financial services was changing dramatically, he told the committee, as technology transformed the landscape.
The working group would need sufficient depth and breadth to design a scalable code that would accommodate that.
"There's a much broader scope in how financial service is delivered as opposed to medicine, accounting or law," he said.
It might be that advice was given by an individual or through a product provider's streamlined processes, or via a computer system. "Or it might be some combination. Other professions tend to be very centred on the skills of the individual," he said. "That's not the case with financial services."
He said the nine members of the working group represented more of the subsections of financial advice that were not currently as heavily regulated.
Authorised financial advisers - of whom the industry has argued there is too little representation on the working group - would experience less change under the new regime than other parts of the industry, he said.
The new code and regime would put every situation where there was a recommendation or opinion offered together and determine a code of conduct that would provide a uniform standard for consumers to expect.
Dale-Jones said he was confident the code could do it but it would need to be able to approach it in a way that was not legalistic. The working group was on track to get the code to the minister by the end of the year, he said.
He said the exemptions in law that allow for financial advice by lawyers and accountants were not needed and those industries could be catered for by the code, too.
| « FADC prepares for another case | Mann on a mission to diversify financial advice » |
Special Offers
Comments from our readers
And how can they claim other professions like accting dont embrace technology - have they not noticed the impact of a business like Xero.
Finally, is Angus really saying that it was a good idea to have no working AFA's on the CWG "because there was going to be less change for them". I would have thought the views of those providing quality advice right now would have been worth including in the discussion.
What looks like loyal pit ponies on the CWG are working with blinkers on and not interested in doing the right thing by investors, simply appeasing their masters' needs for the status quo disguised as change.
Proper regulation should be principles-based and so encompass any form of financial advice, be it robo-, via an AFA, RFA, insurance related . . . . Starting with the clear principle that the advice must be in the client's best interests encompasses all people needing advice and crosses all sectors of advice. Wouldn't that be simple, easy to police, very much in the investor's interests and therefore in the industries best interests in the long term. With greater trust comes more confidence to use financial advice.
Clearly, delineating between advice and selling is another key principle of good regulation in this arena, for the same reasons.
I don't see organisations as adding 'skill' - but I do see the entity adding process.
Having the ability to offer advice is a human (or at a stretch robo) trait, and the skill required to meet Code obligations should be made up 100% of the operative's competence.
If meeting Code Standards completely = 100%, how much is permitted to be contributed by the licensee and how much by the individual? Could we see a 10% competent/compliant VIO operative (the other 90% coming from the VIO itself) being enabled to flog products under the guise of 'advice'? Isn't this where the Australian system went wrong?
Differential compliance measures seem to be proposed to accommodate the VIO model when the consumer should expect to encounter common standards of compliance, skill, and competence when faced with an adviser from whichever point they touch the financial advice sector.
The reported asinine comments by the CWG Chair illustrates to me that yet again regulatory capture from the VIOs is in full swing.
Why not scrub the Code and simplify everything for the VIOs by having one black box that every Kiwi will be forced to use and which can hide forever the horrendous fees and difficulty to achieve personal goals. And get rid of all financial advisers who can be simply replaced by VIO saleswomen/men
Your comments, in my opinion, reflect the fact that you have limited knowledge of what best practice looks like. All you need to do to discern whether there is "competency" is compare the typical investment plan from a bank with those of professional investors with independent trustees like pension funds, ACC, and the NZ Super Fund. Any comparison with those portfolios graphically illustrates why investment solutions from the average vertically integrated provider is "wrong". That's a fact and what is also a fact is that the portfolios of professional investors invariably endeavour to minimise fees. As the Chief Executive of one of the US' largest pension funds said the other day in the FT "the easiest way of increasing returns is to reduce fees". It would be really interesting to get the members of the CWG, the FADC and the MBIE in a room, individually, and ask them to prepare a portfolio for someone saving for retirement. My guess is that most of them wouldn't come up with something that the trustees of the Super Fund would be happy with.
Regards
Brent
In the midst of demands for any and all independent (sorry non aligned) advisors to have degree level qualifications the chairman of the code working group who is to a large degree determining our future has announced that there is no need for individual skills because they aren't needed.
"Other professions tend to be very centred on the skills of the individual," he said. "That's not the case with financial services."
Well it sure isn't in the bank office when they are flogging crap products.
Are we all just going through the motions getting involved in what is basically predetermined?
The ultimate irony. You need the skills but you don't really
Sign In to add your comment
|
|
Printable version |
|
Email to a friend |
