[GRTV] Meet Financial Advice NZ CEO Katrina Shanks

Financial Advice NZ came to life this week. Read the full interview with new chief executive Katrina Shanks where she talks about the association's purpose, what members need to do for the Quality Service Mark and more

Monday, July 9th 2018, 2:05PM

Tell me a little bit about what attracted you to joining Financial Advice New Zealand.

Gosh, there are numerous reasons why I was attracted. I supposed the first one was that I’ve always had a sense of service to the public and making a difference in people’s lives and I believe that financial advisers so that every single day when they work with a client, and work with a customer and they help them on their path of financial wealth, financial health, and giving them a sense of what the value of financial advice can do for their lives. So that was the first thing that was really important to me – helping other people and that’s what this organization does by supporting financial advisers. The second one was the opportunity to make a real difference. Obviously, this is a new organization, it is modern, bright, shiny, relevant, vibrant, and it is really exciting to have the opportunity to mold something and to make a real difference in the lives of New Zealanders, but also in financial advisers’ lives by supporting them with some really good skills and a basis to move forward in the industry.

Was building the association one of the major attractions, or was it around promoting the financial advice side of things?

It was actually the three pillars, which are in the constitution for the association. So obviously there is promotion - which is reaching out to the public so they understand the value of advice. Then there is advocacy – ensuring that the framework which financial advisers work in and which consumers are in, is fit for purpose – being able to reach out to the decision makers and policy makers and ensure that framework is correct. And the third one is standards – ensuring that when customers do get financial advice from financial advisers who are part of Financial Advice New Zealand, they know there is a standard in place and they’re getting quality advice.

With the advocacy function, you’ve got your role with being a former MP, how much of a help is that in a role like this?

It is significant. Significant because I understand what influences policy and decision makers, what that process looks like, the different levers you can pull and push to make that difference. Also, how the legislative process works – at what point do you need to be involved in the consultation, at what point do you talk to your ministers, you talk to MPs’, you talk to select committee, and how can you influence those outcomes so it is the better outcome for everybody, because politicians don’t always get it right, as we know.

Ah well, we’re having a review of the laws already.

Already, that’s absolutely right.

But when it comes down to the advocacy side of things – and I think we’ve seen in the last couple of years, you can either take an approach of trying to work with the regulators and the officials, or you can be quite vocal in pointing out what is wrong – where do you see this role fitting in those two ways of approaching advocacy?

Well I believe that you should work with decision and policy makers as much as you can. If it comes to a point where you’ve got to go your different ways because you can’t agree in the outcomes you believe are wrong, then you need to stand firm with that and stand true to what you believe, but I think you get best outcomes when you work with people as opposed to against people.

So, if something is happening and you don’t agree with it, you’ll tell them?

Absolutely right, I’ll tell them. But there’s different ways which you can tell them. You can tell them within committees, that’s why it’s really important that you get at the table with these decision and policy makers, and not running beside the table. Being in the right place at the right time is really important to ensure that you can influence, and that policy has been made.

With the new body, “FANZ” as a lot of people call it, Financial Advice New Zealand, how would you describe the unique selling proposition, if you like, around the organization - why advisers should join it?

I think there are a number of reasons. I think you have a much louder voice if you have a collective and I think when you have a collective, you have a better ability to influence policy, but also write policy. The more variety of opinions you’ve got, the richer the information is and the knowledge is that you’ve got. I think being part of a movement which can influence those policy and decision makers is really important, so you’ve got a voice. Individually it is hard to have that loud voice, but collectively you can get great outcomes. I think the other really big thing for financial advisers – I’ve been to a lot of meetings around New Zealand, and I’ve only been here 3 weeks next weeks, listening to what advisers are saying, and one of the most important things to them is reaching out to the public and the consumer, so the public and consumer can understand the value of advice and go and seek that advice at certain times in their life when it’s really relevant to them. Also, being part an organization which is going to reach out to the public and educate the public on what that value of advice looks like.

On that point, is the association more of a professional body for advisers, or is it more of a body for the public and being out there and promoting advice?

Well, it is both actually. They actually complement each other. So, you’re there for the advisers to allow them to be able to reach out to the consumer in a relevant, modern, and vibrant way, but you’re there for the consumer so they can understand what that value of advice is, and what that quality of advice looks like as well. That other third pillar of Financial Advice New Zealand is about quality.

Which brings us to the QSM, how is progress with developing that coming along?

Well it’s still being developed. Obviously, we know that there are six elements to the quality service mark, and that there are certain assessments that are going to take place, and you’re going to need to have a certain amount of experience and professional development, and although in a professional promise, there are those elements to it. But I think that it won’t quite be complete until the code is complete because we’re going to ensure that we’re in line with the code, and we also align with regulation, and because compliance of regulation is one of our elements as well. So until those are bedded down, we can’t quite bed down a quality of service mark.

The question I often hear from advisers is “why do you need a quality service mark when you’re going to have the code, you’ve got the FMA sitting there regulating advisers, and this new legislation which is going through, so what’s the purpose?”

That’s a good question, and I think the purpose is that we’re going to reach above what the regulation is. So, we’re saying regulation is the base, the very bare minimum that you’ll need. What we want to do is reach above that and say if you come to a Financial Advice New Zealand adviser, we’re above the base bar that there is in legislation.

What sort of things would put them above the bar?

Things like the level of professional development you’ll have to do, the experience that you’ll have to have, the referees that you’ll have to provide, the review of case studies that may happen -

Who will do that?

We’re still working through that at the moment - the professional promise that you’ll give. So there are a few elements in there which sit above the regulation. The purpose of the QSM isn’t to put more regulation or more compliance on the financial advisers, they’re designed to be dovetailed together, so if you reach the quality service mark, you would have reached all the compliance that you’ll need for regulation as well. So in effect, what we would like to do over time is go to the regulators, and I met with the FMA a couple of weeks ago, and we were talking about if the quality service mark works how we think it’s going to work, then they may say “actually we don’t need to do as many audits on the members of Financial Advice New Zealand because we know you’ve already reached that mark with your members."

Will the quality service mark then become sort of like the level they have to achieve, and you’ll become a quasi-regulator?

No not at all. What we’re ensuring is that Financial Advice New Zealand members won’t have to go through lots of work basically. So, if you’ve met Financial Advice New Zealand standards, and the quality service mark, you’ve met the regulator’s minimum mark as well. So therefore, you won’t be double work doing, and we won’t be doing it on behalf of the regulator, its the reverse and effect. Our quality is recognized by the regulator – they’re not driving us.

So, you’d like to get to the stage where the regulator would look at Financial Advice New Zealand doing some of the work that it will have to do?

Yes and no. So yes, I supposed if you were to take that on face value, yes. But no in terms of we’re not doing the work for them. We’re doing the work that we believe will give the public confidence because we have a certain quality service mark in place. So for us, it’s about boding confidence with the public as well, so they’re got trust in financial advice when we give it to them.

Will there be any level in there where there is any punishment and complaint – I guess disciplinary element – to it?

Financial Advice New Zealand will have a disciplinary arm to it, of course like every official organization does.

So that will be separate to what we have with the FADC now?

I’m not across that, so I can’t quite comment on that, sorry.

That’s okay – sticking with qualifications and standards, some people think that they’ll join the association because it has the rights to the CFP mark, and others are saying well maybe someone else should have that. If the CFP guys went out there and said we want to have out own association, what would your thoughts be on that?

Once again, they complement each other. They’re not competing with each other. It’s a different qualification which is internationally recognized, yet again. I think those quality marks are really important for those that have got them, and obviously a part of being a part of Financial Advice New Zealand enough to having the license is that we promote them as well. So it’s not competing with each other, its complementing each other.

Will the association actively promote CFPs?

Yes.

How that dovetails in with your QSM is going to be interesting as well.

Actually, I think its more of promoting quality advice to New Zealanders. As we know, not a lot of New Zealanders get financial advice, really. So, we have to reach out a lot further to ensure that New Zealanders will recognize what quality advice looks like. The more qualifications in that space, the better, as far as I’m concerned. We’re not competing, we’re complementing each other.

How many adviser memberships do you need to get to critical mass?

What do you think that number should be?

I don’t know. It’s going to come down to finances, isn’t it?

Off of today, we’ve reached over 1,300 that have signed up – which is called “on-boarding”. We obviously don’t start until the 1st of July, but they’ve made the commitment already. We’re well past 1,300, its 1,500 maybe, so we’re on the road to having critical mass already, which is really exciting for the organization.

So those are all people from the IFA, the PAA, and the New Zealand Advisers Association?

Yes, that’s right.

The large majority of them would have “on-boarded?’

The three organizations, collective, have a membership of 1,800, well just under 1,800, so we’re two-thirds of the way there to those which already a member. What we’re just about to open up on the 1st of July, to those that weren’t members of either of those organizations, to be able to join Financial Advice New Zealand. We’ve had a lot of queries already and people that are interested in coming on this journey. I think it’s a really exciting journey, and I think it’s well worth coming on board.

Absolutely, and it will be fascinating to see how it pans out. Code Working Group, obviously a big talking point at the moment, and there’s been a lot of angst, I think, that the representation of the group hasn’t been that balanced and have a lot of practitioners. Have you got a solution as to how that can be fixed?

Yeah – last week I wrote to the Minister, Kris Faafoi, and asked if we could meet with him to consider going on the Code Working Group as Financial Advice New Zealand, so we’re representative of that other end of town, which is where the criticism has been.

Have you heard back yet?

No, but we are waiting and I’m sure we will get that meeting in the near future.

The advice industry is made up of – I call it, “three verticals” – mortgages, life insurance, and investment, and that all –

And financial planning.

Yes, financial planning – they’ve often had different agendas or outcomes of what they want, and they haven’t necessarily worked that well together. How do you bring them all together or get them on board?

There’s a couple of things in there. I think in a membership-based organization, you have to recognize every different discipline within the organization and ensure you have a valued proposition for them to be a member. Without a valued proposition, there is no reason to be a member. So that’s my job, to ensure that there’s a valued proposition for every single member, whether they’re a mortgage broker, an insurance broker, whether they’re big or small, it doesn’t matter. Everybody should have a valued proposition if they belong to Financial Advice New Zealand. I think overall, we’ve got the same common goal, and that is to reach out to the public, get the public to understand what the value of advice is, then take them on that journey, and build that public confidence.

It is going to be an interesting journey and I wish you the best.

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