[The Wrap] Making sense of the AMP deal; Who should run CPD?
This week heralds the end of quite an era, with the news that AMP is being split up and sold. Here's my attempt trying to understand what it means.
Friday, October 26th 2018, 5:01PM 
2 Comments
Firstly it is clear that investors like life insurance businesses. AMP is sold; OnePath sold very a hefty price tag to Cigna and AIA acquired Sovereign. Then of course you think about the past year where both Fidelity Life and Partners Life had received significant capital injections.
AMP has been around for a long time and has arguably done many good things. Looking back over recent history the biggest event was the acquisition of AXA. The view is that this was almost a byproduct of the deal done in Australia at the time.
Every now and then this crops up in conversation and the view is that it hasn't been particularly successful. Looking back through Good Returns I came across this Key Facts brochure.
When the groups combined their KiwiSaver market share was 18%, now AMP has around 10% market share in this market.
On the life insurance front it sat at 20% but figures sourced by Good Returns suggest its market share now sits around the 14% mark.
The two groups, combined, had 665 advisers. Now the numbers are: "250 in our QFE, 45 in AdviceFirst and many hundreds of distribution agreements with brokers."
Clearly 1 + 1 did not = 3.
While there is demand for life insurance businesses, one could speculate finding a buyer for the wealth business was not particularly successful hence the decision to list it on the sharemarket.
This one is interesting as it's important to note that the actual fund manager, AMP Capital, is not part of this deal. Indeed we are not clear what's happening here and hope to find an answer for you!
WIN A CHOCOLATE FISH
Besides AMP one story which has engaged readers this week has been about the idea that professional bodies should be setting CPD requirements under the new adviser regulations.
It's one of those pieces I recommend you read, especially the comments.
If you want to win the competition put up by Murray Weatherston, here are the details:
Two part quiz
Is anyone prepared to guess
(1) how many NZ Certificates in Financial Services (Level 5 ) [Qual 2315] have been awarded; and
(2) of them, how many included the Financial Advice Strand.
To take part you need to add your answer to the comments on the article.
I'm really interested to see the answers.
With CPD the TMM Better Business Conference for mortgage advisers is on in Auckland next week. Angus Dale-Jones is presenting on the Code and it's your chance to learn more and ask questions. Details here
I've noted before that the new financial adviser laws and Code of Conduct are going to shake up the dealer groups. This week Newpark announced its ideas around a new mortgage adviser group. Some would say there is no room for another player here, but they don't think so.
The offering is something different and interesting. Besides the pricing it's a clear play at using mortgages to sell more life insurance. It's no coincidence that the new group is being headed up by a former Sovereign executive and Sovereign Home Loans' business case was that mortgages were a way of getting more life business.
As someone said: "All roads lead to risk".
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Comments from our readers
In saying the code doesn't define CPD and it's left to the professional bodies, assuming FANZ, SIFA etc, isn't quite correct.
We're talking government here, someone has suggested professional bodies and everyone has run with it.
It's not the professional bodies that define what NZ Certificate in Level 5 is, it's NZQA.
Skills and other training organisations, like Strategi, are the ones that will have to put together the programs to assess prior learning to then have the achievement/certification stamped for those wanting to cross credit. And maintain it too...
And that assessment needs to be signed off by NZQA. So yes a professional body could do it, so could a dealer group. If they were suitably certified by NZQA with an assessment program that met the standard. Though frankly giving that to the dealer groups as they stand presently is like the fox in the hen house...
The Code requires maintenance to remain competent to the level 5 standard. Which means any changes to the education standards behind level 5, every adviser is going to have to review and tick off (assessment) that they have it covered. Some of that might be read one of these articles. Others may require a formal paper.
That's about the minimum bar to play, that's all.
And it's going to drive a whole new investment in training in a different way to what the industry has done in the past.
For those of us who want to work above the minimum bar, then yes the personal development plan comes into play, with things that extend us in our chosen fields. Neither is mutually exclusive, but it does put the onus on the FA and FAP to ensure they are complying, not the code, the FMA, or the provider.
Though I'm expecting the bar to lift once everyone is on the field...
Surely as a profession where we are in charge of setting direction with peoples lives, we can also take responsibility for ensuring we are doing the same for our professional development?
Because quite frankly, if an adviser can't manage that, they probably should not be an adviser.
And I know you're taking the view of the adviser in front of the judicial panel, I respect that. At the same time, an adviser doing the right things with the right intent is also significantly less likely to find themselves in front of that same panel.
The parallel here is the H&S industry, those trying to do the right thing are ok, they are helped and WorkSafe only responds harshly when real harm happens. For those that ignore what's changed and what is needed, WorkSafe is down on them like a ton of bricks. I'm expecting to see much the same happen for us.
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I think CWG has copped out in their draft Code standard for CPD.
Everyone has concentrated on no quantity and no spec for what counts and the suggestion that that should be left to professional bodies. Some of the latter will be rubbing their hands as it gives them a selling point.
However there will be a large number of financial advisers who will not be a member of any professional body. Who would guide them?
There are 2 issues re CPD; quantity and what counts.
1. Quantity - I don't see anything wrong with Code having a set quantity as a "safe harbour". What happens if I am not a member of a prof body and 1 think 7 hours is enough but FMA reviewer thinks I should have done 15? Also I bet dollars to donuts that some of those welcoming no quantities in the Code will take a completely different view within their own professional body. Didn't IFA say a point of difference they were double the AFA code requirement?
2. What counts? There has been a lot of ill-conceived comment about the uselessness of a lot of current CPD.
That doesn't hold up because under AFA Code, we all determine for ourselves what counts.
There were principled criteria as follows
(a) activity had to be within scope of your own CPD plan
(b) it had to be delivered by a subject matter expert
(c) there had to be external verification that we attended.
Nothing prescriptive about that.