Focus on customers, not fees: Shanks

The fee-for-service debate is a “red herring” for New Zealand mortgage advisers, who should focus instead on customer outcomes, according to Financial Advice NZ CEO Katrina Shanks.

Tuesday, December 4th 2018, 1:33PM

Katrina Shanks

In recent weeks, the adviser remuneration model has come under pressure in Australia, with CBA Bank CEO Matt Comyn suggesting a fee-for-service model is the fairest model for customers. CBA’s NZ subsidiary ASB played down the comments and described NZ as a “very different market”.

In contrast to Comyn, ANZ CEO Shayne Elliott told the Royal Commission his bank largely relies on advisers for its mortgage book.

Trail commission has also been the subject of debate in Australia, with the Royal Commission expected to recommend a potential ban in the country.

Katrina Shanks, the CEO of Financial Advice NZ, told TMM Online New Zealand advisers should focus on their conduct and service, and this was more important than the fee debate. She said lenders and advisers alike should be “committed to their role in providing ongoing service and expertise for clients”.

She added: "There have long been conversations about commission versus consumer-paid fee-for-service. But the more important discussion - and the one we have been and will continue having in New Zealand - is about ensuring the consumer always comes first across all aspects of the financial services sector, and ensuring that we have a healthy advice profession that can enable more New Zealanders to access the benefits of quality advice.”

Shanks added: “In the current environment, commissions are a red herring; the focus needs to be on how the sector as a whole supports the best outcomes for Kiwis."

Speaking to TMM Online, Mike Felton, the CEO of Mortgage and Finance Association of Australia CEO, says the broker channel is “highly efficient” for the Australian market. He said advisers “offer the customer an average 13.8 years industry experience when dealing with a broker”. “That level of experience is a very different offering to that available in the branch network,” he added.

Tags: Financial Advice New Zealand