Surge in AFA numbers pre-FSLAA

Authorised financial adviser numbers grew in the last year for which data will be kept on them.

Monday, June 24th 2019, 6:00AM

The Financial Markets Authority has released its latest snapshot of the AFA market. It will be the last one published because the Financial Services Legislation Amendment Act removes the AFA designation.

Advisers who were AFAs before the new regime comes into force in June 2020 will be deemed to have met the competence requirements of the new code.

The AFA data shows 140 advisers became AFAs in the year to the end of June 2018, the highest number in the three years the FMA has collected that data.

Ninety allowed their authorisation to lapse, from 110 a year earlier.

The highest concentration per head of population remains around Auckland, Wellington and Otago.

There were 160 AFAs aged over 65 in the latest data, and 497 aged between 56 and 65. Just 187 of the total 1800 were aged under 35. A third had been providing financial advice on category one products for more than 20 years.

AFAs were predominately dealing in KiwiSaver and “other category one products”, although 12% said they were authorised but did not provide financial advice services to clients.

Just under a third were employed by a business that was not a QFE and 22% were shareholder or director of a firm with more than one adviser. Another 14% said they were a sole adviser practice and 8% a sole practitioner. More than 90% said they had received no complaints in the past year.

A third had up to 49 clients and 11% said they had more than 500. Just over 20% said they had had no new clients in the past year.

Most were paid commissions and bonuses. The percentage receiving soft commissions dropped again.

Just under 20% received more than 50% of their commission or production bonuses from investment products from one product provider.

The FMA said it had received a number of queries from advisers wanting to know when the cut-off date is for AFA applications.

"While advisers can apply to be an AFA any time up to the start of the new regime, we suggest they apply as early as possible to allow us time to complete their application – particularly if their application is received during the period we are assessing transitional licences.”

Tags: AFA FMA