[The Wrap] It's time to consider the impact of regulatory change
The past week has been a big one. Fisher Funds buys Aon KiwiSaver; Cigna sold; a Bitcoin fund rolls out and FNZ picks up Hatch. While there was lots to comment on comments from a departing bank CEO are a stark warning signal to the industry.
Saturday, October 9th 2021, 1:51PM 
2 Comments
The regulators have been in the spotlight again on various fronts. Retiring SBS Bank Shaun Drylie made his views clear on the impact regulatory changes are having on the industry.
It was refreshing to see a senior executive tell it as he saw it rather than some watered down corporate communications piffle.
Just as telling is that the Bankers Association tended to agree with what Drylie said.
There really is an urgent need for those who are making regulatory changes to think about what some may call unintended consequences of the changes.
It's all well and good to do things for the customers' best interests but they also need to be cognisant of the impact on the industry.
Others have made similar comments to me. Not that long ago I was discussing what one of the success factors for life insurance companies was. Because they largely rely on third-party distribution the people at the top of these organisations need to be at the coal face with advisers.
People who have done that well over the years include Milton Jennings at Fidelity Life, Ralph Stewart at AXA and Naomi Ballantyne with a number of companies. Of course there are others too, but there are also examples where the boss never got in front of advisers and the consequence could be seen. (No names on this one, sorry).
In this recent discussion it was clear that the regulatory burden being placed on organisations, that CEOs and Managing Directors just don't have time to engage as they would like with advisers.
New Zealand advisers are only too aware of the impact of regulation. They have been the part of the financial services sector which have borne the burden for the longest time.
In Australia the impact of regulation on advisers was laid clear in the recent survey of adviser wellbeing. It wasn't a good look.
AIA is supporting a New Zealand version of this survey. It closes on October 10 and I would encourage you to take part.
Also during this week it was interesting to read the MJW KiwiSaver report which is loaded with interesting information and analysis. It's also a nice follow up to last week's Wrap where I discussed this concept of value for money and KiwiSaver funds.
It will come as no surprise to some that MJW found high fee managers actually provided strong returns. This on-going debate reminds me of the active v passive one. It's ragged for years, evolves over time, and both sides can produce coherent arguments.
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unintended consequences? maybe it's:
1. tunnel vision.
2. the wrong people on board, ie, zilch field experience. advisers' contributions were not valued.
3. the hidden agendas, eg. getting rid of the small players, justifying one's "job or existence"?
my take:
1. the cost to be in this business will continue to escalate.
2. number of brokers (independent advisers) will continue to fall.
3. consumers will not get better advice / outcome from robo advice than the face-to-face advice.