The Institute of Financial Advisers (IFA) and the Professional Advisers Association (PAA) unveiled plans today to form a new representative body, Financial Advice New Zealand.
IFA board chair Michael Dowling
says it is imperative to reverse the absence of advice in the lives of New Zealanders.
“We won’t achieve the needed change simply with words or by continuing to rely on word-of-mouth from the good work done by advisers,” says Dowling.
“We have to take action. We need to substantiate, support and evidence the consumer-centric nature of advice by giving the public a body that unambiguously represents their interests – Financial Advice New Zealand.”
PAA chairman Bruce Cortesi
says the vast majority of New Zealanders simply don’t realise how quality advice changes lives for the better.
“They don’t know how to access it and who to trust. We urgently need to turn the tide.
“We need a body that makes it crystal clear that consumers are the number one priority for advice. We need a body with a clear consumer mandate that will resonate with the public and support greater access to quality advice.”
Whether the new body will be formed or not will be decided by member vote in July and if voted in favour, the formation of the new body will take about twelve months and as it is not a merger, does not necessarily mean the closure of the PAA and IFA.
“That’s not determined at this stage,” Dowling told NZ Adviser
. “That’s up to membership to decide if that’s what they want to do.”
He said the timing of the Financial Adviser Act Review played a critical role but that they are looking beyond it.
“We’re looking as far as 10 years out. We see it will be important to work in with the timing of the FAA Review but that’s not the driver for the change that we’re going through – it’s the natural evolution of advisers and financial advice.”
“This has been a journey and we looked at the future of the industry,” Cortesi told NZ Adviser
. “We underwent some fairly rigorous research and had a blank sheet of paper to look at what an association of the future needs to look like for the industry and the future of the industry.”
The formation of the new representative body may also give the industry more weight in discussions with the regulator on important issues.
Dowling told NZ Adviser
that during their discussions with FMA and MBIE on the FAA Review, “we’ve said if the door could be left open for us to build a stronger voice for advisers that would be helpful and they’ve said they wouldn’t close that door.
“So I think they’re willing to give us a chance to walk the talk but we have to get behind it to be successful with this.”
The IFA and PAA commissioned specialist strategic consulting firm, Eleven, to take an in-depth look at the role of the associations in best serving members and in supporting greater access to advice for New Zealanders.
The research explored New Zealand and international advice professions, including: consumer perceptions and awareness of advice; the impact of market, technology and regulatory change; and how advisers view the current and potential role of associations.
The research indicated a new representative body is needed to address the growing barriers to New Zealanders accessing advice.
“Confusion is one of the big barriers,” Dowling told NZ Adviser
. “Consumers are confused about 'what does good advice look like, where would I go for it and who could I trust?' and those are the big barriers for them.”
Cortesi added that lack of awareness around advice has played a key part in the confusion amongst consumers.
“If you haven’t actually had an experience of receiving financial advice then your perception of it would be very different from what the reality actually is.”
The response from members to the proposal has so far been very positive with Dowling saying 90% of the feedback received so far has been in support of the new body.
“There are some that raise objections and we think the objections are as important as the support - because we’re going to ask all membership to be involved in fleshing this out and seeing what it actually could look like.
“What we’ve got at the moment is a principle and we’re saying we think the principle is worthy enough to have an organization stand for it,” Dowling told NZ Adviser
Looking ahead, the PAA and IFA will be conducting information sessions nationwide for members to discuss the formation of Financial Advice New Zealand in the week commencing 20 June 2016.
The sessions will be held in Auckland (North and South), Hamilton, Tauranga, Napier, New Plymouth, Palmerston North, Wellington, Nelson, Christchurch, Invercargill and Dunedin.
Following these sessions, the IFA and PAA will each call a Special General Meeting for a member vote on the formation of Financial Advice New Zealand, at a date to be confirmed in July, the same month the National Adviser Conference will take place.
“Part of the timing for us is the conference as well where we’ve said this is about everyone – the consumer, the adviser and the provider working together,” Dowling told NZ Adviser
A video on the proposal accompanied the announcement which can be viewed here.