The FMA announced on Wednesday that it would use its exemption powers under the Financial Advisers Act (FAA) to leapfrog the 2019 law reform to the FAA to allow financial advisers and institutions to provide online advice by next year.
Once implemented, the fact that financial advisers and institutions can advise clients online via robo-advice instead of in person, will bring New Zealand in line with the US, the UK, Canada and Australia.
The FMA received 49 submissions, most in favour of robo-advice, during a consultation period for its proposal that ran from 21 June to 19 July. The regulator said it was granting the exemption to the FAA to foster and promote innovation within financial markets, and to improve consumer access to online financial advice and financial advice in general.
Kiwi Wealth Digital and Innovation Manager Ramesh Naran said: “We’re long seen the potential for technology to deliver better personalised financial advice to Kiwis.”
Naran said the FMA’s decision recognises the ability of technology to improve financial understanding and outcomes for New Zealanders. He added that Kiwi Wealth saw the move as “democratisation of professional financial advice that everyone can benefit from”.
Kiwi Wealth is now developing robo-advice technology to offer customers investment advice, and guidance beyond retirement planning.
Financial advisers and institutions wanting to rely on robo-advice will need to apply to the FMA and will pay a fee similar in cost of Authorised Financial Adviser (AFA) license fees.
This process will be opened from early 2018, with the FMA expecting the first advisers to be able to provide robo-advice services to their clients by the first half of 2018.
FMA Director of Regulation Liam Mason said advisers need to apply to the FMA to rely on robo-advice because its “consistent with our gatekeeper role for other financial advisers (AFA and Qualified Financial Entities) and provides us with increased visibility over the providers entering this (robo-advice) market.”
FMA grants robo-advice
Market regulators discuss innovation
The Financial Market Authority’s (FMA) decision to allow robo-advice from next year will unshackle technology advances to benefit New Zealanders, Kiwi Wealth says.