The FMA is urging advisers to “make informed decisions” when choosing how to license themselves, and to make full use of the information provided by MBIE, the Companies Office and various industry bodies.
The FMA has released its consultation document for full licensing, and advisers have until 5pm on Friday, August 07, to submit their feedback. The document outlines the eight conditions being considered for obtaining a full license, and suggests three different license classes for different types of businesses.
John Botica, director of market engagement at the FMA says advisers should “think through their options clearly” when deciding which class of license would work best for them, and to carefully research any firms they may be planning to join.
“We often talk about giving clients and consumers the right information at the right time to allow them to make informed decisions around their future wellbeing, and advisers too should be doing the same,” Botica said.
“I really encourage them to cast their net in many directions, from understanding the new regime to talking to MBIE and the Companies Office, and to us at the FMA.”
“Talk to your professional associations such as Financial Advice New Zealand, as they’ve developed some comprehensive licensing kits,” he continued.
“And don’t forget to talk to the providers of the products that you consider when giving advice. What they are thinking for the future, what their expectations are of you in the new regime – but more importantly, what your expectations are of them. Don’t make decisions in a vacuum, check all your bases and do your due diligence on firms who may be asking you to join their team.”
Botica says the FMA is seeing a lot of single adviser structures coming through in the transitional licensing phase, and the majority have opted to license their business as an ‘entity’, which is then responsible for them as an adviser.
He says he has also seen applications for more complex structures, including advisers registering themselves on the FSPR while also being linked to a larger provider. However, he says the bulk of applications have been for medium-sized firms engaging 2-20 advisers.
“As of Friday June 12, 846 transitional licenses have been approved or are under assessment,” Botica said.
“These account for 5,855 financial advisers and 6,528 nominated representatives.
“Single adviser businesses form 46% of the total number of licenses, and 49% are firms which have between two and 20 advisers. Five per cent (5%) have 20+ advisers.”
Financial Advice New Zealand CEO Katrina Shanks has welcomed the decision to have different classes of license, saying it will make things easier for small businesses in particular.
“Financial Advice NZ supports a system that offers licences that fit the scale, size and different financial advice that businesses provide, be they for a single-adviser business, a multiple adviser business, or something more complex, such as a licensed FAP engaging multiple advisers as well as having nominated representatives,” Shanks said.
“This system will be beneficial to small businesses that do great work providing personalised financial advice to clients and who will have a system that’s fit for purpose.”
