Amid hectic preparations on the cusp of a new system, regulators and government say they feel “really positive” about the future of financial advice in New Zealand, with the FMA saying that the sector’s “star is on the rise.”
Discussing his interactions with brokers and advisers over the past few years, the FMA’s principle consultant for market engagement Derek Grantham says the majority of the sector is committed to strengthening its position in the eyes of the public, and is well positioned to help more New Zealanders make good decisions.
“I think that as a sector, your star is on the rise. This is your moment,” Grantham said.
“We’re right on the cusp of a whole new era that helps you to grow in trust and confidence - trust in the quality of advice, and confidence in you as advisers.
“What I’ve seen over the last few years as I’ve travelled across the country and spoken to lots of advisers is passionate and committed advisers who are really upfront and up for implementing these changes.”
Grantham noted that the changes will also help address issues such as low levels of financial literacy, as well as the relatively small number of New Zealanders who seek out professional financial advice.
“If you look at a lot of the research that talks to some of these issues, and the fact that only 20% of New Zealanders have a financial adviser, that speaks to a huge opportunity,” he stated.
“There’s research that’s trying to scope the potential underinsurance problem, so there has to be the strongest case ever for advice, and it’s right in front of you.”
“There’s an opportunity now to grow a stronger voice around what you believe to be right and wrong, acceptable and unacceptable,” he added.
“From a sociological point of view, we’re shaped by the people around us and the groups we belong to, so this is an opportunity for the sector to shape itself and the future.”
MBIE’s Sharon Corbett agreed with this positive outlook, saying that financial advisers are “leading the way” for other institutions including banks and insurers, who will soon be facing their own new licensing regime.
“I personally feel really positive about the future of financial advice in New Zealand,” Corbett said.
“I think most people agree that there are some fundamental flaws in the current system, the main one being the lack of a level playing field which means that there’s consumer confusion, and inconsistent treatment.”
“The new regime is really about building trust and confidence by having a level playing field,” she explained. “This means that whether I walk into a bank for financial advice, talk to a KiwiSaver provider or go see a broker - whatever the case, I receive those same protections.”
Corbett says that the ultimate aim is to get more New Zealanders to look for financial advice, and to hold everyone in the financial sector to the same standards of good conduct and client care.
“As everyone knows, people who get advice are more likely to be financially better off and have greater peace of mind that they’re on the right track and are making good decisions,” she said.
“There’s a bill in parliament at the moment that will hold banks and insurers to good standards of fair treatment, and I think in a way, the financial advice sector will be leading the way in this regard. But ultimately, we want everyone in the financial sector to be held to those standards, whether we’re talking about advice or about the way that financial products are designed in the first place.”
“We certainly recognise that there is a lot of change happening at the moment,” Corbett concluded.
“But if you put all of that change together, it’s really all aimed at creating a thriving financial services sector where consumers are confident that the financial products they’re getting will meet their needs.”
