From complying with new financial service regulations, to battling widespread economic challenges – industry stakeholders, such as financial advice providers (FAPs), are having to adapt to carry on. Tony Dench, outgoing chief executive of adviser group SHARE & Newpark, has some wise words for the sector.
“There’s always too much to do, and that’s just the reality,” said Dench during one of the sessions on professional advice at the recent conference held by the Financial Services Council of New Zealand. “Actually, I think that’s one of the first things to think about: getting really comfortable with not getting it all done... When you’re reaching that point of being overwhelmed, there’s only two things to focus on.
“The first thing is the thing that matters the most, and the second thing is the thing that you can do something about. The rest of it – outsource it. And outsourcing means you’re going to have to pay somebody else to do it. So, advisers are also going to have to be reasonably comfortable with putting their hand in their pocket and paying for some of the things that they’re just not going to get done if they try and keep it all to themselves.”
The Belfast native – who resigned from SHARE & Newpark a couple of months ago but remains at the helm as part of the adviser network’s leadership transition – was among the panel speakers for the FAP leaders forum that examined the headwinds and tailwinds faced by the industry, as well as how providers are navigating change.
Dench noted: “There’s certainly a degree of consolidation that’s going on in the sector at the moment, particularly so in the insurance space… If an adviser is going down the route of consolidating with someone else, it’s important to have a good fit. That is the single most important thing of any kind of acquisition. There’s no point in a FAP buying a book or buying a business where it’s just not a good fit.”
Deals stem from the fact that some advisers are choosing to exit, either because of the new qualifications and licensing process or simply because they’re essentially ‘done’.
“We do see advisers leaving – there’s no question about that,” declared Dench, who will be continuing his career within the wider financial services industry. “And a number of those advisers are leaving primarily because they’ve run the race; they’ve spent their time in their career and they’ve come to this stage.
“The bit I want to talk about, though, is that it seems to be primarily around the insurance space. The investment advisers regulated a decade or more ago and are perhaps not feeling quite the same; the insurance advisers are feeling the weight of that regulation a little bit more.”
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As for mortgage advisers, it was suggested that they could be proving to be a source of new blood for the industry.
“The mortgage advisers are typically coming out of some of the corporates, typically a younger demographic, and absolutely more diverse in all kinds of ways,” highlighted Dench. “And they’re coming through our doors, full of enthusiasm, entirely coachable, and they don’t see regulatory change. They just see, ‘Well, these are the new regulations, so this is what I need to do and off we go’. They are ambitious and ready to grow.
“Then they look across the fence and they see the insurance world and they think, ‘Oh, well, if I’m doing a mortgage for a 25- or 35-year-old or whatever, I’d like to be able to talk to them about the KiwiSaver, I’d like to be able to talk to them about protection, and I’d like to build a relationship with them over the next 20 or 30 years’ and move through there. That new crew that are coming through is not being well talked about in our sector.”
Meanwhile, given the economic squeeze, the outgoing chief is encouraging FAPs to think about their cash flow and about setting some money aside in case the economic conditions start to generate unexpected cash flow drains.
