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New Zealand suffers from poor financial literacy, low savings, underinsurance and is over mortgaged - but industry changes proposed in the Financial Services Legislation Amendment Bill (FSLAB) will help lift people’s confidence and participation when it comes to obtaining advice, a broker says.
Cave Financial managing director Michael Cave, an authorised financial adviser (AFA), said it was time disclosure requirements on commission and soft dollar incentives were rolled out across the industry and time they didn’t just apply to AFAs.
“It will also force a bit more self-accountability as disclosure becomes a bigger part of the registered financial advisers’ client meetings,” Cave said.
“Legislating to ensure about 7,000 advisers will have to operate to the same standard that 1,500 of us have been doing so for 10 years is the right thing to do. It will end any confusion and provide certainty to consumers.
“We don’t need not a complete overhaul. All we need are some regulatory upgrades, and so in that regard the proposed legislation is completely fit for purpose.”
Cave added that he is expecting a “period of change” which will see some advisers disappear, others reappearing under another banner and “many agencies and companies” experiencing aggregation and consolidation.
“It’s important the changes achieve the right balance, particularly when it comes to the likes of the many smaller advisers who do a great job in our rural areas, towns and cities,” he said.
“No-one wants them strangled by red tape and pushed out of business. Their role is important as they can offer a really personalised, tailored and local service that people don’t want to lose.”
Cave added that the “overwhelming majority” of advisers always put the clients’ interests first, but noted the relationship between client and adviser would be enhanced by greater transparency.
“That’s got to be good for New Zealand consumers and the industry alike,” he concluded.
