The Companies Office Blog did a simple promotional post on their shiny new register of financial advisers. They suggest that consumers should use it to check if the financial adviser they are meeting is registered. It's great to get feedback from readers - and they scored with this post. Keith said:
"Do financial advice sales people need to be registered?"
That's an interesting distinction "Financial Advice Salesperson". But before we attempt any analysis we should get the rest of the comment:
"My wife & I had a sales person visit our house last week.
He did emphasise several times that, he personally will not be giving us financial advice.
We were told that our written financial advice would be prepared by a registered adviser. The disclosure statement of that advisor was left with us."
This consumer is doing exactly the right thing - checking up. It smells fishy, but we have to presume innocence, so here are two scenarios.
a) This salesperson was selling something else (say, houses) and came across a financial need (say, a home loan). In that meeting, they have perhaps collected some information to make a referral and have left behind the financial adviser's dislcosure document - the next call will be made by the financial adviser. Provided the sales person has issued no advice, there is no harm done. What's more, the process of giving a referral is specifically exempted by the Act.
b) The salesperson is a 'spotter' for a financial adviser. The scope of the problem depends on what they say in the meeting. They could, in fact, be acting as a financial adviser. The offence is therefore to act unregistered. Although we don't have enough information to tell, it could be worse. If the salesperson presents recommendations then it is hard to see how they could have much of that conversation without ending up giving advice.The financial adviser may also be failing in their obligations.
Which of these scenarios do you think is more likely?