« July 2013 | Main | September 2013 »

Client Cognition Around Financial Questions

Anyone involved in helping people with financial advice has always known it - some people have particular difficulty thinking straight when the questions are financial. Mathematical ability plays a part (as research from the Comission for Financial Literacy and Retirement Income shows) but there are other factors in play as well. This article explains some recent research which reinforces this. It is a reminder to take particular care. Link.

Epic Financial Markets Conduct Bill Passed

Chapmann Tripp released this announcement:

"The Financial Markets Conduct Bill has now been passed and represents a significant achievement for all involved - Minister Craig Foss, former Minister Simon Power, Select Committee members, officials, and those from the private sector who have committed significant time and resource to get legislation which is both workable and durable. 

The new Act will be brought into force progressively from April next year.  Much of the detail will be established through regulations, with consultation on drafts to begin in October. 

We urge you to continue to engage through the remaining stages to get the best result possible."

Where are the AFAs Today?

"A new study has found that banks, stockbroking firms and a single firm (AMP) together account for more than half of the Authorised Financial Advisers (AFA) in New Zealand.
 
The ‘AFA today’ report, authored by respected financial services journalist, David Chaplin, also found that of the total 1,895 AFAs identified in the research only 325 investment advisers, or 17 per cent, might qualify as ‘non-aligned’.
 
According to the study, AMP, with over 200 employed or aligned AFAs, ranks by far as the most influential entity in the market for retail investment distribution, followed by stockbroking firm Craigs Investment Partners. 
 
For a full copy of the report, which also compares AFA numbers in banks, stockbrokers, insurance-focused groups, investment specialist firms and the self-employed sector, please click on the following link to open a PDF document."

Download the report >>

David Chaplin
 


Uninsured Win a Battle

An excellent article at the NBR tells us that a number of property owners with bare land or land with an uninsured property on it have won a court battle. The headline, from the piece by Chris Hutching, proudly proclaims:

Quake outcasts win against Brownlee

However the judgement is a limited one. What we know from the article is:

"Justice Graham Panckhurst ruled that the decision to offer to purchase the properties of the applicants on the terms announced by the Earthquake Recovery Minister Gerry Brownlee was not made according to law and is set aside, “as are the offers subsequently made to the applicants by the chief executive”.

That may simply mean that a better process must be followed to arrive at a decision. Looking at the health of society as a whole I hope that one aspect of that decision-making process is moral hazard. Of course, there are complexities - like being unable to obtain EQC coverage for bare land, applying to some of the sites - however, if the government always bails out uninsured people then it is likely that more and more will choose not to insure. If that happens then there is another form of unfairness - to those that take the responsible choice to insure. It may also mean changes for EQC.

Link.


We Must Unite to Rebuild Confidence in Advice

Keith Richards, Chief Executive of Personal Finance Society recently wrote an article called "We Must Unite to Rebuild Confidence in Advice" on UK website Money Marketing.

"The financial planning industry can play a key role in influencing public perception of the profession as a whole but some consumer groups, either intentionally or unintentionally, help to distort public perception of the advice community.  

Part of the Personal Finance Society’s consumer confidence campaign aims to engage with groups that have a direct influence over consumer attitudes, calling upon them to recognise the significant changes that have been put in place over the past two decades. This, coupled with the evidence available, provides a compelling argument for the value and importance that advice can play for the majority of UK consumers."

Click here to read the full article.


Quotemonster to be Bought by Quality Product Research

Tim von Dadelszen, director of Inform Holdings Limited, announced that the popular insurance quoting and research platform for advisers will be sold. “We have made a conditional agreement to sell the website www.quotemonster.co.nz to Quality Product Research which will complete in the next couple of weeks” Tim also added “Quotemonster has been a huge success and it is ideal for its development that it will be owned by the business which provides the research available on the site.”

Quality Product Research CEO Alan Rafe said “Buying Quotemonster illustrates our commitment to research and supporting advisers as we continue to grow our business in NZ. It means that the quote engine will be independent of any distribution businesses, and is consistent with our independent approach to product research.”

Alan Rafe also explained “We are delighted with this purchase and have already hired additional staff to develop new services. More details will be provided at our roadshow.”


Criticism From All Corners

Only financial advisers (the investment-focused kind) with a sense of humour will appreciate the irony of being attacked on one side for being too active, and the other for being too passive.

On the one hand advisers are frequently accused of being too active to justify portfolio management fees - moving client money, fund-holdings, bonds, or shares in order to gain a transaction fee, or justify annual fees.

On the other hand there has been publicity in the UK tabloid press accusing advisers of being idle for using low cost managed funds.

It seems that whatever your point of view there is a way to attack advisers.


Partners Life Raise More Capital

Partners Life has raised more capital - gaining the support of an institutional investor who commenced their process throught an earlier round of capital raising Partners advises:

Waterman Capital commenced due diligence on Partners while we were in the process of this capital raising but due to time constraints, were unable to finalise their research by the time we closed the investment window.

        We continued to provide Waterman with the information they needed to complete their due diligence and         we are very pleased to announce that the outcome of this very thorough due diligence process is an         investment of $6.25m into Partners equating to an initial 5% stake.