Demystify licensing - understanding what is required to be licensed as a financial advice provider

There’s a lot of talk around the licensing pathway, and it is getting more complicated than ever for advisers who would prefer to maintain in control of their advice practice.

Advisers will need to prepare their practice in advance of any licence application with all expected policies, processes, and controls in place. While also maintaining a governance system, financial controls and reporting, and ensuring that there are protocols and procedures in place.

We have identified and mapped out:

  • At least eight things which will have to be done and in place if you wish to be allowed to continue practicing just as an adviser in the short term
  • 15 more things you need to complete before the end of the Transitional Licensing period if you wish to stay in business as an adviser, although not necessarily with your own licence
  • And 23 more things you are required to fulfill if you want to be able to successfully apply for your own licence and retain your independence as a business owner by the Transitional Licensing period.

Barry Read, Russell Hutchinson and Tony Vidler have put together a practical webinar in the key decision points and options for New Zealand financial advisers considering their licensing choices.

Through this webinar, you will be presented with neutral arguments. With no promotion of any models or providers. Instead, you will be provided with a genuine strategic approach that gives your adviser business probable options.

During the webinar, we will provide a comprehensive checklist of the various practice management, advice process, and regulatory issues which we expect will be required for full licensing.

The NZ Adviser' Licensing Decision Pathway Webinar

Date:         5 July 2019

Time:        10.30 a.m.

Cost:          $75 (+ GST)

Duration:   1 hour

Click here to register

Adviser Businesses: Opportunity is Among the Uncertainty and Change

Changing requirements for adviser businesses put pressure on everyone, but these changes could create winners and losers in the advice world in particular, as well as the wider insurance sector in general. Some advisers will identify opportunities while others will find the pressure overwhelms them – and so they will make a decision to leave.

I am concerned that rushed change, often poorly designed, could damage the market. That worry applies not just to legal and regulatory change – such as a Supplementary Order Paper running to well over 100 pages – but also to industry reaction to the new law. I am particularly worried about reducing the supply of advice to clients and pushing some out of the advice sector.

But you may also find great opportunity in change. Could that be you?

The advice business that is more likely to succeed will have one or more of the following characteristics:
• A strongly defined advice service with clear value to the customer
• Strength (or scale) in a particular territory
• Well-organised marketing processes, and some experience of marketing automation
• Compliance assurance processes that provide evidence to managers of good adherence to advice standards
• Good governance processes, with effective oversight of how advice is given, how insurance providers are selected, and how clients are served
• Access to capital
• Most of all: an optimistic frame of mind about the opportunities that may emerge
Of course, even the best advice businesses usually need to work on one or more of these, and most need to do some work in each area.

Transplanting investment-focused advice processes to an insurance or mortgage advice business can fail – because the importance of the emotional connection to the client, their need for cover, and knowledge of insurance products is lacking.

Forcing your advice into a process designed by a technology provider can fail too – because systems design isn’t the same as service design. The problems of failing to focus on the customer and their journey through the process of purchasing advice is often lacking.

Taking time to work on these areas of your business is vital, however, because:
• If you know you have strong advice processes, a good compliance assurance plan, and good governance, you will have nothing to fear from the new compliance regime
• If you have good systems, scale, and operational efficiency then you can cope better with any changes, and also look for growth opportunities
…and there will be opportunities to grow – if you understand your balance sheet and have access to capital, you may be surprised at the opportunities available over the coming years.

"Newpark’s commitment to supporting advisers’ success drew her to the role"

Melanie Purdey, former Medical Assurance Society Sales Manager, has been appointed as the new CXO of Newpark Financial Services. She begins her role as Chief Executive on April 2nd. With 25 years industry experience here in New Zealand and Canada, Purdy was identified as the best person for the job. Her understanding of the new regulations and commitment to ensuring customer-centric business operations were factors that solidified her candidacy.

Her intention is to make Newpark the obvious choice for advisers, by making certain that their tools are top quality, current and compliant with the overall brand, culture and team that is not substitutable.

Click here to read more. 

New Zealander of the year described as having an inspiring presence at financial advice conferences

Mike King has an “inspiring presence at many financial adviser conferences.” Mike King was awarded the title of New Zealander of the year. He was one of 448 nominees, all who have contributed positively to New Zealand society. King has been awarded the award for the work that he has done around mental health awareness and other related substance abuse issues.

Alongside his rigorous work with breaking societal stigmas relating to mental health, King has invested his time in attending financial adviser conferences, where he has an inspiring presence. Click here to read more. In fact, he was a presence that helped us to be our better selves.

Ninth Message from FSC about future changes coming

Here you can find the ninth message from the FSC about the future changes coming to financial advice regulation. You can find the first eight messages here

MBIE released a consultation paper about licensing fees and levies in December and you have until the 22nd of February to give feedback. Submission details are available here

Advicemonster - We need your input

It was great to see more than 500 advisers in our recent roadshow to launch Advicemonster. We know that we are near the beginning of this journey and we have many suggestions for enhancements to the needs analysis and statement of advice documents. Added to that, with more information on the structure of the new regulatory environment and some great feedback from advisers groups we are looking to launch some key enhancements to the service which will be released in October. Then we have some further development decisions to be made. We need your help. To help us decide what features to add after the October update we would be very grateful if you can complete the survey. It can be anonymous (so you can be mean if you want) or you can include your details (so we can talk with you about your cool ideas). So please take a look at the survey 

Australia: Laws Alone Will Not Prevent Bad Advice

An outcome - like avoiding accidents - tends to arise from a number of activities or strategies working in concert. Good legislation is usually one of them, but only one. When we come to rely too heavily on only one strategy, we can get poor results. 

While I am, broadly, supportive of the idea of the Royal Commission into misconduct in the financial services sector in Australia, I don't think this article is the best example of why that inquiry is needed. I offer it to you, instead, as an example of the types of problem that will remain after the inquiry, and after any law change. Max Newnham rightly points out the poor advice given to this client. But the advice was the product of either carelessness or greed, which will remain whether or not the adviser is employed in a vertically integrated advice business. I happen to prefer the idea that consumers have choice. But even if they do, it would not prevent bad advice borne of either incompetence or greed - which can happily co-exist with a long approved provider list. Specifically, the duplication of the income protection cover in the example in the article would be no less possible, and probably no less likely, should the client have been talking to an independent adviser. 


Latest Goodreturns piece

My latest piece on goodreturns is here, which is the follow-up post to the one a fortnight ago,about advisers thinking about their plans. Plus there is this piece written by Susan Edmunds based on some informal comments I made about the need for a change in the law. Of course, only some advisers lack client files and good processed - not all.  The comments quoted in that article are clearly not the whole substance of the matter, but the issue around record-keeping and the application of the Code to everyone who gives financial advice are both essential ingredients for a new regime.