New FSC research findings, and more daily news

FSC CEO Richard Klipin presented the findings of new research at the FSC Get in Shape summit last week. Unlocking the Potential of Professional Financial Advice was centred around the response of those within the industry to the following questions:

·       How do you feel on the other side of Covid?

·       How ready are you for upcoming regulation changes?

·       What is your outlook for the future?

Klipin noted that findings indicated that the industry is in a time of change with a transition from a sales led approach to an advice led approach. With this change it expected that there will be changes to business models, remuneration models, and client connection methods. The research also showed that advisers had a positive outlook on thepost-COVID-19 reality. 

FSC CEO Richard Klipin unveiled the new research entitled, “Unlocking the Potential of Professional Financial Advice” at the FSC: Get In Shape events this week.

The research shows that the financial advice sector has remained resilient despite the challenges of Covid and regulatory change while continuing to provide ongoing value to Kiwis.

The FSC research committee asked the advice community three questions.

1. How do you feel on the other side of Covid?

2. How ready are you for upcoming regulation changes?

3. What is your outlook for the future?

Klipin said that the conclusion of the research was that “We are in a huge moment of change. We are moving towards the much more level footing of an advice-led [rather than a sales-led] conversation.

“Because of this, business models, remuneration models, how advisers connect with their clients are all going to change. It feels like this moment is unleashing an incredible opportunity for the industry.”

As well as reaffirming previous research that highlighted the benefits of financial advice during times of turmoil, the research also showed that advisers were feeling that they could weather the post-Covid storm.

“What we saw in Covid was a change in how people operated their businesses. The key change in this sector has been the pick up and the take up of technology.

 

The research found that many advisers are preparing themselves for the upcoming regulatory changes, with 57.5% of advisers reporting that they were preparing for changes relating to FSLAA and 32% of advisers saying that they would be ready when the law came into place. The research also highlighted that there generally was a positive response to the upcoming change.

When looking at how ready advisers are for regulation change the numbers are looking even more positive.

“At the end of last year, 57.5% of advisers said that [they] have continued to ready themselves to implement the required changes in FSLAA, 32% said they will be ready when it begins.

“This notion in some parts of the sector [that some are] wondering how ready are people? How many people are out there not doing anything? This data says that most advisers are well down the track.”

According to the research most advisers have a positive outlook for the future. Many of the respondents felt that the incoming regulation changes are positive for customers, and for advisers bothClick here to read more

FSC findings

In other news

FSC: in response to the Lockdown announcement and upcoming regulatory changes, the FSC will be running a Zoom session for those registered for the Christchurch and Dunedin Advice Summits on Wednesday 17 February 2021 from 08.00 until 10.00.

The Zoom session schedule is:

0800:  Welcome from FSC, CEO Richard Klipin

0805:  Opening Session: Hon Dr David Clark, Minister of Commerce and Consumer Affairs

0815:  Embedding the changes in the New Zealand Advice Sector

0905:  Comfort break

0910:  Disclosure – Focusing on your responsibilities ahead of 15 March 2021

0935:  Helping New Zealand’s advisers to grow – tools, tips and insights

0955:  Close - FSC, CEO Richard Klipin

 


Chatswood operating at alert level three

With the move to alert level three travel plans for this week have been cancelled. I shall be in touch with each of you to reschedule meetings that were planned for in-person with either Zoom or a tentative alternative date.  Staff are all used to working from home now and are well set-up to do so. We will clear messages and divert the office phone but you may still require mobile numbers to quickly reach Jerusalem, Kelly, Fran, Melissa, Ed, or me - feel free to drop us an email and ask if you do not already have these. 

If you are at an insurer and would like us to help publicise any event changes due to the alert level change please let us know we are happy to blog those for you. 

 


Implications of approval of Australian advisers operating in NZ, and more daily news

The Financial Markets Conduct (Australian Licensees) Exemption Notice 2020 issued by the FMA allows Australian licence holders and representatives to operate in New Zealand. Although MinterEllisonRuddWatts special counsel Alistair Robertson says there is nothing to worry about, some advisers have expressed their concerns about allowing Australian advisers to enter the market at this time. Robertson has clarified the terms of the exemption saying that Australian advisers that choose to move to New Zealand will be able to continue servicing Australian clients.. The exemption doesn’t allow Australian advisers to service New Zealand clients. Australian advisers looking to achieve the exemption will need to:

  • “Hold a current Australian financial services licence, be in the business of providing a financial service in Australia, and not have a New Zealand place of business.
  • Be registered as a financial service provider in New Zealand, and be a member of a dispute resolution scheme.
  • Take all reasonable steps to ensure its representatives submit to the New Zealand courts in respect of the relevant financial services.
  • Give the FMA written notice that it intends to rely on the Exemption Notice.
  • Have procedures that give reasonable assurance that the licensee and its representatives comply with relevant Australian regulatory requirements when giving regulated financial advice to a New Zealand retail client under the Exemption Notice.”

“The FMA released an updated exemption that allows Australian financial service licence holders and their representatives will be free to operate in New Zealand without a local licence, following the rubber stamping of the Financial Markets Conduct (Australian Licensees) Exemption Notice 2020.

The move, which came at around the same time that politicians were scrambling to finalise a trans-Tasman travel bubble, was the finalisation of a proposal first put forward to the industry in August 2020.

Some advisers may be worried that allowing Australian advisers into the New Zealand market at such a tumultuous time of regulation change could cause trouble.

Alistair Robertson, special counsel at MinterEllisonRuddWatts says that New Zealand advisers have nothing to be worried about.

“The exemption is limited in scope. It does not allow Australian financial advisers to solicit New Zealand retail clients. It generally allows Australian advisers to continue to service Australian clients if they, the adviser, move to New Zealand without having disruption to those clients and without complying with the New Zealand licensing regime.” Click here to read more

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Asteron Life on dealing with compliants, and more daily news

Asteron Life has notified advisers that it would like to know when a customer compliant relating to the insurer is brought forward. Asteron Life has said that this presents an opportunity to improve services. Asteron Life has prepared a shareable information sheet about the steps to support clients through their complaint process.

“If a client has a complaint, we want to know about it because we see it as an opportunity to put things right and improve our service for the future.

We take complaints seriously, whether it’s about our products, services or something else. Our established complaints management process - which meets regulatory and industry code of practice obligations - ensures we put the client at the heart of everything we do. It also means we are able to acknowledge and respond to a client complaint in a timely manner.”

Since you work so closely between Asteron Life and the client, you may end up being the recipient of a complaint about Asteron Life. So our team can do everything they can to resolve it, we have put together a simple one-page guide on how you can support the client and report the complaint. The guide includes an outline of how to spot a complaint, how to deal with a complaint and who to notify at Asteron Life.

This document is not for clients, but rather an easy process for you to follow. Please feel free to share the guide with your colleagues who may also receive complaints from clients. If a client would like to know more about the complaints process they can visit the Asteron Life website or call us on 0800 737 101.”

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Numbers are numbing - it is stories that get us, and our clients, to make good choices

I am not thrilled with checking on COVID-19 numbers. You have probably done this quite a bit over the last year. It is hard to believe that at this date last year was the first point at which human to human transmission was confirmed by a Chinese scientist. There would still be weeks before it became clear that this was going to be a global pandemic, and it was not until the end of March that we realised how bad, and therefore how serious the response would need to be. Things changed rapidly. Throughout that period I have checked various statistics sites, built models, talked with insurers about impacts, reinsurers, and gathered information that is relevant to the sector. I am not exactly sick of it, but the grim reality does weigh one down.

But these are merely numbers. I know, of course, that each number is a precious life lost. Even for many of the survivors there are very long-lasting effects. But the numbers never quite make it real, in some way, they overwhelm. This is a lot like using statistics to try and convince a young couple that they might need insurance. It is simply too hard to see themselves as one of those numbers. It is the emotional pull of real life that brings the issues home to me:

In March last year, my first experience of a friend with Covid-19: they flew back from the United States sitting next to someone on the plane 'who coughed a bit' - a few days after landing here, in isolation, they found they had Covid-19. That was months ago, she still has difficulty walking any significant distance. 

A distant relative, elderly, hospitalised during the first wave in the UK, caught Covid-19, and impressively, at 98, survived. My father does volunteer work collecting food for his church to distribute through their food bank. It is a great job to have in retirement. He's in his late 70s and still collects - even though it isn't safe, really, for him to do so. Three of his friends have had Covid-19 - fortunately they all survived. A friend in the church, her son who worked in Spain was critically ill - fortunately he survived. 

But so many don't live through it. You can see accounts of lots of people. Check out the BBC website. But again, more directly: last night I was on a zoom call which largely hosted people in the UK. There were 88 people on the call. Two who spoke had family members die in the last week. One woman's mother died during the week from Covid-19. One man lost his best friend 'choked to death' he said by Covid-19. Both in the last week. 

 

 


The essentials for overcoming future catastrophes, and more daily news

Diana Clement wrote a NZ Herald article on the need for being prepared in case of unexpected circumstances. Clement highlights that we need to be mentally prepared for the occurrence of personal or societal catastrophes. Clement continues by noting that getting out of debt and having savings is essential to overcome future crises. The need for budgets is highlighted by using the events surrounding COVID-19. Steve Morris, a financial adviser at SW Morris & Associates notes that we would all benefit from using digital tools such as free digital tools for personal cashflow forecasting such as PocketSmith. Insurance is highlighted as being another essential thing for New Zealanders to have in place to ensure protection. Income protection, mortgage protection, trauma/critical illness, permanent disability, business interruption, medical, and life insurance are all mentioned, with Clement saying each offers different types of cover that are useful in different circumstances. Although insurance is deemed as essential, Clement concludes by saying that no insurance policy is completely fool proof.

“My usual New Year articles are all about the positive stuff and how you can turn your year around. But after 2020, let's talk about preparedness. That includes being mentally prepared for curved balls, having savings, and taking out insurance.

Mental preparedness. Do you have a plan for the next time the world turns to custard? Unpredictable (black swan) events such as the Global Financial Crisis and now pandemic, hit us every 10 years or so. We can have personal black swan events such as divorce, or illness. Financial adviser Steve Morris of SW Morris & Associates has seen an upswing in couples separating after lockdown. This can be financially crippling. He recommends getting help from organisations such as The Parenting Place before the relationship ends up on the rocks.

Savings. Getting out of debt and building up some savings is essential if you want to ride out the next financial crisis. If you're constantly a few weeks from financial meltdown then this applies to you. It's hard, but you need to change your thinking and create a budget. People can and do turn their finances around. Use Covid-19 as the financial catalyst to get you started.

In an ideal world you need three to six months living costs (not income) squirrelled away. Providing you are still able to work and willing, most people will find a job within that period.

The best tool for this is a budget. I know it sounds boring, but it's simple to write your first budget and the outcome can be truly life-changing. I follow a number of investing and get out of debt forums and see ordinary Kiwis celebrating cutting up their last credit card or beginning an emergency fund. Don't write it off. It can happen.

Morris also recommends using the free digital tools for personal cashflow forecasting from PocketSmith.

Insurance. The whole point of insurance is to cover yourself financially when unexpected events hit. That's insurance cover for your health, income, and property.

A variety of insurances can cover your income/outgoings. They include income/mortgage protection, trauma/critical illness, permanent disability, business interruption, medical, and life insurance (which often pays out if you're diagnosed with a terminal illness. Each covers different risks and it's a good idea to seek advice from a financial adviser. Everyone is covered by ACC for accidents, but you're more likely to become disabled by illness, and only qualify for Work & Income benefits if you don't have insurance. When insuring yourself, make sure you think about the non-working or lower-earning partner, says Morris. All too often a higher-earning spouse has to reduce hours to pick up parenting duties if the other spouse becomes ill, is disabled, or dies, says Morris. Trauma cover is very good in this situation because it usually pays a lump sum, he says.

Insurance is essential in our modern world, but no insurance policy is 100 per cent foolproof. Because the things you will claim on are unexpected, they could fall outside the policy wording.” Click here to read more

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