FMA offer insights into new regime progress, and more daily news

During a Financial Advice NZ webinar FMA director of market engagement John Botica concluded that the industry responded well to the regime change. Botica highlighted that over 3,000 financial advice providers, 10,000 advisers, and 12,000 nominated representatives are now on board. It was highlighted that there is now a steady flow of full licences applications. Botica made a note to discuss the lack of linking between advisers and FAPs on the FSPR. HE warned that it is important to link as there is the possibility of being deregistered from the FSPR from July. The assumption that the obligations of FSLAA don’t apply to the two-year transitional licence period was debunked,  it was made clear that all obligations of the new regime have been effective since March 15, 2021. Adviser website not reflecting the new disclosure rules was another issue discussed during the webinar. We offer a website review service for advisers looking to ensure they are compliant and have websites that are user-friendly. 

“Just over a month on from the start of the new regime, the FMA has shared a report card on how the financial services industry has adapted to the changes brought about by FSLAA.

Speaking at the Financial Advice New Zealand “Bring in the Experts” webinar, FMA director of market engagement, John Botica, said “The numbers tell us that [the industry] responded well.

“To see over 3,000 financial advice providers, together with 10,000 advisers and 12,000 nominated representatives tells us that the industry stepped up to the mark.”

According to Botica other factors on the positive side of the report card are that traffic of advisers applying for their full licence is starting to pick up.

“We are starting to get a good flow of full licence applications, and we are starting to see those licence approvals [coming] through which is great to see.”

But the report card was far from straight A’s.

On the negative side, Botica noted that many could be better at linking the advisers to the FAP on the FSPR.

“It is really important not to forget to do this. You really don’t want to get to the end of June and be facing the very real possibility of being deregistered from the FSPR.”

Another concern of the FMA is the misconception that the two year transitional licence period is a timeframe where the obligations of FSLAA do not apply.

Botica says, “This is just wrong. All obligations under the new regime took place on March 15. The transition period is in respect to moving to a full licence and to your approach to competency.”

The other low grade on the report card is related to adviser websites not being updated to reflect the new disclosure rules.

“Where we see genuine mistakes we will be sympathetic.” Click here to read more

In other news

FSC: Financial Services and the Climate Crisis with Hon James Shaw breakfast on May 14

FSC: FSC Connect Webinar on Cyber Security with Deloitte

Suncorp: Major insurer welcomes mandatory climate reporting


Cigna implements new commission, and more daily news

Cigna has implemented several new changes to their commission model. Advisers will now receive 100% of Cigna’s documented commission rates, regardless of their persistency rates or group affiliation. With this change, advisers will now have the power to decide how commissions are split. Commission payments will now begin from month two. Cigna has said this change was introduced in acknowledgement of the extra time and effort advisers are putting into their businesses. Another change is giving adviser the option of choosing the payment period with the as earned option. Advisers can now choose between upfront payment and spreading the payment over the first two years. Advisers that choose to spread payment over two years will ensure that there is no clawback if a policy lapses during that time. Cigna has added more selection to their discounting options. These options have been linked to spread commissions.

Renewal Commissions will now be paid from month two

We recognise that the servicing of your customers doesn’t start from month 13, it starts from the moment their policy is issued.

With the new regulatory environment you’re now operating in, we acknowledge the extra time and work you’ll be dedicating to your business. So we want to support you further as you work harder to protect your customers.

From now on you’ll be paid all the commission

All Advisers, regardless of persistency level and/or Group affiliation, will now receive 100% of our documented commission rates. We can help facilitate any splitting of commissions you need to do, but you are in total control of where it goes.

We’re introducing an ‘as earned’ payment option

Choice matters. So we’re giving you option to receive your commission payments over the first two years, instead of upfront. With this option there’s no clawback if a policy was to lapse in the first two years.

More flexibility with our discounting options

To provide you more flexibility and options to suit your customer’s needs, we’re adding more selections to our discounting options and we’ve linked these to our spread commissions.

Updating our commission to include best in market features reflects our ongoing commitment to you and helps ensure New Zealanders have continued access to the quality advice you provide.”

Cigna commission table April 16 2021 3
Cigna commission table April 16 2021 3
Cigna commission table April 16 2021 3

In other news

FSC: Register for Breakfast with Hon James Shaw

FMA: FMA targets fees charged by fund managers

ACC: ACC estimates 90 per cent of injury claims are preventable

From Good returns: From army life to life insurance - a big gun leaves the industry

Cigna: Insurance for living campaign 


Dr David Clark voices his concern

Minister Dr David Clark is concerned about poor financial decisions made by some New Zealanders during the Covid-19 crisis and feels that advisers have a critical role to play in supporting customers in making good choices. At Dunedin Town Hall, FSC Getting in Shape event. The minister also reiterated the value of a consumer data right and new conduct law. 
 
Thumbnail_IMG_8937

Interrupted: FSC Get in Shape Conference rescheduled plus more daily news

The FSC has announced that the Christchurch and Dunedin Get in Shape summits will go ahead on 14 and 15 April 2020. The second half of the summit was interrupted due to changes in COVID-19 alert levels. Similar to the Auckland and Wellington summits, the upcoming summits will include a masterclass session. Click here to register

“The two Get in Shape Advice Summits that were postponed in February due to Covid-19 alert levels have been reorganised on 14 April 2021 in Christchurch and 15 April 2021 in Dunedin.

The sessions, including the 2021 Masterclass are all designed to help and support the community to grow and adapt, following the start of the new FSLAA regime this week.

If you missed out on our Auckland and Wellington events, tickets are still available for both the Christchurch and Dunedin events. Find out more information and register.

Those already registered for the postponed events will have received an email and text with a link to the updated tickets automatically transferred to the new dates.”

In other news

Fidelity Life: new adviser portal set to go live in July

Picture2

Insurance People: Katrina Church asks: Should the government be encouraging the public to seek advice?

Sorted: Tom Hartmann writes: This is what good advice looks like


FSC Regenarations Conference announced, and more daily news

The FSC has announced that this year’s conference, Regenarations, will be held at the Cordis Hotel Auckland on 22 and 23 September 2021. This year’s theme will build on previous themes around Wellbeing, Sustainability and Guardianship. The conference will focus on highlighting the importance of recovery and going forward together. Click here to get Super EarlyBird tickets

“We are pleased to announce the launch of the Financial Services Council Conference for 2021.

 

On the 22 and 23 September 2021, at the Cordis Hotel Auckland, we will be holding our flagship event with leading edge content and speakers, that will spark debate around key issues affecting the financial services industry.

 

The theme for this year's conference is 'ReGenerations' which builds on previous themes of Wellbeing, Sustainability and Guardianship. With this, we want to highlight the importance of recovery and going forward together in both good and trying times.”

 

In other news

 

RBNZ: Industry feedback refines Insurance Solvency Standards

CFFC: Money skills for women offered in new workplace course

ASB: Insurance Manager roles being advertised

Financial Advice webinar: Bring in the Experts: How to engage a Financial Adviser to a FAP on the new Financial Service Providers Register


Pinnacle Life on insuring rainbow families, and more daily news

Pinnacle Life has published a piece on their website on the importance of insuring rainbow families. Pinnacle Life noted that families today no longer resemble the typical nuclear family unit. The piece focuses on rainbow families, which are families with parents who are part of the LGBTQI community. Pinnacle Life highlighted that the 2013 census recorded that there were 1,479 children of same-sex families in New Zealand. Pinnacle Life also noted that insurers base premium rates on assigned gender. While Pinnacle Life asks about a person’s gender, they have stated that they offer flexibility around policy ownership. Nonbinary individuals are still able to take out life insurance for themselves and their families, without worrying about gender-based pricing.

“The stereotypical family of 2021 is remarkably different from the family of 50 years ago. Mum, dad and two kids are becoming less the norm and more the unlikely. Today we are more likely to have blended families, split families, 1-child families, many kid families, single-parent families, multi-race families, rainbow families and more. With the pride festival winding down this week, we wanted to take a moment to acknowledge rainbow families particularly. 

 

A rainbow family is a same-sex or LGBTQI-parented family. Statistics are hard to come by, but in 2013 the census recorded 1479 children of same-sex families in New Zealand. It's safe to imagine that if we broadened the definition, considered the number of people who didn't complete the census and increased public acceptance during this period, that this figure has probably doubled and is growing. Teachers and schools will be factoring this into activities involving families, clubs and community centres too. It's not difficult; it just takes a bit of thoughtfulness to remember that not all kids have a 'mum and dad'. Some have two mums, two dads, or a combination that extends beyond one of each or something in between.

 

If you're part of a rainbow family, you might be frustrated that life insurance companies seem to be behind the times. While there is total flexibility around who owns your policy, we still ask questions about gender, with the only options to be male and female. Some life insurance companies underwrite transgender applicants based on assigned gender, while others use their stated gender.

 

Life insurance rates are calculated based on assigned gender and this is understandably a sensitive subject for a lot of people. This is unfortunately the norm in the industry because of the statistics around mortality. We can ensure that, once you purchase your policy online, your true gender is recorded in your policy document.

 

The important thing is you can still get life insurance if you are nonbinary, and it doesn't mean that you'll pay higher premiums because of your gender.

 

Your rainbow family may not have a nonbinary member. Rainbow families come in all shapes and sizes. But one thing they all have in common is that a lot of thought went into creating the family in the first place. Finding the 'missing ingredient' takes consideration and planning that most heterosexual couples haven't had to give a second thought. And that's just the starting point.” Click here to read more

 

In other news

 

nib: EMA HR Summit to be held 25 March 2021

FSC: Adviser research reveals optimistic outlook for the sector

Southern Cross: Southern Cross’s membership at 13-year high


What should advice cost?

What should advice cost? That was an excellent question from the audience during the first two of our recent getting in shape series. Perhaps this seemingly simple question surprised our panel. The answer to the question is not easy. It was a kind of sub-plot in the day's event: the question of the cost of advice is part of the disclosure story, part of the story about the future of advice, part of the story about the value of advisers solidly backed up by the research shared on the day. When asked what advice should cost the panel made a good beginning - in both Wellington and Auckland the first answer was "it should not be free". This echoed John Botica's  earlier comment during the first panel in Wellington where, talking about disclosure, he asked that any advisers taking commission should not refer to their advice as free. Of course advice isn't free. Often something that is not paid for is not valued. Advice is paid for (whether by fee or commission) and it is valuable. 

The question came up in the context of a discussion about how to make advice more accessible. For people to value advice they must first know it is available, believe it is worth getting - but these are just pre-conditions. Often we know something would be good for us, but don't do it.

Many people struggle with making the time to meet with an adviser - not just because of the time for the meeting, but they fear the time the work around the meeting will take. A good portion of the population are certain that their finances are a mess, and if not, then the musty file of papers definitely is a mess. So they fear judgment. Many people struggle with making room for the cost of advice. If they believe that it will require payment at the time and their budget is already stretched they will be reluctant to make an appointment. Commission has a valuable financing role to play here - but it is not the only mechanism, of course, that can make access to advice easier. 

So although advice should not be free, we need to make it easy to start the process. Which means the initial steps should be free - and easy to do.

Most advisers offer initial discussions at no charge. More can be done to make brief trials of the value of advice accessible. Social media helps, Zoom and MS Teams helps, but nothing quite beats a meeting - and the ability to slip into a 20 minute session on KiwiSaver at lunch or hear ten top tips on managing your home loan at the local mall are probably under-utilised strategies. Now add some tools in the client's first language (which will not be English in about a third of cases in Auckland) and spoken by someone who at least knows your culture a bit... these are access strategies. They reduce the psychological costs (fear of rejection, fear of shame, fear of being exposed as not having 'enough money to qualify for advice'). 


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

 


FSC Get in Shape summit kicks off, and more daily news

The FSC Get in Shape summit kicked off on Tuesday in Wellington. The two-part conference begun with the advice summit that was made up of different panels with industry experts. The advice summit included an address by Minister David Clark. The second part of the conference was the Masterclass that was focused on licensing, disclosure and advice. The next conference will be in Auckland, followed by conferences in Christchurch and Dunedin next week.

Thumbnail_IMG_8683

Trisha Edmonds, Head of Advisory Distribution Funds at ANZ is pictured leading a panel that includes chair of the Financial Advice Code Working Group Angus Dale-Jones, FMA Director of Market Engagement John Botica, FMA Principal Consultant - Market Engagement Derek Grantham, and MBIE Manager Financial Markets Sharon Corbett

In other news

Financial Advice: Financial Advice reports that there have been 1,467 transitional licences issued as of this week with 774 authorised bodies attached to licences. This covers 9,600 advisers. 

PAA: PAA Legacy Trust calling for 'innovation' from advisers

FSC: Out of retirement villages and into the FSC