The proposed adviser über-body, Financial Advice New Zealand (FANZ), would start with a “blank sheet of paper”, according to Michael Dowling, chair of the Institute of Financial Advisers (IFA).
Dowling said the mooted new adviser organisation – to be created from the ashes of the IFA and Professional Advisers’ Association (PAA) – would develop a structure based on feedback from members after FANZ had formed.
While the two groups hired consulting business, Eleven, to research advisory industries both in NZ and offshore prior to the FANZ proposal, he said there was no intention to put a preferred organisational model to members prior to the vote.
“We’ve been careful to start with a blank sheet of paper,” Dowling said. “It would be wrong to [impose a FANZ structure] without getting a mandate from members.”
The two adviser bodies – comprising about 700 typically investment-oriented IFA members and the 1,200 or so mainly mortgage and insurance advisers who make up the PAA – would begin a series of national information sessions for members from June 20.
Both the PAA and IFA would convene respective special general meetings in July to vote on the FANZ proposal.
Dowling said the vote would focus on the creation of a new organisation rather than a formal merger or dissolutions of the IFA and PAA
According to the IFA FAQs, in the ultimate structure of FANZ would be determined in the 12 months following any formal approval.
“During this time, the existing membership of IFA and PAA will be transferred to form the founding membership of FINANCIAL ADVICE NEW ZEALAND,” the IFA says. “These members, and others who join the first twelve months, will be invited to provide the feedback that forms the body’s mandate and constitution.”
If approved, FANZ would be something of a back-to-the-future move for the NZ adviser associations, which have previously attempted to meld the various sub-groups – typically aligned with either insurance or investment specialties – into a unified advisory body.
The most recent NZ pan-adviser body, the Financial Planning and Insurance Advisers Association (FPIA), fell apart in 2006 after a seven-year effort, resurfacing as the slimmed-down IFA. Meanwhile, the PAA mopped up the larger group of insurance advisers before also tying in the NZ Mortgage Brokers Association in 2012.
Dowling said the FANZ proposal represents the next phase of evolution in the advisory industry.
“[Adviser bodies] have to ask where to best place ourselves for the benefit of financial advisers in the future,” he said. “FANZ is bigger than just the IFA or PAA – we want to appeal all advisers, including those not yet members of an industry body.”
He while membership of a professional body is not prescribed under the Financial Advisers Act (nor likely to be in the to-be-rebooted version), FANZ would offer value to members as a “principles-based and aspirational” organisation.
“The law is just about the minimum standards,” Dowling said. “We want the advisory industry to be aiming for good outcomes [for the public] rather than just preventing bad outcomes.”
In the year to June 2015, the IFA reported a net profit of about $24,000 on total revenue of over $781,000, which included $520,000 in member subs and over $80,000 of surplus conference income. Meanwhile, the latest published PAA accounts (for the year ending March 31, 2014) show the group lost just over $10,000 during the period on income over $1 million, including member fees of almost $600,000 and conference revenue of about $370,000.