Heathcote Investment Partners founder, Clayton Coplestone, argues the NZ advice sector must overcome historical differences to establish a unified and independent professional body…
In 2021, the Financial Markets Authority (FMA) provided a definitive count of the NZ adviser population for the first time under the new licensing regime.
According to the FMA figures at the time, the industry comprised more than 3,000 advice businesses – about 1,800 financial advice providers and the remainder classed as ‘authorised bodies’ – that collectively housed “10,743 financial advisers and 12,287 nominated representatives”.
Yet out of that potential community of 10,743 qualified advisers (or 23,000 practitioners if you include the employed, sales-type roles), how many belong to an industry organisation?
My guess is well under 1,000.
But even if we stretch the figure to 1,000 that implies less than 10 per cent of financial advisers, who now operate under a common legal code and educational standards, have bothered to join an industry body.
And the tiny minority of advisers who do belong to industry associations is spread across increasingly fractious and fragmented groups.
Such disunity diminishes the collective voice of ‘financial advice’ in media, regulatory discussions and broader industry debate.
While these disparate bodies address unique member needs, this splintered approach also hampers uniformity in industry standards, codes of conduct, and regulatory compliance.
I believe the sector requires a singular, overarching and independent industry body to consolidate what could be a powerful voice, amplifying its influence and advocating for a unified agenda that benefits consumers and advisers alike.
Such a peak industry organisation would be charged with promoting sound financial advice while championing accountability, transparency, and ethical conduct.
Any advice body focused on ‘professionalism’ must also remain independent of product providers to preserve its integrity and effectiveness and to foster consumer trust.
However, industry organisations appear to be trending in the opposite direction with product manufacturers gaining greater influence in exchange for offering financial viability and membership growth.
Conflicts of interest are inevitable under these arrangements as secretariats try – and usually fail – to balance the commercial interests of members with their obligation to advocate for unbiased financial advice in clients’ best interests.
The credibility of financial advice hinges on ensuring recommendations are free from undue influence, reaffirming the need for independence – without having to defend ‘Chinese walls’ or claiming that the resulting body serves the interests of the entire industry.
Despite the long-held divisions between various business lines, the relatively new licensing regime has created common ground for all advisers no matter where their practitioner alliances lie.
The industry needs, deserves, a single independent body to harmonise historically discordant elements by setting universal standards of practice in areas including client engagement, risk assessment, investment strategies, financial planning and ongoing advice.
All financial advisers – whether currently affiliated with an industry body or not – stand to benefit from a unified, conflict-free representative organisation capable of advancing ethical and practical standards, upholding accountability, lifting the public standing of advice and acting as the flag-bearer for professionalism: a combined membership of 10,743 (give or take) would be a force to reckon with.