De facto partners, the Financial Services Council (FSC) and Workplace Savings NZ (WSNZ), have edged closer to a more formal union with a joint conference slated for September 7-8 in Auckland.
The ‘Navigating change’ annual conference marks a major commitment to the relationship between the two industry bodies, which have been contemplating a full merger for almost a year while sharing both a secretariat and CEOs over that time.
Richard Klipin, appointed as dual FSC/WSNZ chief last November replacing interim head Owen Gill, said the conference would reflect the increasingly common concerns of both organisations.
In a statement, Klipin said: “The industry is going through rapid change and consumers demand more from our sector every year. This conference will challenge delegates around the big issues facing our sector including regulatory change, the rise of consumerism and the need to create a sustainable industry.”
He said the inaugural conference – the first time the FSC has been involved in such an event – has a number of sponsors lined up with a program sketched out but some speaker details yet to be confirmed.
To date, the ‘Navigating change’ conference has confirmed Lisa King, Eat My Lunch founder, as keynote speaker with the two-day affair to feature seven main stage presentations, 12 workshops and the obligatory gala dinner and awards night.
While it’s unclear whether the two organisations would set a date for a formal merger at the September shindig, both industry bodies have kept the hope alive in their most recently-published annual reports.
In the 2016 FSC annual report, chair Rob Flanagan, says the two groups had completed “a study of what would be gained from merging them”.
“The forces driving a merger include the increasing emphasis on regulation in financial services in New Zealand, the rising expectations of consumers and the depth and range of products and services that digital technology is bringing,” Flanagan says in the FSC report. “Together, these factors require better-organised advocacy on the part of financial services firms.”
Meanwhile, David Biegel, WSNZ chair, says in the organisation’s 2016 annual report, published last week, that the ongoing merger talks were “being driven by increasing regulation, rising consumer expectations, and the obvious efficiencies a combined approach would bring to the industry”.
“As we look to bring the organisations together it is essential that we continue to represent the interests of our dual constituency of traditional workplace restricted schemes and KiwiSaver,” Biegel says.
Over the 2016 financial year ending December 2016, WSNZ reported a loss of more than $93,000 after a profit of just under $30,000 in the previous annual period.
“The deficit is a result of income for 2016 conference and events not directly covering related expenses given higher than anticipated fixed costs and lower than anticipated attendance,” the WSNZ annual report says.
Despite the loss, WSNZ still holds net reserve assets of about $219,000, the report shows, which, coincidentally was almost exactly the surplus recorded by FSC over the 12 months ending June 30 last year.
“Our cash-on hand at 30 June was $268,445 and our net assets were $252,598,” the annual report says. “While the FSC’s immediate cash position appears to be very strong, that is more apparent than real.”
The FSC report notes while property expenses at its “interim” Auckland office had dipped “that is unlikely to be the case in the long-term”.
“Most importantly, we anticipate lower membership revenue in 2017,” the annual report says. “On a conservative forecast, we anticipate members’ revenue at a little over $800,000, a reduction of 28.2% on 2016. This reflects the across-the-board fee cut we implemented for 2017.”
The industry body suffered an outflow of members – now partially reversed – as some life insurance members rebelled following the FSC-funded publication of a Melville Jessup Weaver report criticising commission structures.
“A merger with WSNZ remains a prospect,” Flanagan says in the FSC annual report. “However, if the board were to decide not to proceed with a merger, the FSC is still in a strong position that would allow it to continue, representing its members to regulators, the Government and consumers, in a professional and constructive way.”
As at March this year, the FSC reported 15 full members (mainly life insurers and big brand financial institutions) and 14 ‘service provider’ associate members.
WSNZ, which has a mixed membership base of corporates, savings schemes and individuals, recorded 103 members at the end of 2016, eight fewer than the previous December.