In a world-first arrangement, the CFA Society of NZ is opening up an ‘associate member’ category designed to boost the ethical status of the country’s financial advisers.
Jeff Stangl, CFA Society NZ president, said the new associate membership offer – to be formally launched this Tuesday in Auckland – would provide a globally-recognised stamp of trust for advisers who took up the designation.
The CFA NZ statement says: “[Associate Membership] enables finance professionals who are non-CFA Charterholders to come under CFA Institute’s code of ethics, and distinguish themselves in a competitive market.”
Stangl said the ongoing Australian Royal Commission (RC) into financial services highlighted the low levels of public trust in the industry.
“We’ve been working on the associate membership plan well before the Royal Commission,” he said. “But [the RC] does show we need to rebuild trust in financial services.”
Maria Wilton, former managing director and chair of Franklin Templeton Investments Australia, will present on “reputation, trust and ethics” in light of the RC at the CFA NZ associate membership launch on Tuesday evening.
Stangl said the associate membership status involves sitting a two-hour online exam that encompasses six of the seven standards covered under the full CFA Charterholder ‘code of ethics’ – and a $250 annual fee.
“It’s an internationally-recognised code of conduct [for those in finance] that has been contextualised for the NZ environment,” he said.
According to Stangl, the CFA NZ body would initially target authorised financial advisers (AFAs) as potential associate members.
“We’re not limiting [the associate membership] to AFAs but we think they will be interested,” he said. “… The initial response from both individuals and institutions has been very favourable.”
As well as falling under the umbrella of the “widely-recognised CFA brand”, associate members would also have access to regular education and networking events, Stangl said.
However, he said the associate membership status would come with stringent standards including a requirement to re-sit the ethical exam every two years and ongoing monitoring by the CFA.
The CFA Institute, which co-ordinates the global Societies, has dedicated compliance staff to manage and monitor members, Stangl said.
Under the Financial Services Legislation Amendment Bill (FSLAB) currently before Parliament, all financial advisers in NZ would be subject to a new code of conduct. The new code of conduct – due to be published in draft form this August – would capture all financial advisers rather than the roughly 1,800 AFAs (an acronym due for the chop) in the existing regime.
Due to formally launch this July, a new pan-industry association – Financial Advice NZ – is also seeking to capture the high ground of adviser credibility.
But Stangl said the new designation – the first among the 130 or so CFA Society’s globally to require associate members to formally sit the ethical exam – would enhance any other adviser qualifications or legal standards.
“We’re committed to raising the benchmark of behaviour across the industry. If other organisations capture that space – we’re ok with that too,” he said.
As a non-profit organisation, Stangl said the CFA Society can offer a cost-effective solution for advisers.
“As long as there is a need, we will be there,” he said.