Financial advisers asked to sharpen act 

The professional body representing independent financial advisers says recommendations intended to lift the industry's game will push some of its more experienced members out of business.

However, it still gave an initial thumbs- up to last week's proposals, and the financial services sector's bigger players welcome them.

On Thursday, the Ministry of Economic Development's financial intermediaries taskforce released a series of recommendations focused on financial advisers and marketers who provide financial advice, or who market and promote financial services.

The proposals include "higher standards" for financial advisers.

Those who did not meet the requirements would not be allowed to offer personal tailored financial advice and would have to carry a "health warning" about their limits.

The taskforce said the changes would enable consumers to more easily tell the difference between the financial advice and product marketing roles "which currently are closely intertwined and difficult for consumers to distinguish".

At the moment, the intermediaries were not obliged to make it explicit.

If adopted, the proposals would require "a substantial number" of existing financial intermediaries offering tailored financial advice to meet "appropriate competency standards, higher ethical standards and closer industry examination".

In some cases that might mean training. If advisers are not able or prepared to meet those obligations they will have to limit their role to product marketing or leave the industry.

Those opting for a marketing role would be required to be more upfront with customers about their role and its limitations.

George Elkington, president of the 1300-member Financial Planners and Insurance Advisers Association, said he was initially delighted with the recommendations, "but when I look at the report, the devil is in the detail".

Elkington agreed with most of the recommendations especially those that improved disclosure requirements but was concerned some experienced FPIA members might be forced out of the industry.

"We support better and higher qualified advice but by the same token there are operators who have been around a long time who have done a very good job in their market.

"I'd hate to see them moved out of the profession because they are perhaps a bit too long in the tooth to pursue some of the university requirements that are easier for younger players."

Tower Asset Management chief executive Tony Hildyard said his company, while "pretty supportive of the whole thing", had some issues with the distinction between product marketers and financial advisers.

"But in general well-educated, informed people and clear processes for doing things and clear disclosure is a positive for the market."

AMP NZ's general manager for distribution, David Chote, said his company had been working hard over the past 18 months to ensure its financial intermediaries could meet any likely changes.