Time running out for financial advisers

Photo / NZ Herald

Fewer than 150 financial advisers have qualified to meet new criteria for giving personalised investment advice to the public just weeks before the new regime comes into place.

Michael Frampton, manager strategy and corporate relations at assessment organisation ETITO, is worried that the low numbers of people sitting the exam will result in a backlog in the new year, with some advisers not being able to continue in business because they could not get in to sit the mandatory qualification.

From December 1 those who have qualified can start calling themselves authorised financial advisers (AFAs) and by July 1 all who want to continue giving personalised investment advice have to be qualified.

"Time is running short to prepare for this regime. There have already been extensions and advisers need to treat July 1 as a very serious deadline."

So far 3913 advisers have registered with the organisation, which is the only one mandated to assess the new standards, and of those 1537 have made a booking for the set B standard.

All those who want to call themselves AFAs must pass the set B standard.

But only 175 have sat the multi-choice exam so far with 84 per cent or 147 passing.

Frampton said he expected the pass rate to drop as statistically the numbers of people sitting the exam were still considered small.

"Those who have already engaged in it are also likely to be well informed, well connected and have a good understanding of their new obligations."

Frampton said he believed that a large number of financial advisers were still preparing for the new qualifications.

"What concerns us is that there will be a number of financial advisers that have not yet registered, and not yet made a reservation for assessment that will result in extreme pressure on the system."

He said the Securities Commission had already warned advisers who waited to register until after March 31 that they were putting their chance to qualify in time at risk.