Speaking at TMM’s Annual Roundtable, advisers and lenders said they expect changes to the Financial Advisers’ Act, such as additional qualification requirements, to weed out many advisers. They also expect the adviser channel and business volumes to grow in the next few years, as customers find it more difficult to take out loans.
Jenny Campbell, National Sales Manager at Astute, the new Aussie player in the market, said there would "definitely be a fall, no question”. “That is a good thing though, as it will bring professionalism levels right up. It’s good for the good operators. Those who aren’t up to speed will have a tough decision to make.”
BNZ head of third-party distribution, Adam Ward, expects a shake-out in the market. “A lot of people have come into the market, thinking it’s easy money. As the market tightens, it will get tougher, and you will see advisers drop out,” he said.
Josh Bronkhorst, managing director of Mortgage Link, believes the new financial advisers' regime would directly impact adviser numbers. He said only high-quality advisers would thrive in the new system. “If you don’t have the ability to become a FAP in your own right, you should not be given entrance into a FAP.”
Bruce Patten, head of growth at NZFSG, also predicted a run-off, but said it might take time, due to the interim licensing period.
Those that do stay in the industry stand to benefit from growing adviser volumes. Those present at the roundtable expect volumes to increase over the next year.
Ward said developments including the Royal Commission and LVR restrictions had driven customers to specialist advisers. “It has raised the profile of the adviser industry, and that isn’t a bad thing. It is challenging for banks to keep up [with regulation], let alone customers, so I predict the adviser channel will grow.”
Patten said regulation would continue to make it difficult for borrowers, pushing customers out of bank branches and into the arms of advisers: “The Responsible Lending Code was great for advisers. The banks did a terrible job explaining the Code. They said no, and customers didn't know why. We got a huge inflow of business just from that one piece of regulation.”
For the full roundtable discussion, pick up the next issue of TMM.