Ballantyne says while her firm is not seeing large numbers of advisers quitting their jobs, probably because they are younger than the industry average, there could be a raft of unintended consequences when the regime comes into full force next March.
She points out that when Australia set out to change the industry’s commission structure and regulate advisers in the wake of the Trowbridge report in 2015, nobody expected the ensuing mass exodus from the sector, with consumers being left without access to advice.
“That is the risk that will play out in New Zealand as well if we’re not careful,” Ballantyne says. So far that hasn’t happened which, she says, is testament to New Zealand having learned from the Australian experience. “But we haven’t reached full licensing yet.”
Like many other insurers Partners Life has sunk big money and a lot of effort into getting its advisers through the provisional licensing process to the point where they could now think about their options.
“I think we are starting to see people going ‘actually, thanks for getting me through that but it was the easy part and the rest of this is too big, too hard’. That’s especially [so] if they were already nearing retirement age and are thinking now is the time to go,” Ballantyne says.
The likelihood of advisers consolidating into bigger businesses creates a different sort of risk.
“It concentrates risk and decisions are made at the corporate level rather than advisers making decisions for themselves,” she says.
“It’s not necessarily a bad thing but from a product provider’s point of view, it puts leverage in the hands of a few instead of the many.” For a business such as Partners Life, this could mean a loss of distribution.
