What you need to know about financial advisers
The law around giving financial advice has changedThe Financial Advisers Act (2008) came fully into force on 1 July 2011, making the Financial Markets Authority (FMA) the main regulator of financial advisers in New Zealand. The new law aims to promote the sound and efficient delivery of financial advice, and to encourage public confidence in the professionalism and integrity of financial advisers.
The Financial Advisers Act (FAA) will make financial advisers more accountable for the advice they give. Financial advisers have to meet standards of care, diligence and disclosure. They are also required to be registered and belong to a dispute resolution scheme.
The Financial Advisers Act sets defined operating standards for financial advisers. The Act aims to ensure consumers can have confidence when they deal with a financial adviser that that person is professional and meets appropriate standards of competence.
Under the new regime there are three types of financial advisers:
1. Registered Financial Advisers (RFA’s): A Registered Financial Adviser is an adviser who is qualified to give advice on simpler products; such as mortgages, life insurance, risk insurance, call debt securities, bank term deposits, consumer credit contracts, and many different insurance products. They are required to be registered but not authorised. They also have a lower level of disclosure, financial supervision and monitoring by the Financial Markets Authority (FMA). However RFA's within Iconic Financial Ltd follow the same disclosure regime, practices and principles as an AFA so you can be assured of quality advice. They also have extensive experience in their field of expertise.
2. Authorised Financial Advisers (AFA’s): An Authorised Financial Advisor can give advice on more complex financial products and services; such as Kiwisaver, investment, financial planning services including securities, any estate or interest in land and futures contracts, retirement planning services, and wealth management. AFA’s have higher standards than RFA’s in terms of disclosure and monitoring by the FMA. All AFA’s are required to comply with a Code of Professional Conduct and meet minimum standards for competence, knowledge and skills, client care, ethical behaviour and ongoing professional training. All AFA's have been through a rigorous examination process to gain a qualification that sets them apart from RFA's. Of course, a qualification alone is no guarantee; it must be accompanied by experience. We are qualified and have over 20 years experience with our history dating back to 1987.
3. Advisers working for Qualifying Financial Entities (QFE’s): Financial advisers employed by companies that have been granted status as a Qualifying Financial Entity (QFE) by the Securities Commission will not need to be individually registered or authorised if they only provide advice only on their QFE’s own products. The QFE must ensure that its employees and nominated representatives have the competence necessary to exercise reasonable care, diligence and skill in advising clients. A typical QFE would be a bank or insurance company.