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New Zealand

Advisors, FAP figures will be consolidated as regime ramps up

Michael Hewes: FMA Deposit Taking, Insurance and Advice Director

New regulatory data reveals that NZ’s financial advice sector is entering the full licensing phase after a grueling two-year transition period in a more condensed and slightly leaner state.

Figures released last week by the Financial Market Authority (FMA) show that while the structure of the market has changed significantly, the total number of advisors has dropped by about 2,200 since the transition regime began two years ago.

According to the latest FMA data, the era of full licensing began with 20,795 regulated people, including 8,838 advisors and 11,957 nominated representatives. comparative statistics There were 23,000 individuals, 10,750 advisors and 12,246 nominated representatives when the transition to the Financial Services Act Amendment Act began in April 2021.

However, the move to full licensing rules, combined with a nearly 10% decline in individuals, has pushed the number of Financial Advice Providers (FAPs), the primary unit of regulated currency, to the last 1,360 from about 1,820 two years ago. decreased to It suggests a reasonable amount of business consolidation and advisor withdrawals or readjustments of status.

The latest FMA figures show that only 451 single advisors, or FAPs in Class 1, are fully licensed and an additional 855 entities have been approved as Class 2 providers (with one or more advisors). (but no designated representative). As of last week, the regulator has licensed 54 Class 3 FAPs, which can include an unlimited number of advisors or designated representatives.

Additionally, full license launch data counts 1,140 “licensed agencies” or other entities that fall under FAP responsibilities, compared to 1,200 as of April 2021.

The general industry pullback undoubtedly reflects the withdrawal of some advisors, while some ancillary industry firms eligible for transition had their FAPs expired before the full licensing regime. .

For example, Australian research firm Morningstar will no longer serve NZ retail clients following an upgrade to its advice license.

“Morningstar Australasia will continue to provide research to NZ wholesale clients, but due to changes in NZ financial advice legislation, Morningstar.com.au and Morningstar Investor retail products will no longer be available on NZ The terms of use for these websites will be updated and individual NZ-based clients will also be notified of the changes,” said a company spokesperson.
“If we have information that indicates they are NZ residents they will not be able to access their Morningstar.com.au and Morningstar Investor subscriptions. Your subscription will be refunded unless you confirm you are a client. This will be done on March 16th.”

Michael Hewes, the FMA’s newly promoted director of deposit taking, insurance and advice, said the final adviser tally could go up once the final administrative duties are completed.

“The total number of advisors covered by these full licenses will be known in June, when details will be linked to each licensee’s registration in the Financial Services Provider Registry,” Hewes said in a statement. It is.”

“Our focus on advice is the oversight of licensed advice providers and It will be directed to the director.”

https://investmentnews.co.nz/investment-news/adviser-fap-numbers-consolidate-as-regime-goes-full-steam/?utm_source=rss&utm_medium=rss&utm_campaign=adviser-fap-numbers-consolidate-as-regime-goes-full-steam Advisors, FAP figures will be consolidated as regime ramps up

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