The revised code covers CPD, complex advice scenarios, and more
The revised Financial Advice Code comes into effect on 1 November. For mortgage advisers, one of the most substantial shifts is the move from “maintaining” knowledge and competence to “continually developing” it under Code Standard 9.
The revised code also introduces changes on how advisers should deal with complex client situations. It explicitly states that advisers dealing with more complex scenarios must demonstrate technical expertise above the minimum standards. They also need to self-assess whether their expertise matches the scope of the advice that they’re providing.
Financial Advice New Zealand (FANZ) chief executive Nick Hakes (pictured) said these changes are pragmatic and sensible, and reflect how advice is given in day to day practice.
The code also acknowledges the increasingly important role of professional bodies in delivering CPD learning. Hakes says the difference between maintenance and ongoing development can be best seen in the increasing convergence of different advice types – an area where CPD activities become invaluable.
“You can reflect on what advice you’re delivering today, and also how you’re going to evolve that over a period of time,” Hakes told NZ Adviser.
“An example is our ageing client base. There is an intergenerational shift of wealth, and so depending on the advice business, the adviser might need to learn and hone their craft in different areas of advice.
“Another example is that we’re seeing a lot of convergence in the scope of advice that we’re applying,” he said. “There is a convergence around mortgages, lending, KiwiSaver, budgeting and cash flow, so the need to continually develop expertise is a reflection of where we are today.”
The revised code explicitly recognises the role of professional bodies like FANZ in delivering meaningful CPD. Hakes said this creates a three-way partnership between advisers, their FAP, and professional bodies – and this is something advisers can rely on if they do encounter complex scenarios in their day-to-day work.
“If we can work in tandem to ensure that professional development plans are reflective of what’s needed now and into the future – that’s where the balance lies,” Hakes said.
Principles remain the focus over prescriptions
The financial advice regime has been principles-based since its inception, and the revised code doesn’t change this. The industry has professionalised rapidly over the last five years, and Hakes said the revised code “recognises the growing maturity of financial advice in Aotearoa” and “sets a clear trajectory for its future.”
There isn’t any sign of moving to a more prescriptive approach, and Hakes says that’s a good thing.
“We still want to exercise our professional expertise and judgement,” he said.
“We can see from other markets what the unintended consequences are when things are over-prescribed. What the Code Committee has done is hit the ball back to the financial advice profession.
“It says: here is a principles-based regime, here is how the code standards interrelate and work in tandem. It is now up to the profession to work within that, and to create professional development plans that are constantly refining our skills and applying them to the scenarios that are most relevant to that adviser and their clients.”
