QFE will help write business: Sovereign
Sovereign chief executive Charles Anderson says advisers can apply to join the QFE if they are prepared to use Sovereign's programmes and processes.
They will also have to agree to regular compliance audits and professional development reviews, maintain professional indemnity cover and suitable marketing controls
He says advisers who "are uncertain about how the regulations will effect them personally" can apply to join the QFE for protection.
However he stresses that advisers have to apply to join the QFE.
He expects some advisers who apply won't meet the standards set.
"If you're a maverick adviser then Sovereign isn't the appropriate home," he says.
Anderson is pitching the Sovereign QFE as being one of the best in the market and will provide advisers with tools and services to help them grow their businesses.
However as it is early days with QFEs it is "difficult to do competitive analysis".
He says these advisers will have to operate under the rules set by the QFE which includes how they write business, run their business and they would have to use the QFE's online planning tools.
The QFE has an arrangement with the ISO as its disputes resolution scheme. Sovereign would help any member if they end up in a dispute. This help would include reviewing files, making submissions and helping to find a resolution.
The QFE, since it takes responsibility for its members, would make any settlement. However there was an onus on the adviser to follow the QFE's rules and procedures.
While Anderson expects around 85% of Sovereign's business to come through QFE members that is the same quota as what Sovnet advisers adhere to at the moment.
The QFE has a recommended list of other products its members can use, however there are some limitations.
He says the list can't be too big as Sovereign is taking responsibility for the products QFE members use.
"We have to control the quality and process," he says. "If (the product list) was any wider our liability would balloon out."
It also puts the onus on Sovereign to have good products.
Anderson says there are around 650 advisers in Sovnet at the moment. He says around 230 have applied to join the QFE. Some can't join because they have decided to go down the AFA route while others will just remain in Sovnet.
Most of the advisers who have applied are ones who are considered some of the bigger risk writers for Sovereign.
He expects there to be around 300 members by July 1 when the regulatory regime starts.
The QFE will mainly appeal to advisers who write risk business. Sovereign hasn't decided yet whether it will include KiwiSaver as a recommended product in the QFE.
Anderson expects that the QFE will help Sovereign write more business, but not immediately.
He says because advisers will end up doing better needs analysis with clients than they do at the moment there will be the opportunity to cross-sell products.
