John Hawkins, chairman of the New Zealand Shareholders Association, said one of the biggest problems was the system of RFAs, AFAs and QFE advisers.

He said the vast majority of consumers would not know that the different adviser designations meant, nor what they could advise on, or the limitations of their advice. “Some are no more than glorified sales and that is an area that needs to be cleared up,” he said.

Another problem was that it was very time consuming to sign up for advice. “People with modest amounts of money find it hard to get an adviser to give them specific advice catering to their situation because they do not have enough money to make it worthwhile for the adviser to spend the time. We have a situation where the administrative complexities of the regime are reducing choice.”

Many advisers had responded to the regulation by  shutting up shop, or choosing to amalgamate with a larger group. 

That had meant smaller centres, which could not sustain big advice operations, had become more poorly served for advice. “The larger centres are better catered for and the smaller centres are missing out," Hawkins said.

Massey University senior lecturer in economics and finance Jeff Stangl agreed changes should be made. He said more education was needed – for consumers so they could understand why they should seek advice and understand the advice they were given – and for advisers.

He called for a higher entry standard for AFAs and an increase in ongoing CPD requirements.

“The intention of having the bar set really low was to bring in more people into the fold as AFAs and gradually and progressively raise the bar. Education is critical.”

Both said more clarity was needed on commissions and conflicts of interest.

Hawkins said it would take a while for the advice industry to develop so that consumers would have confidence. “People had a pretty bad experience, that’s not going to disappear in one, two or five years. It’s almost a generational thing.”

Massey University is this evening hosting a discussion about the potential changes to the Financial Advisers Act. Speakers will include retirement commissioner Diane Maxwell and Hawkins, as well as financial sector representatives, including key professional bodies. Commerce and Consumer Affairs Minister Paul Goldsmith will also attend. It starts at 5.30pm.