When the Financial Advisers Act was introduced several pundits said it would prompt large numbers of advisers to either change industry or retire, given that many were in their late 50s and early 60s.

Anderson said that had often been the case internationally when new regulations were introduced, but the experience in New Zealand so far has been different.

“We thought there would be a big exit of advisers from the industry because it would all get too hard for many of them… I think that hasn’t happened,” he said.

“That’s probably because the Registered Financial Adviser set of regulations is not that draconian – it’s really not a significant, insurmountable step to get registered as an RFA.”

However, he said there had been an increase in RFAs “valuing their business and seeing what they can do with it.”

Becoming an Authorised Financial Adviser is “a bit more challenging” and also involves a significant financial cost for many advisers, Anderson said.

“There are some people for whom it’s cost between $80,000 and $100,000 in terms of lost income to go through the training process to become an AFA.  That’s just through days off and lost business.  But I think if it gives the public confidence then that’s a good thing.”

Qualifying Financial Entities (QFEs) also play a key role in the new regulatory environment and Anderson said Sovereign was the only product manufacturer that had established a QFE for nominated representatives.

“We set out to establish a QFE for nominated representatives as well [as employees] principally because there was a lot of uncertainty prior to the Act that advisers didn’t quite know how this would pan out for them,” he said.

“They didn’t know how rigorous the enforcement might be and what the liabilities might look like if they transgressed.  There was a whole lot of uncertainty and we’ve taken a lot of that away from them.”