Everyone's an adviser, but not necessarily a financial planner
Calls from the Capital Market Development Taskforce to impose a fiduciary duty upon financial advisers have been met by receptive industry ears.
The taskforce's latest progress report suggests that clients' best interests should be at the heart of financial advice, with legal obligations and incentives put in place to ensure they are. It says ultimately this requires that a "clear fiduciary duty" be placed upon them.
Institute of Financial Advisers (IFA) president Lyn McMorran says it is already looking to give the concept greater prominence as part of an overhaul of its Code of Ethics and Practice Standards.
"The main point of our Code of Ethics and Practice Standards is to put your clients' interests first and that really is the mark of a true fiduciary in terms of providing advice," she says.
Investment Savings and Insurance Association (ISI) chief executive Vance Arkinstall also supports imposing a fiduciary duty on investment advisers.
McMorran was equally supportive of the idea of regulating the term "independent adviser", going further to suggest that "financial planner" should be regulated too.
"Everybody's a financial adviser, but not everybody's a financial planner," she says.
"And I don't think anybody should be able to call themselves independent if they're receiving commissions or they're in any way tied to a particular provider."
McMorran added that some of the recommendations in the taskforce's latest progress report were already underway.
Arkinstall says the ISI has accepted the taskforce's call for greater transparency in fee disclosure, saying it already has a project underway to introduce a self-regulation standard for improved disclosure.
But he expressed disappointment that the taskforce had harked back to the Morningstar report that gave New Zealand's funds management industry a D minus grade.