He was reacting to the Financial Market Authority's report on the insights it has gleaned from its monitoring of advisers and Hakes said the report was “balanced, insightful; the tone was right” in acknowledging this is the first year since new regulatory rules came in from March 17, 2023.

While it was favourable overall, the FMA's 60 monitoring visits to advice businesses and examining interactions with about 350,000 clients found some gaps, many of which come down to inadequate paper work.

“Naturally, everybody is having to adjust” to the new rules, Hakes says.

If clients are provided with good advice, “ultimately, this builds consumer confidence” and the industry needs to recognise which areas need improvement.

Advice businesses, particularly those which are growing, need to ask themselves whether they have adequate record keeping and the mechanisms and processes in place to ensure clients are receiving quality advice.

The FMA highlighted gaps in ensuring clients understood the advice they were given.

“I would describe this as informed client consent. There's lots of research that says when clients understand what their financial plan is about, or the lending, insurance or investment product and how that helps them, they're more likely to stick to the plan,” Hakes says.

He also cited research that shows those with financial advisers “enjoy a higher quality of life, more financial confidence and experience less financial stress.”

Lack of proper disclosure of fees, commissions and other incentives by some advisers was another of the FMA's findings.

Hakes says FANZ is working with its members to “champion high professional standards,” including to improve such disclosures.

The FMA also said some advisers aren't properly telling clients about disputes resolution options for when things go wrong – all financial advisers have to belong to one of the four disputes resolution schemes.

A report by the Ministry of Business, Innovation and Employment released last week found the best-known scheme was the banking ombudsman with 46% of people surveyed being aware of it, followed by the Insurance and Financial Services

Ombudsman scheme with 27%, but that awareness of the Financial Dispute Resolution Service was only 16% while Financial Services Complaints Ltd (FSCL) was only 14%.

Hakes acknowledges that advisers need to do more work to raise consumer awareness of the dispute resolution services available, but said that analysis of the insurance ombudsman scheme found that out of more than 4,000 complaints it received, only 2.2% related to the financial advice provided.