ASSET JANUARY FEBRUARY 2017

JANUARY / FEBRUARY 2017

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FINANCIAL FORECASTS WHAT LIES AHEAD IN 2017 Tereora to build on legacy

Strategy first for risk advisers

Finding solutions with robo-practice

LEAD STORY

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FINANCIAL FORECASTS WHAT LIES AHEAD IN 2017

UP FRONT 04 EDITORIAL ASSET Publisher Philip Macalister says there is a positive feel to the year ahead 06 OPINION Financial adviser Roydon Shotter tells you about what he learnt at a Fintech Conference 08 NEW ZEALAND NEWS In case you missed them here are some useful stories from Good Returns.

09 AUSTRALIAN NEWS Top financial planning stories from across the Tasman 10 PEOPLE ASSET rounds up the main People stories including an Honour for one insurance leader and an Obituary to another.

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The new boss at Fidelity Life, Nadine Tereora talks about her plans for the company.

In this issue of ASSET experts provide their thoughts on the year ahead. AMP Capital chief economist Bevan Graham and Head of Investment Strategy address investment issues; David Whyte updates insurance advisers on changes ahead and Barry Read from IDS provides an adviser regulation update.

PROFILE: Nadine Tereora

REGULARS

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24 Adviser Profile John Schell and his holistic approach to planning

26 AML report Meredith Cornelius provides an important AML Update.

28 Russell Hutchinson

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Risk advises contemplating the future should think strategy first

30 Practice Management Tony Vidler says “The robopractice� is the next adviser opportunity

32 Morningstar data The last fund performance numbers from Morningstar

34 Data Where are all the CFPs in the world?

03

UP FRONT

{ FROM THE PUBLISHER }

Bring it on this year

I

04

don’t know about you, but last year seemed to be a particularly tough year for many businesses in the financial services industry.

I know it was for us and when I have talked about it with players, from big banks right down to smaller advisory firms I received similar feedback.

Part of the difficulty can be sheeted back to all the change and uncertainty in the market place. Fund managers have been donkey deep with the requirement to get themselves licenced under the Financial Markets Conduct Act. For the smaller firms this was a massive undertaking – with one of the end results being distracted from business as usual.

Now they are through this period, they can hopefully focus on what they do best – managing money for clients.

Life insurance companies too faced huge change and started feeling the influence of regulators, especially around the thorny issue of “churn” or replacement business alongside the Financial Markets Authority’s Section 25 information request.

Added to that we saw quite a lot of

.G W OODRETURNS.CO.NZ

leadership change in life companies. Often when this happens there can be a whole shake up of the organisation. One has to look no further than the biggest player, Sovereign, to see how a leadership change leads to a massive disruption throughout the organisation.

Mortgage brokers and lenders too have been at the thick end of change, especially from the Reserve Bank and more latterly the big banks bringing in a form of credit rationing.

Advisers have felt much of these changes, but they too have been feeling it. The review of the Financial Advisers Act, if it goes ahead as planned, will totally shake up the Registered Financial Adviser market. It’s unclear whether life insurance advisers and mortgage brokers understand what potentially lies ahead – if not they will find out soon.

Then of course there is the idea of creating Financial Advice New Zealand. One body to unite you all. The combined association is something we will be commenting on some more in Good Returns.

After a year of change there is a feeling this year that things will settle down a little and businesses can focus on the BAU. Yes there will be change. Perhaps the biggest impact will come in markets, especially now Donald Trump is the President of the United States.

In this issue we have a number of pieces looking at the year ahead and what it may bring. I hope you enjoy these and find them useful.

People I have spoken to this year are optimistic about 2017, and so are we. Bring it on seems to be the slogan.

Philip Macalister Publisher

HEAD OFFICE 1448A Hinemoa Street, Rotorua PO Box 2011, Rotorua P: 07 349 1920 F: 07 349 1926 E: editor@tarawera.co.nz PUBLISHER Philip Macalister EDITOR Susan Edmunds CONTRIBUTORS Royden Shotter, Bevan Graham, Greg Fleming, David Whyte, Barry Read, Russell Hutchinson, Tony Vidler, Meredith Cornelius.

DESIGN Jonathan Harding ADVERTISING SALES Kelly Thorp kelly@tarawera.co.nz phone 07-3491920 SUBSCRIPTIONS Dianne Gordon P: 0800 345 675 E: dianne@tarawera.co.nz ASSET is published by Tarawera Publishing Ltd (TPL). TPL also publishes online money management magazine Good Returns www.goodreturns.co.nz and The NZ Mortgage Mag All contents of ASSET magazine are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited.

ISSN 1175-9585

OPEN INVITATION TO AUTHORISED ADVISERS OPEN INVITATIONFINANCIAL TO AUTHORISED FINANCIAL ADVISERS

THEMES IN A NEW ERA OF LOWER INVESTMENT RETURNS LOWER INVESTMENT RETURNS

WHEN & WHERE

MEET THE MANAGERS – Bringing Investment THEMES IN A NEW ERA OFProfessionals Together

WHEN & WHERE

Low returns rule the markets. Governments are warming up to fiscal support. The PRESENTERS Low returns rule the markets. Governments people are voting with their feet – and their wallets. So what should investors expect

TUESDAY 14TH MARCH TUESDAY 14th MARCH SUDIMA HOTEL CHRISTCHURCH SUDIMA HOTEL CHRISTCHURCH AIRPORT, CNR MEMORIAL AVE & ORCHARD AIRPORT RD, CHRISTCHURCH

PETE MORRISSEY Portfolio Manager

are warming up to fiscal support. The people are voting with their feet – and their wallets.

So what should investors expect in the first The conditions that led to three decades of exceptional returns have either half of the year?

in the first half of the year?

Cnr MEMORIAL AVE & ORCHARD RD

WEDNESDAY 15TH MARCH CHRISTCHURCH JAMES COOK HOTEL 147 THE TERRACE WEDNESDAY 15th MARCH WELLINGTON

weakened or reversed, with investors needing to adjust their expectations. There is a growing towards “thematic” investing, whereby investors are using funds To helptrend bridgeisthe gap between fiction and that give anshort opportunity to and capitalise reality, term volatility medium on termthemes that, in a low growth environment can give a little we extra client portfolios a structured and diversified manner. opportunity, haveto coordinated a full day JAMES COOK HOTEL MEET THE MANAGERS – in Bringing Investment Professionals Together agenda of diverse experts in their related fields.

WhilstWith “Past performance is isnot necessarily indicative of future results” is the so much to discuss, this definitely the standard is time for investors of all types, individuals as well as event disclaimer for investmentitprofessionals to attend, institutions, to take thattomessage very by resetting and DAVID WHITTENtheir expectations MICHAEL HADDAD and we look forward seeing you HOGAN at one seriously of RUSSELL STEPHEN BENNIE Portfolio Manager Manager taking appropriate steps Managing to avoidPartner being caught Portfolio short Manager in the event of Portfolio an extended the venues in mid-March. period of lower returns.

PRESENTERS

To help bridge the gap between fiction and reality, short term volatility and medium term TOPIC: opportunity, we have TOPIC: coordinated a full dayTOPIC: agenda of diverse experts their There is Is there The TOPIC:inThe related fields.

With so much to discuss, this is definitely the event for investment Tailwinds for AREITs. Always Value growth outside Investment Case for Outlook for Australian property marketsprofessionals are to attend, and look forward to seeing you at one of Australasian Somewhere. thewe USA and if Global Resources eing impacted by the Regardless of the macroin a Portfolio equities. ransforming economies andthe venues in mid-March. there is where do

TOPIC: Asian

ocial structures across the Asia Pacific region. The rapid growth n urbanisation has been both the ause and effect of a rapidly rowing middle class which is riving business growth and emand for commercial property cross the Asia Pacific region.

Relatively high yields, strong arnings growth and long-term conomic trends are expected to ead to a continuing bright outlook or Australian commercial roperty.

economic environment, or which government is in power, the Global market is always producing opportunities for diligent investors alert to the PETE MORRISSEY difference between a Portfolio company’sManager share price and its intrinsic value. The challenge is finding reliable indicators of superior returns, such as insider ownership, competitive advantages, low valuations, and shutting everything else Asian out.

we find it?

The USA has single handed borne the burden of delivering investment returns this decade, is MICHAEL that likely to HADDAD continue and Portfolio Manager what are the prospects for the rest of the world to pick up the baton?

A specific allocation to global resources provides investors with important growth and diversification benefits: growth benefits because they have economic value, and RUSSELL HOGAN diversification benefits Managing Partner because the factors that influence their returns (such as scarcity and access) are different to those that drive bond and share markets.

Clayton Coplestone Director, Heathcote Investment Partners

THE SCHEDULE

Investing in bonds for capital gains and equities for income reached, its 30 year in the making, peak in 2016 with widespread negative government bond DAVID WHITTEN yields. The impact of Portfolio Manager investors recalibrating to a world of rising interest rates may have a profound impact on equity valuations in 2017.

THURSDAY 16TH MARCH 147 THE TERRACE RYDGES HOTEL 59WELLINGTON FEDERAL STREET LACHLAN PIKE AUCKLAND Portfolio Manager

THURSDAY 16th MARCH RYDGES HOTEL 59 FEDERAL STREET TOPIC: Global AUCKLAND Listed Infrastructure – Essential Assets for Uncertain Times.

As the world slowly reflates, what are the effects of rising inflation and interest rates on the infrastructure sector? Will market mispricing of interest rateSTEPHEN sensitivitiesBENNIE create opportunities or risks for Portfolio Manager infrastructure investors? Join this session to uncover the answers and to gain further insights about the role that infrastructure can play in your client’s investment portfolios.

COST: NO CHARGE LACHLAN PIKE Portfolio Manager

Registration desk opens at 8am RSVP Roadshow TOPIC: starts at 8.30am TOPIC: Global TOPIC: There is TOPIC: Is there TOPIC: The TOPIC: The Reserve your complimentary seat now Tailwinds for AREITs. Always Listed Infrastructure Value growth outside Investment Case for Outlook for Lunch and refreshments are complimentary Australian property markets are Limited spaces at each venue – Essential Assets Somewhere. the USA and if Global Resources Australasian impacted by theends at 4.45pm and will be followed by cocktails Thebeing Roadshow Regardless of the macrofor Uncertain Times. there is where do in a Portfolio equities. transforming economies and RSVP@heathcoteinvestment.com economic environment, or across theonly Asia As the world slowly reflates, A specific allocation to global Investing in bonds for opensocial tostructures attendees we find it? which government is in rd Pacific region. The rapid growth what are the effects of rising resources provides investors capital gains and equities

by Friday 3for income March 2017 inflation and interest rates power, the Global market is The USA has single in urbanisation has been both the on with important growth and reached, its 30

OPEN INVITATION TO WE LOOK STRUCTURED CREDITS at the conference constitutes 6 hours of For more information please visit our website ORWARD TO Full attendance AUTHORISED FINANCIAL ADVISERS learning.

If it is a learning aim within your 2017 Professional www.heathcoteinvestment.com SEEING YOU cause and effect of a rapidly growing middle class which is driving business growth and demand for commercial property across the Asia Pacific region.

Relatively high yields, strong INDY SINGH earnings growth and long-term Managing Director economic trends are expected to lead to a continuing bright outlook for Australian commercial property.

always producing opportunities for diligent investors alert to the difference between a company’s share price and its intrinsic value. The challenge is finding reliable CHRISTOPHER indicators DEMASIof superior returns, such as insider Portfolio Manager ownership, competitive advantages, low valuations, and shutting everything else out.

handed borne the burden of delivering investment returns this decade, is that likely to continue and what are the prospects for the rest of the world to pick upWILSON the baton?

DARYL

Managing Director

diversification benefits: growth benefits because they have economic value, and diversification benefits because the factors that influence their returns (such GLEN VANand ECHTEN as scarcity access) are Head of FundSource different to those that drive bond and share markets.

AND YOUR Development Plan, you may decide that this learning constitutes OLLEAGUES 6 Code Structured Hours.

TOPIC: Growth TOPIC: Global TOPIC: Finding invitation is open themes in a lowAbsolute Returns Great Boutique ofessional return world.

- Separating Managers. ncial Fiducian has identified three Affluence specialise in Stock Prices from mediaries only growth themes that have a high RSVP: Reserve Your Complimentary finding Seatboutique Now.fund Fundamentals. probability of success in the managers who have the are “wholesale coming environment of low There is enormous potential to outperform Limited Spaces At uncertainty Each Venue. returns traditional assets. in the world significantly over long ts” for the WEfrom LOOK First, in only 10 years to so, right now.

From Trump, to periods.

They combine these Rsvp@heathcoteinvestment.com oses of the India’s economy should the Fed, to China, to Brexit managers to achieve style FORWARD TO catapult to become the 3rd and the future of the EU. diversification and reduce ncial Advisers Act

By Friday 3rd March 2017 INDY SINGH CHRISTOPHER largest GDP nation.

Investors Investing has rarely been volatility, using a similar YOU DEMASI Managing Director 8 (as described in SEEING who participate now at this more challenging than it is investment process to the Portfolio early stage could obtain today. Yet by focusing on a family offices Manager of ultra-wealthy on 5c of the Act) AND YOUR significant capital appreciation business’ fundamentals, investors. Daryl Wilson will

strongly encourage

over this period.

COLLEAGUES Second, technology is going to change the way we live. Its

rather than its stock price, we retain confidence in the long-term outcomes of the

share what Affluence look for in a great manager, the advantages the best fund

TOPIC: Powering Advice Through Data Analytics.

Faster, better decisionmaking and cost reductions are just some of the benefits that data analytics bring to an advisory business. FundSource, in partnership with Financial Express (FE), will hold a DARYL WILSON of the live demonstration Managing Director FE Analytics cloud-based research system that uses New Zealand data from more than 900 managed funds to filter, analyse and select funds, demonstrate

year in the making, peak in 2016 with widespread negative government bond yields. The impact of investors recalibrating to a world of rising interest rates JULIAN MORRISON may have a profound National Key Account impact on equity valuations in 2017.

Manager

the infrastructure sector? Will market mispricing of interest rate sensitivities create opportunities or risks for infrastructure investors? Join this session to uncover the answers and to gain further insights about the role that infrastructure can play in your client’s investment portfolios.

TOPIC: When you Buy Matters.

A reasonable amount of outperformance over time compounds to make a staggering difference to future wealth. But to achieve such outperformance, you must invest very differently to the average investor. To buy (or sell) contrary to the crowd is inherently difficult.

GLEN VAN ECHTEN This session will highlight Head of FundSource why the drivers of investment success are counterintuitive, and why contrarian investing can be the most rewarding investment discipline.

For more information please visit our website

www.heathcoteinvestment.com

JULIAN MORRISON National Key Account Manager

OPINION

WATCH THIS SPACE Financial adviser Royden Shotter has been introduced to IBM’s Watson and is starting to see opportunities to embed more technology into his business.

T { ROYDEN SHOTTER } 06

WWW.GOODRETURNS.CO.NZ

.here’s been a lot of buzz lately about roboadvice and Fintech and what it could mean for advisers.

When distilled, the message so far has mostly been: • If your business is transactional then you can expect to have a hard time as what you are doing is likely to be replicated and competitors will emerge that will be challenging for you • If you can add value or go ‘beyond the transaction’ then your chances of survival look better because ultimately, people respond well to being looked after by people There is a lot of “yes, but…” with these points and its worth reflecting on exactly what is coming. By this, I mean that while we have

been happily messing about in our relative sandpits, on a global scale, others have been considering the nature of sand and how they can make it do what they want.

BIG DATA AND BIG MONEY ARE LOOKING TO COME KNOCKING At Binu Pauls’ recent Finnotec conference I was introduced to Watson. Watson is an artificially intelligent data analytics tool that IBM spent $16 billion developing. If you had a business idea you could white label a front end in whatever format you wanted but behind it Watson will be crunching your numbers. Data analysis doesn’t in itself sound like anything to be especially concerned about until you start considering

OPINION

what this might mean when it’s applied.

Getting creative for a moment, consider the following scenario: a prospective client engages with an online website with the aim of trying to determine what personal insurances might be best. With your authorisation Watson accesses your bank accounts and medical files.

It now knows your age and medical history, income, debt, spending and possibly a host of other lifestyle factors too (given it probably had a peek at your Facebook feed).

It might ask you to fill in a few blanks but within milliseconds it has considered your wider finances, analysed your personal health for relative risk, compared it against everyone else in the country and cross referenced your details specifically for the statistical likelihood of a claim in any given area and how it might impact on your life.

Watson then makes a recommendation for types and amounts of cover and with no need to make an actual decision now, gently suggests a blood test so an underwriting decision can be completed. Try doing all of that off your paper based data collection.

Oh, did I mention that this happened via a smartphone on a bus while said prospect was on their way to work? No need to disrupt their otherwise busy schedule.

How far away is this? Maybe not as far as you think.

Watson is available right now but there are a number of barriers in the way. Firstly a central medical database with everybody’s information

" While we have been happily messing about in our relative sandpits, on a global scale, others have been considering the nature of sand and how they can make it do what they want" in one place. The fact that Auckland Central Hospital can’t directly access medical information for a patient that’s just arrived from North Shore hospital, or their GP’s notes, is only one reason why we need this kind of thing.

You can see the logic in having this and because it makes sense is bound to happen sooner or later.

What else is missing from this picture?

Digital Identification. To be able to sign off the authorisation for a third party accessing your medical information from a smart phone on a bus suggests you will need to be able to identify yourself quickly, easily and legitimately.

There are any number of parties that are working on this already and the spin-offs will be significant. However, theoretically this is not too far from having an implanted barcode on your forearm so you can imagine the sort of spanners this might encounter before it happens. It could stall proceedings somewhat.

That perhaps is the key point here. The barriers to this kind of tech becoming the norm are simply a number of obstacles that, while significant, are being worked through by any number of players that you would otherwise never even think to consider...until they appear in your sandpit and steal all your toys.

While it’s tempting to finish here with “maybe it’s time we thought hard about exactly what we are offering to our clients” I do wonder if we have already moved beyond this.

As a practitioner myself I am considering the possibility of a radical shift where the landscape may be less sandpit and more ballpark. The question may well be “I have a background in financial services – what does my new job look like?”

Royden Shotter is an AFA with Echelon Advisers.

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UP FRONT

{ NEWS FROM NEW ZEALAND }

Growth fund prompts complaint An investor who put $8000 into a growth portfolio for his son, only to find the balance had dropped to $7000 when he tried to access it 20 years later, has complained about the advice he received.

Financial Services Complaints Ltd received the complaint this year.

The complainant said he had hoped the money would be useful for his son to buy a house or pay for his education.

He paid an adviser $1100 for advice and had intended that the investment would grow over time before his son needed to use it.

He had seen from statements that it was underperforming but had hoped it would recover over the long term.

His adviser had since sold his business but the purchaser offered to give him the $1000 he had lost and refund the fee paid for advice.

FSCL was unable to investigate because the incident was outside its six-year time limit. The complainant eventually accepted the offer.

Ditch benchmarks in client conversations, advisers told Advisers are being urged to talk to their clients about the performance of their investments in terms of goals, rather than referring to benchmarks and indexes.

ANZ’s head of advice transformation Adrian Kwa said goal-based investing offered a more focused approach that addressed the most important issues for investors.

If a client needed money for their kids’ education in a couple of years, a percentage of the portfolio could be separated off and allocated to that goal, with the correct asset allocation. Its performance could then be judged on how well it was on track to achieve the target.

Adviser Jordi Garcia said it was a method he already used. “A benchmark is just a yard stick, that’s all. To be honest, most clients don’t have a realistic expectation for benchmarks. If you ask a client what their expected return from an investment will be they can’t answer that because they have nothing to gauge it on.”

We would welcome the opportunity to help you sell part or all of your client base.

We have many more buyers than sellers, all keen to provide those clients with a high level of service.

CALL US NOW

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WWW.GOODRETURNS.CO.NZ

FMA warns code changes must be adopted in months Advisers must have their business practices updated in line with the new Code of Conduct requirements by March 1, the Financial Markets Authority has warned.

The new version of the code came into force on December 1, 2016.

One of the key changes made is that it has separated the existing code standard eight, covering suitability of advice, into two standards.

This is designed to address concerns that the existing rules were making it too difficult for advisers to offer anything less than a full financial plan for clients.

It also updates the code in line with new qualifications available and makes it clear that DIMS providers can asset their independence and that of their processes.

The FMA said AFAs would need to review and update their adviser business statements, specifically around how they would comply with the new code standards eight and nine.

Eight now requires that when providing a financial adviser service to a retail client, an AFA must agree with the client the nature and scope of the service to be provided.

Nine says that when providing a personalised service to a retail client an AFA must take reasonable steps to ensure that the personalised service is suitable for the client, “having regard to the agreed nature and scope of the personalised service provided”.

Maree Porter

021 874 231

maree@mikemoore.co.nz

UP FRONT

{ NEWS FROM AUSTRALIA }

Government introduces standards legislation Australia’s Revenue and Financial Services Minister has introduced the bill that will increase requirements on the country’s financial advisers.

The Corporations Amendment (Professional Standards of Financial Advisers) Bill includes compulsory education requirements for new and existing advisers, a year’s supervision for new entrants, a code of ethics and an

exam that will be the benchmark standard for the industry.

Advisers will also be required to undertake continuing professional development.

The new regime is set to start on January 1, 2019, when new advisers will need a degree. Existing operators will have until 2021 to pass the exam and until 2024 to meet educational requirements

AMP hit by industry issues AMP has written down the goodwill in its Australian life insurance business by A$668 million this financial year.

“We've seen consistent deterioration in the insurance sector over the course of 2016," AMP chief executive Craig Meller

said. "Today's actions are designed to reset the wealth protection business."

It said that higher-than-expected payouts and policies lapsing had been “accentuated” through 2016 and a review showed the problems were deep-seated.

Active still way to go for Aussie investors A new survey shows most Australian investors are confident about active management and three-quarters have assets in actively managed strategies.

MFS Investment Management found that although passive funds had become more popular, active management was

Financial advice businesses without a digital service will be the exception rather than the rule before long, it has been predicted.

Australian roboadvice provider Ignition Wealth chief executive Mark Fordree told media that early adopters were bringing more and more digital financial advice into their businesses.

"In 2017 digital financial advice will become a mainstream solution, provided as a core offering by professional financial businesses."

HSBC expands Australian private bank

still important.

Three-quarters of survey respondents said they were at least “somewhat concerned” about a major drop in equity markets over the next year. They were also keeping an eye on their managers’ track records.

ANZ sale prompts interest ANZ’s moves to sell its wealth and insurance business in Australia is attracting international attention.

When it announced its financial results in November, ANZ confirmed it was considering selling its Australian insurance, advice, superannuation and

Robo soon new normal

investments business in Australia.

OnePath has 10% of the Australian life insurance market and is the sixth-largest life insurer in Australia.

Asian insurers Meiji Yasuda and AIA are both rumoured to be interested in the life insurance business.

HSBC is to open a private bank office in Australia to offer its services to those with more than A$10 million to invest.

“Australia is a priority growth market for HSBC, and having a private bank office here will complement and enhance our existing retail, commercial and investment banking businesses,” said HSBC Australia chief executive Tony Cripps.

“We anticipate significant growth from being able to offer a comprehensive private banking experience to both new and existing customers.”

Private bank customers will have access to DIMS, equities, fixed income products, derivatives and full banking service.

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ASSET UPDATA FRONT ADVISER

a new appointment email details { PEOPLE } Ifandyoua have picture to editor@goodreturns.co.nz

BALLANTYNE HONOURED

Naomi Ballantyne

OBITUARY: JOHN BODY

John Body

The former Managing Director of ANZ's wealth business, John Body (JB) has been farewelled.

Body, 52, died on Christmas Eve at Mercy Hospice after a battle with cancer.

During his career he spent 29 years at ANZ, holding a number of senior executive roles in New Zealand, Australia

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Partners Life founder and managing director Naomi Ballantyne says it is "surreal" to be made a Officer of the NZ Order of Merit (ONZM) in the New Year's Honours list, but something she is very proud to have received.

Ballantyne was described in the award's citation as being an "insurance entrepreneur", and one of the main drivers of the industry's product innovation over the past 34 years. "[She] has created careers for hundreds of New Zealanders, business opportunities for thousands of small-medium enterprises, hundreds of millions of dollars in shareholder value, and financially supported many thousands of New Zealand clients when health issues interrupted their lives."

Over the years she has been involved in the establishment of the three companies, Sovereign, OnePath Life (originally called Club Life) and Partners Life. Besides developing the companies she has also been responsible for much of the product innovation in the life insurance industry.

Ballantyne said she was surprised

"that anyone would notice me". Also she said it was surreal to be honoured as she has spent much of her professional life "fighting the establishment".

She initially found the industry - and its old boys club - to be frustrating, with discussions centred on what competitors were doing rather than what was right for the customer.

Ballantyne says the award is also recognition for the industry and the people she has worked with.

"It's not just a recognition for me, but for the whole industry."

While there is plenty of flak thrown at life insurance companies and risk advisers, people need to realise how much companies pay out in claims each year and how important advisers are in making sure New Zealanders have appropriate life insurance cover.

One regret is her mother unexpectedly passed away just before Christmas and will miss out on seeing her daughter receiving the honour.

Ballantyne joined the industry when she was 18, dropping out of a marine biology degree to take up a management course.

and Asia, focused on markets, foreign exchange, private banking, insurance and investments.

In 2010 he was appointed Managing Director of Wealth NZ, leading its Private Bank, Investment Management and Insurance teams.

In January this year Body was promoted to Retail and Business Banking Managing Director.

Body's original appointment to the head of Wealth was a little bit of a surprise as his background was in institutional banking. The new role included ANZ's life insurance business, OnePath, as well as the advisory and wealth operations.

A strong characteristic of his time in the Wealth business was his belief in helping more New Zealanders to understand more about retirement savings and helping New Zealand build on the foundation that KiwiSaver has provided.

Body was a bank executive who was accessible and always willing to discuss issues. He managed to bring a perspective to issues which was wellthought out, considered and objective.

Two good examples are his contribution to ASSET Magazine's

KiwiSaver Round Table last year, and his comments on churn in the life insurance business.

David Boyle, who worked with Body, had this to say: "When ANZ Wealth was established the great thing about being in his team was his focus on the customer.

John had excellent leadership skills and from my perspective encouraged everyone in the team to try things outside the square.

"He was highly regarded by those in the industry. He loved music and cars and from my perspective was very passionate about work and his family."

ANZ chief executive David Hisco said, in a memo to staff: "John had a sharp mind, a dry sense of humour, a strong social conscience, gave wise counsel, was loyal to ANZ and his colleagues, and - most importantly - loved his family dearly."

"So, as we digest this news and remember our mate today it's ok to grieve. But, knowing John, he wouldn't want us to be morose but instead ensure that Debs and their children are well supported and that we reflect on what's important during the festive season which is, after all, about life - and show love to those close to us."

ASSET UPDATA FRONT ADVISER

AMP NZ GETS A NEW MANAGING DIRECTOR

E-commerce. As well as holding several directorship roles, Mary and her husband also have their own business, Abbey Rose – candles and fragrances, current chairman John Wood says.

"I am truly excited about Mary’s appointment, and feel that the timing could not be better for the TripleA, especially as we await the Government's announcement on the changes to the FAA and most importantly how it will impact on us all."

NEW SALES BOSS FOR PARTNERS

Blair Vernon

Blair Vernon has started his role as Managing Director AMP Financial Services New Zealand.

Vernon will report to Jack Regan, AMP Group Executive, Advice and New Zealand. Regan, was the former Managing Director AMP Financial Services New Zealand but has moved to AMP’s Sydney office to lead an expanded portfolio, assuming responsibility for AMP Limited’s Advice and New Zealand businesses.

“Blair is uniquely positioned to leverage the strengths we have across AMP to continue to drive our business strategy and performance,” Regan said.

Vernon joined AMP in 2009 and has held a number of executive positions within the company, most recently as AMP’s Director Retail Financial Services, responsible for sales, customer service, marketing and supporting AMP's extensive Adviser business networks. He has more than 20 years’ experience in financial services.

GORDON TO LEAD TRIPLEA BOARD

The TripleA has appointed Mary Gordon as its new independent chairman.

Gordon will be introduced to the board at its first meeting in March 2017 and officially take over the chair's role for the second board meeting mid-2017.

Gordon brings with her a wealth of knowledge, both at the governance level and operational management.

"Her commercial experience expands across the financial sector, management consulting, health, architecture and

Andries Van Graan

Partners Life has appointed Andries Van Graan as general manager of sales.

For the past five years, he has been general manager of Newpark Group.

Managing director Naomi Ballantyne said the appointment meant Partners had “another safe pair of hands leading our well-regarded and respected sales team”.

She said it was looking internationally for another senior executive who could bring strategic, diverse distribution experience to Partners Life.

“As we begin to take advantage of the potential that the Blackstone shareholding facilitates for Partners Life, the depth, strength and agility of the Partners Life leadership team will become increasingly important meaning the opportunity to introduce new ideas and skills is exciting to us.”

Van Graan takes up the role on December 12.

He replaces Simon Fisher, chief sales officer, who has left to take up a role with a brokerage.

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LEAD PROFILE STORY

TEREORA BUILDS ON A LEGACY New boss for Fidelity Life wants to focus on growing what her predecessor achieved, writes Susan Edmunds.

N

ew Fidelity Life chief executive Nadine Tereora has a complex challenge ahead: how to honour and build on the legacy of her predecessor, while carving out new opportunities for the insurance company to strengthen its hold on the New Zealand market.

Tereora joined Fidelity in October, from a role as executive general manager of customer experience at Suncorp. She had previously been chief executive of Asteron Life, before Suncorp’s management shake-up created the new role. Tereora was the first female chief executive of a company within the Suncorp group.

She replaces Milton Jennings at Fidelity, a man who in almost 30 years at the company built strong and enduring relationships with his staff and the advisers who distribute the company’s products.

Tereora said the opportunity she was presented with at Fidelity was compelling. The company had a long history and a very strong brand but was still in the position where it had more potential to tap into, she said.

After just a few weeks in the job, she said one of her early goals was to look at new ways the insurance firm could deliver to the adviser market, and other steps it could take that would help it cement its place among the top three providers in the New Zealand market.

“There are definitely opportunities not explored at the moment, there are always opportunities for growth,” Tereora said. “We’ve got to be clear about our strategy and making sure the opportunities complement that.

Healthy position

“I’ve worked in the life space the majority of my career and the Fidelity Life opportunity is a fantastic one to apply the passion I have and the skills I have to help take forward a business I feel is in great shape.”

She said she felt lucky to be taking over the company when it was in a strong financial position. Fidelity Life reported

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"It’s nice to be in good shape as opposed to taking over something that’s broken and needing to be fixed."

– Nadine Tereora

a record result in its 2016 financial year, with total comprehensive income of $34.5 million reported in October, up 37% on the year before.

Premium income increased by 11% to $222.7 million. The group risk book increased by 40% while retail risk increased 15% due to both new business and retention efforts. Its 10.7% of in-force premium market share was up slightly on the previous year.

“A record year helps coming into a business,” Tereora said. “It’s nice to be in good shape as opposed to taking over something that’s broken and needing to be fixed.”

She said the decision to move to Fidelity was not prompted by the high-profile Suncorp restructure, which saw her move from the Asteron top job.

“I had led the business for about four years and you start to reassess what you are looking to achieve. Opportunities like this don’t come along very often. A key drawcard was that Fidelity Life is a strong, New Zealand brand. That was a very big drawcard for me.”

Focusing on Fidelity Life’s culture would be important to her leadership, Tereora said.

“People that know me know I’m very culture-centric. That’s an incredibly important part of the way I like to run a

business. The people here are fantastic and that was a really big pull for me. Between now and Christmas I’ll be getting my head around the current inflight conditions and think about putting my own flavour on that.

I would like to go into the Christmas break with a clear picture of the next steps for the new year.”

Significant investment

Advisers would notice some differences in the way they dealt with the company in future, she said.

The company has been significantly investing in its new policy administration system, with a new platform called Sonata, created by Bravura Solutions due to be unveiled in the new year. It is the single biggest investment the business has ever made.

Tereora said that would be fundamental to enhancing the way the company delivered its product, and would improve the service model significantly and allow the company to respond in a noticeably different way to brokers and their clients.

It would enable it to process business much more quickly and to bring products to market much faster. Advisers would hear more about that in the coming months, she said.

Tereora said she and Jennings were quite different people and there would be changes as a result of that.

“I’m very much about respecting the legacy that Milton has created,” she said. “But advisers will feel a difference with me at the helm.”

LEAD Y RPROFILE OTS STORY DAEL She said she would remain 100% focused on the independent financial adviser market and was familiar with how that worked.

But she said she expected that they would notice that the pace of business from Fidelity Life would increase significantly and the company would come out with innovative offerings that would enhance their way of doing business.

“I would like to think they will notice that change early on. There are so many opportunities we are facing into right now at Fidelity Life.”

Advisers could expect support above all, she said.

“Customers are demanding more from their advisers and we need to look for ways we can support advisers to grow their business. The challenge is finding new ways to enhance advice businesses. It’s so important we continue to grow that model.”

She said the Financial Advisers Act review was a positive move for the industry and expected most advisers would embrace the changes, because they already had the systems and infrastructure in place to deal with it.

“We will look for ways to support businesses and with the review we are influencing where we can.

The vast majority of advisers are in good shape. I see us playing a role making sure we shape regulatory outcomes. There’s definitely a role that insurers play in supporting those advisers that do need help. We need to be there for them and support them through the change and provide them with a system to enable that.

Creating right balance

“As an industry we are very good at worrying about industry disruption but I look at it differently. How can we be a disrupter? It’s dangerous to get into that situation when you’re worried about disruptor plays. I few focus on our own business and being a disruptor we can look at defining how important the advice industry is even if it is done slightly differently.”

She said while she had always been a big advocate for work-life balance among her staff, there had not been a lot of time for that since taking over at the top at Fidelity.

“When you first join the most important thing is spending time with the fantastic people we have here. I need to understand the roles they play so there’s not a lot of time for balance at the moment, it’s very consuming. But in saying that my kids are very important to me, as is my husband, so I’m making sure when I am at home I am 100% focus on home.”

Jennings was known for encouraging his staff to get out running around Auckland Domain in the Fidelity Life Corporate Challenge series – Tereora said she might allow a break from that, although there is an event on the horizon that will require her to don her own running shorts.

She hoped advisers would be primed for a good year in 2017 with the company. “We’ve got a fantastic brand. Great people. Watch this space. Fidelity Life is going to go on the map and I am thrilled and privileged to be heading it.”

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FINANCIAL FORECASTS WHAT LIES AHEAD IN 2017 What will this year bring for advisers and their clients? ASSET magazine asked industry players to consult their crystal balls.

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Bevan Graham, AMP NZ Chief Economist, takes a look at the key economic themes for 2017.

A year of higher global growth Global GDP growth looks like coming in at around 3.1% in 2016 – not bad when you think back to the start of the year with the ongoing worries and angst about China, and fears of a US recession. Global growth is expected to be slightly stronger in 2017 at 3.5%, the first increase in the annual rate since 2010. Two factors are driving the pick-up – stronger than expected abovetrend growth in the US in 2017, with the higher consumer spending which drove the recovery in growth into the end of 2016 expected to continue into 2017. Average emerging market growth is also expected to be higher in 2017 at 4.5%, but largely by virtue of the end of deep recessions in both Brazil and Russia.

Risks of deflation receded as we entered the second half of 2016 and headline inflation moved higher in the US, Japan, the Eurozone and the UK. However, this was mostly due to base effects, with low inflation numbers capturing earlier weakness in commodity prices falling out of the annual calculation. We expect headline inflation to continue its trend higher in 2017, and this will be an important factor in initially stabilising and later improving inflation expectations.

In the US most measures of inflation are either at or trending towards 2%. And with the unemployment rate now either at or close to full-employment, this is giving the US Federal Reserve (the Fed) confidence to push on with the normalisation of US interest rates.

Outside the US there is little sign of rising broad-based inflationary pressures.

While we expect core inflation may nudge higher in Japan and the Eurozone in 2017, it is likely to remain below target.

That will see a continuation of the asset purchase programmes of the respective central banks, but central banks are also becoming concerned about the risks to the financial sector of too prolonged a period of aggressive monetary easing.

We expect monetary policy in Japan to be largely unchanged in 2017, with pressure to ease more alleviated in the short-term

It is time for fiscal policy to pick up the baton of lifting domestic demand, closing output gaps and generating sustainably higher inflation..

by the depreciation in the yen. Attention now turns to the impact of the second 2016 supplementary budget package to achieve an improvement in growth and inflation outcomes. This is a move in the right direction. Along with rising risks of prolonged easing, we have been concerned about the waning efficacy of ever more monetary easing. It is time for fiscal policy to pick up the baton of lifting domestic demand, closing output gaps and generating sustainably higher inflation.

Donald Trump has become the posterchild for this rotation from monetary to fiscal policy. Market reaction since his election victory has focused primarily on his proposed fiscal stimulus (higher infrastructure spending, corporate and personal tax cuts) and the impact this will likely have on US growth and inflation.

While it remains to be seen exactly what will be implemented, fiscal easing in the US could prove the catalyst for a move to greater reliance on fiscal policy in countries where stimulus is still required.

One of the uncertainties facing markets on election night in the US was whether it was Trump the populist or Trump the pragmatist who would take up residence.

The pragmatic signals started on election night and have continued since as Mr Trump has softened some of his more extreme positions. This has helped markets focus on the more positive aspects of his policy platform.

But there are still risks. Mr Trump remains staunchly anti-trade. Both the Trans-Pacific Partnership (TTP) and the Trans-Atlantic Trade and Investment Partnership are dead in the water, at least from the US perspective. Furthermore, any move towards restrictive trade practices

Global GDP growth Annual average % change

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Global GDP and trade growth Annual average % change

risks a process of tit-for-tat retaliatory anti-trade restrictions that descend into a full-blown trade war. This is a significant downside risk, particularly for export-dependent countries, but also the global economy.

One of the key features, and indeed concerns, since the Great Recession has been the weakness in growth in labour productivity among the key developed economies, especially in countries that have typically done well on this front like the US. In our view, the so-called ‘productivity paradox’ has been less paradox and more lack of patience during what has become a long business cycle.

But we believe we are now at the point in the cycle in a number of countries that are close to full employment (notably the US and New Zealand) where we expect business investment to be an important part of the next phase of growth.

Standard business cycle theory tells us that from the trough in the cycle, businesses typically resource their first phase of growth with labour, resulting in subdued labour productivity outcomes.

But as the cycle matures, labour becomes less plentiful, skills shortages emerge and wages rise. At this point firms turn to capital to resource the next phase of growth – and with that an improvement in productivity.

We have high expectations of a recovery in business investment in the US, New Zealand and others as 2017 unfolds. Rising profit growth on the back of improving nominal GDP growth, along with solid business confidence, are beneficial tailwinds to this expectation.

While average emerging market growth looks set to improve in 2017, that

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We have high expectations of a recovery in business investment in the US, New Zealand and others as 2017 unfolds. improvement is mostly technical in nature as recessions end in Brazil and Russia.

It is better to describe growth as having stabilised at around its average potential of 4.5% per annum. That stabilisation is a function of recoveries in manufacturing sectors, in part due to the competitiveness gains from exchange rate depreciation, and the stabilisation in commodity prices.

The competitiveness gains are welcome, but can only be taken advantage of as currencies stabilise and sentiment towards financial stability, particularly US dollar (USD) denominated debt sustainability, improves. Sentiment towards emerging markets remains vulnerable to further currency weakness.

While growth has stabilised in China, it’s important not to over-estimate government efforts to maintain growth at current levels. With growth concerns parked for now, we expect policymakers to take

advantage of the stabilisation and refocus on necessary structural reforms, and the gradual slowdown in growth to resume in 2017. But remember a slower China is a more sustainable China. Recent efforts to rein in the rampant property market will have a negative impact on private sector investment in 2017.

Politics will remain to the fore in 2017, with Europe the main focus of attention.

There are elections scheduled for March in the Netherlands, April/May in France, and Germany goes to the polls in October, though prospects of an early election in Italy faded as 2016 drew to a close. The focus of these elections will be how well the anti-Europe parties perform. While the same political forces that saw ‘Brexit’ and Trump elected in the United States exist in Europe, we don’t think they are of the same magnitude in Europe. But as 2016 proved, a week is a long time in politics and anything can happen.

There is also an election in New Zealand in 2017. This was made more interesting by the resignation of John Key, with the National-led Government heading into election year with new Prime Minister Bill English. The National party is ahead in the polls and goes in as favourites to at least be the biggest party in the next parliament, but they are vulnerable on a number of issues, particularly affordable housing.

Growth in global trade has slowed appreciably since the 1990s and the early 2000s. Recent work by the International Monetary Fund suggests a big part of the slowdown is due to recent weakness in investment spending in many of the world’s major economies. Our expectation of an uplift in investment spending in countries close to full employment should be positive for growth in trade volumes.

However, another important factor in the slowdown has been the dearth of major trade deals in recent years, and the outlook here is bleak. Globalisation is at risk from rising negative trade sentiment and populist political movements. Our position is that higher global trade is positive for global growth and an essential part of raising living standards, so any measures to restrain global trade growth are a negative for global growth and prosperity.

The evolution of public policy towards globalisation, free-trade and economic integration will be a key theme for 2017 and beyond.

While anti-trade risks rise, it’s important that small trading nations such as New Zealand continue to work to build trading relationships with like-minded countries and regions. Our concern at the demise of the TPP is mitigated by the fact that New Zealand is already working on building new relationships with India and the European Union, and is pushing hard to get talks started with a post-Brexit United Kingdom.

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2017 ASSET STRATEGY OUTLOOK

Greg Fleming, Head of Investment Strategy at AMP Capital, provides his asset class expectations for 2017 along with potential implications for investors.

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MP Capital sees share markets trending higher over the next 12 months helped by improving corporate earnings and stillfair valuations, economic optimism, and supportive global monetary conditions due to continuing European and Japanese monetary stimulus. The nature of a new wave of US fiscal stimulus should become

apparent in the early part of 2017, and this will determine whether markets continue to take an optimistic view of the economy or begin to worry about inflation or credit risks in the face of higher interest burdens on debt. However, beyond the adjustment in the Treasury bond market, there is little sign of these worries yet. Corporate credit spreads have tightened substantially in the

US since the election, suggesting markets believe that default risks are declining.

We anticipate the expectation of rising US government bond rates to continue pushing up other countries’ long-term yields and underpinning an uptrend in the US dollar. We also expect a phase of structurally-higher bond market volatility, firm oil prices, and sustained tension

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between positive and negative factors in emerging markets.

Geopolitical and trade policy tensions will doubtless disrupt markets this year, so expect bouts of volatility within a broadly supportive macro environment. If emerging markets are caught up in sharp shifts in US trade policy, we expect their equities to show more vulnerability, particularly because the main adjustment mechanism for an exporting emerging country in difficult times is a lower currency. In principle, this should boost earnings but that is only meaningful if trade access to the developed end-market is not disrupted.

This can no longer be taken for granted, and so we see emerging market risk intensifying in 2017, with currency risk adding to widespread political risk. While emerging markets are now undervalued on most measures, economic and earnings momentum are poor.

Assets that have run to rich valuations in recent years as global interest rates fell, such as commercial property and lower-rated debt, could face a difficult year. While investments offering a decent yield advantage above government bond yields will still attract a residual interest from yield-hungry investors, the advantage of holding potentially more volatile or vulnerable assets is being eroded, as the yield component of returns on more liquid, cash-equivalent assets is now improving.

AMP Capital believes these main market trends will continue because they reflect a shift in the global allocation of capital and a new appreciation of risk. Even a partial reversal of the globalisation dynamic that held sway during the last three decades would necessitate long-lasting changes in expected market returns. Once the new political climate settles, investors will move quickly to re-position their portfolios to minimize the scope for loss and to ride newly-opening opportunities.

Bear in mind that the inflationary policies announced by President Trump are coming into focus at a time when many investors are holding historically-low equity allocations, and high allocations to bonds.

This means that potentially these investors have the wrong portfolio bias in place for at least the four years ahead – equities are a proven inflation hedge, while bonds have successfully hedged the risk of deflation.

If global deflation risk loses its remaining credibility in 2017, there will be a strong impetus to re-align portfolios and this could trigger a sharper move into growth assets.

The second half of 2017 is more likely to see market setbacks which will provide better entry opportunities for deploying cash.

Some of the risks include:

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▶ Bond yields could rise too far, pressuring corporate earnings growth and undermining equities valuations and corporate buy-backs. ▶ China could tighten up policy following the 19th Party Congress in the Northern hemisphere autumn. ▶ The election risks in Europe could come to fruition, via tit-for-tat populism. ▶ Corporate-positive initiatives proposed by the new US administration may not eventuate as quickly or in the form markets are hoping for. ▶ The ‘excess liquidity’ that normally accompanies global bull markets grows less rapidly, resulting in a substantial market correction.

However, these risks are rather nebulous at present, while the recent round of upgrades to forecasts for US corporate profits in 201718 appear to be more concrete.

Broad leading indicators of growth have also turned upwards recently. New Zealand business sentiment is stable, at high levels.

One conclusion might be that the positive differentiators working in New Zealand’s favour in recent years have become less marked. This supports taking a careful (as distinct from defensive) approach to domestic assets. To become New Zealand equity bulls, we would need to see a compelling new ‘story’ to supplement the existing dividend yield and stable earnings supports for the market.

Implications for investors ▶ Improving economic growth around the world will generally support equities and challenge bonds, because this growth is more ‘traditional’ in nature – arising from better employment and demand, and thus allowing prices and potentially profits to rise. An additional traditional growth source – capital spending and business investment – should also kick in over the next two years. ▶ The diminishing ‘artificial’ component of growth – the part generated in recent years by extreme monetary stimulus via interest rates and quantitative easing – means that global interest rates need to rise. Central banks are less willing to buy up additional large tracts of the bond market to keep credit ultra-cheap. Yield enhancement is still a valid approach, but becoming more selective about avoiding undue credit risk is vital. ▶ The path to higher rates has begun in the US, and over the next 18 months Australasia and the UK will follow suit. This path can be interrupted from time to time by market shocks, but a jagged upward course for yields is now the most likely

trend. Caution is therefore warranted in investments that rely on low interest rates, particularly property, but also debt-funded corporate mergers. ▶ The US dollar will tend to strengthen further, and if this occurs alongside equity market strength it would attract capital inflows to North America. Some of that will be at the expense of emerging markets, which we expect to remain fragile.

New Zealand investors should embrace more international currency exposure, and we are actively seeking foreign exchange diversification. ▶ Growth-oriented shares that earn profits from consumer demand and demographic, technology or medical trends can perform better than defensive shares with high dividend yields. Those ‘bond proxy’ shares will become less attractive as the yields on government bonds progressively increase.

Governments adopting substantial fiscal stimulus at a time of high existing sovereign debt will add to the upward pressure on interest rates and reinforce this trend. ▶ Once governments decide where to concentrate the stimulus (eg building infrastructure, subsidising housing, increasing benefits, or lifting military outlays), associated sectors of the share market will respond quickly as their profit outlook improves. ▶ The global oversupply of commodities will only slowly diminish, so expect raw materials prices to move in a band, rather than to rally strongly. Sentiment on China is better but any trade friction or sharp move in CNY/USD would undermine recent gains in industrial metals. ▶ There is still too much debt in the world, contributing to sluggishness.

Governments may be tempted to deploy inflation-boosting policies as a means of lowering the future debt-servicing burden which could be a challenge for assets that are conventionally viewed as risk-free (developed country government bonds).

In summary, the markets are busy repricing a new set of risks and opportunities that Trump’s election has both intensified and clarified. After nearly a decade of international risk aversion and re-regulation following the Financial Crisis, a new mood of ‘fatigue with authority’ is emerging. At present, many equity markets and currencies are trading within reasonable valuation ranges. Resolution of market mispricings will therefore most likely emerge in those few sectors where a rising cost of credit could present cash flow and challenges when the time comes for loans to be rolled over. Least favoured assets thus remain concentrated in highly debtdependent real estate and commodities.

FINANCIALASSET FORECASTS DATA ADVISER - INSURANCE

CAUTIOUS

OPTIMISM LOCALLY

Looking back and looking forward. We asked insurance and investment advisers about their views on the big themes of 2016, and what we might expect in 2017.

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or some inexplicable reason, I am optimistic that 2017 presents as a decent year in the making for insurance industry participants.

On a number of fronts, developments appear to be crystallising and the general, if not specific, shape of things to come is emerging from the mists of debate, discussion, and review.

From an adviser perspective, the progress being made toward the formation, of Financial Advice New Zealand, with the Forums completed, looks like achieving consensus.

Without pre-judging the detail, the general concept of a membership structure which recognises the identity and functions of the

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several branches – life insurance, investment, mortgage, and hopefully, fire and general insurance – appears to be emerging.

Financial Advice NZ will not please everyone and will be sure to have its critics, but the unifying intent of the initiative should be applauded. The degree of effectiveness and/or progress of the new entity will depend entirely on the will of the participants for it to succeed. The alternative of a fragmented adviser industry – as prevails in Australia with eight separate organisations purporting to be the voice of advisers – is simply unacceptable and will render the proposed advocacy and promotional efforts ineffective. Still much work to be carried out on this front, but there

are promising signs emerging, and insurance advisers should be able to anticipate a more cohesive advocacy effort.

While there have been a number of personnel changes at the regulatory body, the FMA is evolving into an entity with a cohesive focus on governance, conduct, and enforcement. Again, as critical as some some are of FMA, the regulator is a more consultative and responsive entity than its Australian counterpart.

Insurance advisers should be wary of developments over the ditch, with the adoption of the Life Insurance Framework (LIF) likely to cause significant disruption to risk advisers’ business plans. While there are little or no indications of the recommendations of the various reports being adopted here, vigilance may well be advisable.

The delays in releasing the Exposure Draft of the review of the FAA will be addressed soon, and it is to be hoped that the enactment of revised legislation does not fall victim to election year priorities. Uncertainty is not desirable, and the sooner the obligations of the majority of insurance advisers who fall into the” Registered but not Authorised” category, can be confirmed, the better.

Of course, the eventual content of the legislation is likely to have flaws. For example, the apparent disregard for the need to give consumers clarity surrounding the underlying differences between sales and advice is likely to continue. In light of developments in Australian and the US financial service industries, this issue could stand more examination. Nevertheless, the general measures around disclosure, class advice, product demarcation should improve the industry profile and serve the consumer better. Perfect? No, but better than before, and definitely better than elsewhere.

Product providers have had their own representative body issues to deal with, and the schism that saw a number of life insurance

FINANCIAL FORECASTS - INSURANCE

company members depart the FSC, did little for the stability of the industry. With the appointment of Richard Klipin to the role of chief executive, there is every likelihood that the dissident members will return to the fold.

The life insurers that chose to depart need to be convinced that FSC still cares for them and is not the voice of investment and/or KiwiSaver providers solely. Klipin is an accomplished, experienced professional, and is well qualified to heal the rifts of the recent past.

Rationalisation, merger and acquisition activity may be selective and unlikely to be plentiful, although the announcement from ANZ Bank last year, may see the trend in Australia for banks to retreat from product provision replicated in New Zealand. Will we see any new players enter the New Zealand market on the company side?

Logic suggest not, as market size and potential may limit the attraction for new and overseas newcomers. That said, there is a distinct and growing trend for Asia’s giant insurance companies to participate in the Australian market, and there could well be spin-off into the New Zealand market.

Technology will continue to play a significant role in changing the way insurance business is transacted and will impact all participants. The much-heralded Robo-advice will continue to make progress, and the need for insurance advisers to be able to articulate the value of their advice to consumers will become more important than ever. Communications technology will become more significant as

The eventual content of the legislation is likely to have flaws - David Whyte

compliance processes and documentation evolve. Here I have to declare and disclose an interest as chairman of SuiteBox, one of the communication platforms gaining momentum in the New Zealand and overseas markets. The adoption of innovative technology that either increases revenue or decreases cost – or both – will continue to be an important aspect of the insurance industry’s strategic perspective.

Product development does not show signs of any revolutionary changes. Incremental improvements and tinkering with definitions, terms and conditions will continue, and

research-based evidence of product quality will continue to figure in many advisers’ selection processes. No doubt insurers will need to maintain a close watch on the profitability of their product lines, and, in particular, the sustainability of the Disability Income product account. Claims experience for this product will continue to be monitored by the reinsurers, with any adverse trends being reflected in pricing.

So in conclusion, I retain a cautious optimism founded on an apparent steady-as-she-goes approach from industry participants, looking to implement phased change rather than any radical alteration in strategic direction.

Change is, of course, now a constant factor in the insurance as well as other segments of the financial services industry. The survivors will learn to cope and adapt with change, and in some cases, hopefully be the agents of change themselves.

That said, all this upside fortune-telling could prove to be wildly inaccurate as the global political, social, and economic interactions continue to be challenging.

While we may be anticipating a progressive development of changes to the insurance industry, external events still have the potential to render some or all of these prospects for 2017 off target – hopefully not – only time will tell.

David Whyte is a consultant to the industry and former chief executive of AIA in New Zealand and Australia.

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KEEPING UP TO DATE WITH LEGS AND REGS CHANGES

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usinesses who adopt a do-ityourself compliance program to meet their Financial Markets obligations are too dissimilar to clients doing DIY jobs for their financial services and products – for those who live and breathe it, the job can be a joy.

For those who have only a vague idea how it should be done, the idea could be fraught with danger. I know a few advisers who look

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forward to rolling up their sleeves and putting a few hours each month into the compliance program for their business, but if it means forgoing a meeting with a new prospect or current client is it the right use of their time?

Every quarter we have a consultant prepare a list of all the Legislative and Regulatory changes that are happening, or have happened, that relate to Financial Services in NZ. This document runs between six or

seven pages every quarter a third of which can have a direct or indirect impact on a Financial Advice Businesses. The reason we contract this service is because the task of us keeping up to date was time-consuming and we didn’t want to miss anything.

Here is a selection of key updates from the last quarter of last year that relate to advice services.

FINANCIAL FORECASTS - REGULATION

▶ September 2016 – AML/CFT - FIU released the Quarterly Typology Report Fourth Quarter (FY2015-16, 1 April – 30 June) including information focused on “Alternative Banking Platforms.” ▶ 9 September 2016 – The Minister of Consumer Affairs and Commerce announced changes to the Authorised Financial Advisers Code of Professional Conduct have been approved, coming into force on 1 Dec 2016. ▶ 14 September 2016 – In the FMA update, the FMA advised that, due to the changes in the AFA Code, particularly Code standards 8 and 9, the guidance note: “Limited personalised advice” will no longer apply from 1 December 2016 and will be archived once the revised Code comes into effect on this date. After 1 Dec 2016, the FMA website was updated to show the guidance as archived. ▶ 10 October 2016 – FMA released its 2016 Annual Report. ▶ 1 October 2016 – The Reserve Bank put revised LVR restrictions into effect, with associated revisions to the Handbook document “Framework for Restrictions on High-LVR Residential Mortgage Lending” (BS19) ▶ November 2016 – The advisers’ bodies supporting the development of a new advisers’ representative body titled Financial Advice NZ established a website to provide news on progress and to provide an opportunity for interested parties to provide feedback. The website address is www. financialadvicenewzealand.co.nz ▶ 3 November 2016 – Minister released the outcome of the FMA and Companies Office fees funding review, including a table outlining the levy and fee changes, with the changes proposed to come into effect on 1 July 2017. ▶ November 2016 – The Anti-Money Laundering and Countering Financing of Terrorism (Prescribed Transactions Reporting) Regulations 2016 were released, with reporting obligations coming into effect on 1 Nov 2017. ▶ 2 November 2016 – MBIE released a consultation document under the CCCFA regarding the potential unfair outcomes when a lender (creditor) fails to make proper disclosure of non-material key information to debtors, with submissions closing on 28 Nov 2016. ▶ 14 November 2016 – Code Committee released the final version of the AFA Code coming into effect on 1 Dec 2016. Also allowed transitional dates to get CPD Plans and ABS requirements up to date. ▶ 18 November 2016 – Minister of Commerce confirmed that the exposure

Most of our clients, even if they did have the time, do not want to do compliance.

- Barry Read

draft of the Financial Services Legislation Amendment Bill will be released before the end of 2016. (See the next item) ▶ 22 November 2016 – FMA released its response to submissions on the consultation relating to licensed crowdfunding and peerto-peer lending service providers and the information required to be provided in their annual regulatory returns. ▶ 1 December 2016 – Ministry of Business, innovation and Employment announced that release of the exposure draft of the Financial Advisers and Service Providers Acts amending Bill (Financial Services Legislation Amendment Bill) and the associated consultation paper is delayed and will now be released early in 2017. ▶ 1 December 2016 – The Financial Markets Conduct Act came fully into effect, with the ending of remaining transitional provisions. ▶ 8 December 2016 – FMA released its latest AML monitoring report.

Remember these are just the headlines and we now must make sure we are across the details of each item and determine the impact on our client’s businesses.

You would be surprised how many advisers think their compliance is up to date, but regulatory changes have meant they are out of date.

failed to meet their obligations under the act.

We spoke to two of the entities and one of them stated, nobody, (FMA) told me what I had to do. I made the comment that the IRD hadn’t contacted me about my tax obligations either, but I pay them and I pay an accountant to make sure they're right!

Most of our clients, even if they did have the time, do not want to do compliance. They just want to be able to sleep at night knowing they are compliant.

The value of investing in compliance is much more than suggested in the old phrase ‘good compliance is good business’. How do you put a price on your opportunity cost?

How do you put a price on the ‘sleep test’ for your business? How do you put a price on managing regulatory disruptions so your business doesn’t grind to a halt if there is scrutiny?

The benefits of good compliance: 1. Save Time. Investing in the services of experts who work with you to manage your day-to-day compliance means you can take the comparative advantage at a lower opportunity cost and you can use that time to work with your clients. I was walking into an FMA briefing one day and two of my clients were there. I asked them why they are there, isn’t this what you pay me to do? One went back to work, the other had nothing better to do.

2. Staying on top of compliance means fewer distractions. In the case of smaller firms, a compliance issue can often grind the business to a halt because the compliance manager is the responsible manager, who is the director of the business. Minimising these distractions, or treating symptoms early, gives licensees a better process for addressing any materially adverse events.

3. A Good Night’s Sleep. So far, touch wood, clients who engage us to assist in the management of their compliance requirements, who have had a monitoring visit, investigation or information request by the FMA, the business could respond correctly in each case. So, the benefit is that you can sleep better at night, knowing your business is looked after by people who do it for a living.

This is the first in a new series on regulatory issues facing financial advisers. In each issue of ASSET this year Barry Read, who is the managing director of IDS, will provide an Adviser Update.

The economics of investing in compliance How long will it take someone who doesn’t live and breathe regulation to work on the compliance function of their business properly? The FMA recently sent out 12 AML/ CFT Warning notices to entities who had

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YOURsted

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John Schell says he aims to provide his clients a holistic service that will support them through decades of change.

By Susan Edmunds

A

decision to hold back and see how 2007 panned out before launching a new investment advice business proved to be the right one for SurePlan Financial managing director John Schell.

He arrived in the investment industry in the early 2000s, after an earlier career in sales training and consulting, and training in neurolinguistic programming.

A property investment company he consulted for asked that he consider taking on the job of general manager and, having grown tired of working on his own, he agreed.

“This was back in the early 2000s,” Schell said. “I worked with them and it was great; we helped a whole pile of people and had some good processes and a whole pile of really happy clients.

“I did that for five years and then decided I wanted to do something that was mine. I went out and did a couple of years of a business I set up myself but I’m quite into economics and watching systems and trends and I picked that the GFC was coming. I didn’t think it would turn out with massive quantitative easing – I thought it was going to follow the same process of the 1930s, of serious retrenchment.

But I thought when starting an investment company, that’s a bad time to do it.”

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Importance of focus Instead, he closed the operation in early 2007 and worked as a business consultant for four years.

During that time, he realised how important it was to focus on all aspects of people’s lives, when giving advice. “You can’t just work on one area. You can really help them on the investment side but if their cashflow management isn’t right or they don’t have the insurance in place, or a larger plan they’re working to, often you’re doing some great stuff but the results get degraded. Even really smart people can be less than ideal in running their own finances.”

When it became clear that the Financial Advisers Act was coming into play, Schell decided it was time to get back into insurance advice.

“I thought that was perfect. What a great time to come back in and do something I’m passionate about, under a new rule structure that should push out some of the ratbags, create some good opportunities for acquisition and we can set up a business that’s absolutely compliant under the new system.”

SurePlan, set up five years ago, offers holistic financial planning, financial advice, investments, insurance and mortgages.

“What we do is quite different,” Schell says.

“With our model we need to understand the whole of a client’s life. In our clients’ lives they have money coming in and money going out. They usually have a mortgage, some need for insurance. They often don’t have any kind of financial plan other than ‘it would be quite good to pay down our debt’. They often don’t have estate planning in place. We look at all those areas.”

The business has grown through a mixture of phone marketing and referrals. As part of the loan market group, it also picks up recommendations from other mortgage brokers. “By doing the right thing consistently over a number of years we’ve built up enough trust that mortgage brokers refer their clients to us for financial planning, even though we do mortgage broking,” Schell said.

Hurdle for consumers “Early on we said ‘we won’t take your clients’ and everyone said ‘yeah that’s great’ but no one referred to us. But now we’ve been doing it long enough and have done the right thing and it’s made everyone more comfortable.”

A big hurdle is getting the consumers to realise what they need, Schell says.

“Marketing is about having a narrow, tight, precise message. But what we do is all-encompassing. If you heard an ad on the radio that said, ‘hey you probably don’t have your wills up-to-date, your enduring power of attorney set up right, your mortgage is probably structured wrong and you’re probably paying too much on insurance and have no plan for your future’ you wouldn’t

"We’ve been doing it long enough and have done the right thing and it’s made everyone more comfortable."

– John Schell

pick up a phone and call, you would go and get a glass of wine.”

A lot of New Zealanders had never been exposed to a financial plan or financial adviser, he said, and did not understand what might be on offer.

SurePlan’s sales process is set up in such a way that the team puts in about 20 hours of work on each client before they pay for any services.

“It sounds pretty high risk but luckily we have a high hit rate,” Schell said.

When a client is referred, he makes the initial phone call to talk to them about what is on offer. He then organises one of his team to visit and spend about 90 minutes explaining about a financial plan, how SurePlan worked and what the client could hope to get out of the relationship.

If the client approves, they pay a $550 bond before having another couple of meetings where they discuss things such as their goals, cash flow and assets.

with a huge amount of assets, a lot of structuring and a lot of work.”

SurePlan sets out its fees so that clients know what they will pay before they are charged. Schell does not charge an hourly rate because he said it would dissuade clients from getting in touch – a key part of the business is that they are encouraged to communicate as much as they need to.

Most of SurePlan’s clients are high incomeearners. Schell said he would like to figure out a way to work with people who did not have a lot of money but had not been able to make it stack up financially.

“If you do the right things in your early20s, it’s just easy. Our average client is in their mid-40s to early-50s and is being paid $150,000 a year, with a $900,000 to $1 million house and a couple of hundred thousand in lending on it. They’ve earned a lot of money in their lives and if we had talked to them when they were 22, they would be worth twice as much without doing it tough.”

Comfortable planning

Managing efficiencies

From there, senior adviser Michael Allen oversees a full financial plan being created, which often runs to almost 50 pages. He then arranges a meeting to go through it in detail with the client.

“If at the end of that, they don’t like the plan or don’t feel it’s what they need or that we’re the right company, they can walk away and we charge them nothing at all,” Schell said. “If they like the plan and they want to retain a copy but they think they would like to implement it themselves, they can pay $550 and leave with the plan. Those two things almost never happen, otherwise I wouldn’t have a business because we spend so much money to get them to that point, that it wouldn’t work. They almost all come on board and say ‘we want you to work with us over the next 20 years to make sure the plan happens’.”

How much a client pays can vary a lot.

Schell says he usually gives a range – from a couple of thousand dollars to as high as $20,000.

“It’s normally somewhere in the middle.

The bottom end means you’re doing almost nothing with us and the top end is someone

SurePlan has recently set up another arm of the business that can be appointed by the court to look after the affairs of people no longer capable of doing so themselves. It can be nominated by an organisation such as a district health board if someone loses capacity and has no family members to step in. Some of that work is done pro bono, through managing business efficiencies, and some is paid for if the client can afford it.

Schell said he wanted SurePlan to continue to be a holistic offering for clients throughout their lives, adjusting and growing with them as their circumstances changed.

He said he could see similarities between the company’s role and that of the bank manager in the town he grew up in.

“I come from Te Aroha and in the 1970s people would go to the bank manager for all sorts of stuff. I would hope we can be that kind of person, that people come to as a resource because we’ve helped them in so many areas. I think being that type of trusted adviser and support person is pretty ideal – although hopefully for us it’s a bit less formal. We used to dress up to see the bank manager.”

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AML REPORT - WHAT DOES IT MEAN?

A The FMA has released its second annual AML Monitoring Report detailing its 2016 monitoring activities and report card on the 800 Reporting Entities (REs) under its supervision.

Meredith Cornelius of Financial Strategies Nelson commented on her reading of the report and what it all means for the smaller retail financial adviser and their practice.

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s a qualified AML auditor and AFA in her own small practice, Meredith provides a unique perspective on AML compliance for other advisers like herself advising a client base made up of New Zealand ‘mum and dad’ retail clients saving for, or in, retirement.

As one of three supervisors, the FMA is charged with overseeing AML compliance for about 800 financial service providers.

These range from the ‘big end of town’ to the smaller independent or productaligned AFA providing financial advice and service on Category 1 products deemed Reporting Entities (REs). Considering my own compliance programme and activities as well as my experience auditing scores of programmes for other retail advisers like myself, there are 4 key takeaways from the FMA’s latest monitoring report.

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Staff Training: Under section 57 of

the Act certain staff must be trained on AML/CFT matters. The FMA is very clear that REs who do not carry out staff training are in breach of their obligations.

I am often asked about what constitutes a compliant training programme for the solo AFA who may have a single administrative staff member, or none at all. For those small businesses, AML compliance may be limited to simply conducting Standard or Enhanced CDD on typical New Zealand clients in practice (driven by the rules prescribed by wraps and product providers), so what more is there to learn?

Maybe not a lot more. Regardless, the FMA is clear that Section 57 of the Act applies to all REs regardless of company size and your activities and documentation must include evidence of sufficient and regular AML training for you and your staff.

What might sufficient and regular AML training then look like for the small practice? ▶ Ensure your written AML Compliance Programme document includes a section on your company’s policies, procedures and controls for ongoing AML training and for yourself and any staff (e.g., your PA or administrative staff). For instance, if you leave CDD collection to your PA, you must plan for, conduct and conduct ongoing training for him or her in addition to your own periodic training. ▶ At a minimum, ensure that you and your staff plan for and set aside time each year to review together your AML Compliance Programme document. Add, delete and revise to ensure the document remains relevant and compliant, and update any policies, procedures and controls.

Record the review session in your own and your staff’s AML Training Log. ▶ If you attend an adviser workshop or conference that includes AML sessions, make a point of debriefing the session with your staff after the event. Make sure you record the debrief session in your respective AML Training Logs. ▶ Schedule time to periodically visit the FMA’s website and read/review recent content on AML. For example, you and your staff can easily access and review the relatively short 2015 and 2016 AML Monitoring reports and record the activity as training in your respective logs. ▶ Ensure you have the most recent identity verification guideline documents (available on the FMA website) at hand in your office. Schedule occasional reviews of the document to keep straight the wonders of CDD – and record the reviews in your training logs.

AML training doesn’t have to be onerous nor involve expensive, but it is required. Use the FMA website as your ‘go to’ AML resource.

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Suspicious Transaction Reporting (STR): This year’s FMA

monitoring report states that ‘… we are particularly concerned about the continued low level of filing of suspicious transaction reports (STR) by REs …’

Given the types of clients typical of the small retail adviser business, ST’s are unlikely and I suspect this concern relates to the large transaction volumes at the ‘big end of town.’ Regardless, you need to ensure the topic of STR is covered in your written AML compliance programme document to achieve full AML compliance. Steps to follow around STRs: ▶ Ensure your AML Compliance Programme document includes a section on your policies, procedures and controls around STR. ▶ Review for yourself and share with any staff the red flags that would constitute a ST (e.g., a client who refuses to provide requested CDD, a client who appears under stress for withdrawal of a large and unusual sum, etc.) – and record the review as training in your respective training logs. ▶ Have a Suspicious Transaction Report Log. Yes, it might be empty, but have one set up as this supports your commitment to taking seriously your role in identifying and reporting ML/FT risks. ▶ Ensure you and your staff are signed up for email alerts from the Financial Intelligence Unit of the NZ Police (FIU).

3

Sufficient Due Diligence for High Risk Clients: Again, given the

types of retail clients that AFAs generally advise (‘mums and dads’ and/or their family trusts), it is unlikely that we face ‘high risk’ situations. As an RE you still need to understand what defines a high risk client and include a section on your policies, procedures and controls when dealing with them. This could simply be a statement that ‘ … our policy is not to engage with any clients deemed ‘high risk’ …’

To be clear, a high risk client isn’t necessarily the same as a client requiring Enhanced CDD (e.g., a family trust). A high risk client is more likely one that is: ▶ Vulnerable to corruption due to the nature of a foreign public position (or related to someone in a foreign public position), also known as a Politically Exposed Person (PEP). The Act requires identification of only foreign PEPs, not New Zealand PEPs (i.e., Teresa May is a PEP; your local MP likely not). If you have identified a client or prospective client as a PEP, take extra steps to assess for ML/FT risk based on circumstances, record your findings (including source of wealth and funds) and review the situation periodically. ▶ Required or requests an unusual business relationship (unusual defined here as distinct to your normal advisory service).

Again, assess any such situation for ML/FT

risk and record your findings in a file note.

Finally, if you are approached by someone requesting you engage with them in an ‘unusual’ manner that appears suspicious, even if you do not engage further with the person if you deem the request suspicious, document the request in your Suspicious Reporting Log and report to the Financial Intelligence Unit (FIU).

Governance and Culture: The FMA has identified the need for better corporate governance to set the right culture within the organisation for effective AML compliance. My view is that the FMA is speaking again to the ‘big end of town’ with larger corporates and their compliance programmes. But the observation remains relevant for the small retail financial adviser and their practice in the following ways: ▶ Regardless of size, an RE is an RE. As a ‘small’ RE, take seriously your AML obligations, convey the importance of compliance to your staff and periodically check that your policies, procedures and controls remain relevant and sufficient. ▶ Do not consider your own RE obligations satisfied just because you follow the AML requirements of another RE (i.e., a product provider or wrap service). They may have a different AML/CFT Supervisor and their own requirements. You, and only you, are responsible for your own RE obligations as per the Act and FMA expectations.

Final thoughts: Whether you enjoy them or not, statutory AML obligations are here to stay. But compliance does not need to be onerous. Here are some quick high level takeouts for small adviser businesses from the FMA Monitoring Report: ▶ Ensure you have ongoing training set out in your policies. Follow through with face to face meetings on appropriate issues with staff. Log the training. ▶ Check systems are in place for suspicious transactions. Know how to report them. Keep an STR log even if it has no entries. ▶ Each year review your definition of a ‘high risk’ client. Include a written policy on dealing with any ‘high risk’ clients. Your policy can be as simple as a clear definition and statement that ‘ … our policy is not to engage with any clients deemed ‘high risk’ ▶ The FMA has a “conduct” focus. Part of this is ensuring that each adviser business has appropriate corporate governance structures to promote a compliance culture. For small adviser businesses this simply means having clear AML policies and walking the walk each year with some training and on-going compliance.

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Meredith Cornelius is a qualified AFA and holds the globally recognised CAMS designation – Certified Anti-Money Laundering Specialist. She owns and operates Financial Strategies Nelson

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Risk advisers contemplating the future should think strategy first The best way to respond to upcoming legislative change will depend on what you really want to do.

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he new version of the Financial Advisers Act is coming.

Should you rush out and finish level five, or first restructure your business to meet the challenges of the new environment? That question actually begs another: What kind of business will you be, which that depends on what you intend to do.

The Ministry of Business, Innovation, and Employment frequently asked questions guide has a nice simple approach to the Financial Advisers Act review.

It assumes that if you are an RFA, as most advisers specialising in risk products are, then you will either become a financial adviser or an agent.

They leave out the question of whether

you will run your own financial advice firm, or at the other end of the spectrum, leave the business. You could even quit giving advice.

You could quit giving advice and focus on running an advice firm, hiring advisers. There are lots of options. But let us assume you intend to stay in the advice business. What now?

Big businesses like to invest in strategic capability. In a small business the business capability seems to be almost the same thing as the capability of the owner/manager. But if you aspire to getting a good price for your business when you eventually sell it, you might want to think a bit more about that.

There are people talking about the Financial Advisers Act review and making

PRACTICE ASSET REGULATION DATA MANAGEMENT ADVISER

" Given that last time around, the law was altered substantially late in the legislative process, caution seems wise."

the immediate connection to increased educational and competence standards likely to be required of financial advisers under the new regime.

Of course, they are broadly right: I am entirely in favour of education and competence. On the other hand, some of those requirements are yet to be made clear,

and sufficient time will be allowed for the transition.

In effect, the idea that passing the course is the first step relies on all sorts of assumptions: that the course will be the requirement, that the law will change as expected, and that your business will stay exactly the same as it is right now, only processes and procedures will alter as a result of the new law. Given that last time around, the law was altered substantially late in the legislative process, caution seems wise. Besides, you might want to change your business and processes based on some other things. So it is valid to wait, and think about some of the other things in the to do list in the meantime.

Changing the order in which you get things done may have other impacts: like on how well you serve your clients, and how much money you make. Both valuable goals that you could achieve immediately, without waiting for the law change.

Here are the most interesting of options to consider: Scale up – Getting bigger or sharing costs has some great effects if you believe the future holds more compliance cost, and if that cost tends to be fixed relative to the size of the business. In a business with a higher proportion of fixed costs you make more money the larger you get. Or put another way: some smaller businesses may go from becoming nice little earners – to being marginal. Adding scale may be just the ticket.

But buying or merging businesses takes time, which is another reason why you should perhaps put this strategy near the front of the queue.

Partner-up – if you lack the capital, the trust, and the opportunity to invest, grow, or buy your way to a bigger business then you can follow the course taken by another group of professionals: partnering. Medical centres often consist of a shared common services business which may own or rent the premises sufficient for a cluster of medical functions.

The services business may manage reception and other non-medical staff. It may even employ nurses. But specialists all retain their own individual businesses, and yet enjoy many of the cost savings of a larger business.

Tool-up. There are some businesses that have few compliance systems, limited customer databases, and poor documents.

The processes tend to be manual at every step. These might do well to focus on creating efficient automation of processes to reduce the hours spent preparing advice documents.

While they might feel a bit exposed right now, this is a happy position to be in – if you fall into this category you can leapfrog the

last generation of clunky expensive software installations and go straight to all cloud-based solutions which are generally cheaper and easier to maintain as well.

Tighten-up. What if you are one of those businesses that did invest in technology and processes five years ago to meet the current FAA requirements, only to find that they were lower than expected? You probably have some high monthly expenses attached to those. Or maybe you simply have a larger physical footprint than needed? Or things have changed and the mortgage brokerage you carefully sited yourself next to has been sold and no longer refers to you? In such cases you may have a cost base that could be trimmed.

Just as debits always come before credits, it is a good strategy to cut before you spend.

So maybe tackle your budgets and expenses before education.

Those options are all variations on the theme of running a financial advice business, probably with you, as a financial adviser, at its centre. But there are two more to consider: Quit running a business, be the best adviser you can be. If you love seeing people, solving their problems, and doing the work of an adviser – and not human resources, compliance, and IT managers – then it is perfectly valid to find an advice business that will let you do that, and let them have all the hassles.

Quit being a financial adviser, focus on running the best business. Perhaps the entrepreneur in you was always stronger than the financial adviser role. Perhaps you just know that as life becomes more complex you can either be a great leader, or a great financial adviser, but probably not both. You could choose to run a great financial advice firm, and not be a financial adviser: you can hire dedicated financial advisers to work in the business and you can focus on the issues of strategy, finance, systems, compliance, and marketing required to make it all work better than anyone else could.

Whichever option you choose; it is likely to have far-reaching consequences. Some of the choices may make it hard to change course for years. Taking time to make that choice is worth it. Make written plans – try to imagine several different options and don’t land on one too quickly. Discuss it with people you trust, people that know your skills and temperament well. Whatever your decision, it would be best if you are happy with that first.

Russell Hutchinson is director of Chatswood Consulting and director of Quality Product Research.

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PRACTICE ASSET REGULATION DATA MANAGEMENT ADVISER

The next adviser opportunity: The robo-practice Raw information and research has become more accessible to consumers so this is not the death knell for human financial advice, Tony Vidler writes.

{ TONY VIDLER }

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e are living and working through a period where there is a permanent and fundamental shift in consumer buying behaviour.

For years the financial services industry has worked with theories such as "insurance is sold, it is not bought", or "investment products

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are too complex for consumers to research for themselves" and certainly for an extended period of time these beliefs were largely true.

The "supply" side of the industry (product manufacturers as well as distribution) has enjoyed the benefits of information asymmetry for literally decades.

Put simply: We had more, or better, information than the customers did, and were in the position of greatest power or influence.

Well, those days are gone already. Raw information and research is abundantly available to any consumer with internet access and a smartphone, and that happens to be just about every person whom advisers might want as future clients. Overseas research is beginning to reveal the extent to which consumers are embracing and actively using their access to this information. This for example from the USA: See below.

Financial products are nowhere near as baffling and confusing to many consumers as we like to believe. They are figuring stuff out for themselves when it comes to deciding on

product solutions.

How consumers access information has changed forever. How consumers assess the merit of product solutions is rapidly changing.

How they access, consider and utilise advice is already a blend of technology-based solutions and human interaction. Swiss Re put together the following research-based graphic of how consumers are using multiple research, manufacturer, opinion and advice sources to purchase insurance products: See Fig 1.

These roboadvice models are not however signalling the imminent commercial death of humans involved in delivering financial advice.

Technology that delivers higher accuracy in diagnosis and bypasses the need for further hasn’t killed off the business of medical practitioners – if anything there is an increasing demand for advice in that arena. Recent surveys and research is increasingly suggesting that millennials – who we all presume will choose technologybased solutions over us – actually prefer a hybrid approach of information access via technology solutions and humans for increasing complexity.

The question for advisers then is not "how do I compete with roboadvice?", but "how do I incorporate a roboadvice offering successfully into my business?”

Our thinking needs to shift from trying to figure how to compete head-on with a demand-driven technology solution and move to a situation where we can make the demand-driven technology solution work for our clients in a way that still enables us to be the people that educate and coach the right behaviours and strategic choices for them.

The solution is the robo-practice.

The robo-practice will blend technologydriven delivery of simple product solutions in a direct-to-consumer model together with systems which identify complexity triggers that indicate the need for personalised advice.

There are times in people’s lives where their financial services needs are actually very simple. No job…no dependents…no worries…

PRACTICE ASSET REGULATION DATA MANAGEMENT ADVISER

what do they need at that point? Not a lot, really. Delivering a high-cost financial plan is rather excessive for the majority at this stage.

Equally, the retiree with sufficient capital and a plan already in place to see them through their likely last days will typically experience diminishing need for expensive and time consuming solutions.

For those consumers who somehow find themselves in the position of spending more time at work and with increasing responsibility, and who are experiencing the joys of a young family and a large mortgage, and who are maybe even thinking about becoming selfemployed at some point…well their lives are pretty complex.

So too are the financial decisions that they have to grapple with. There is competing demand for every dollar they can generate and finding the right balance of debt repayment, provision for the future, ensuring certainty for the family becomes tough for busy people who are focussed on any number of things that are more urgent and pressing than going online to research insurance products or retirement savings funds performance histories for example.

A robo-practice will be one where there is a strong online presence together with an abundance of DIY tools and content for consumers, together with transactional facilities for simple product solutions.

Those facilities already exist in NZ through a few institutions in the insurance and KiwiSaver

The question for advisers then is not "how do I compete with roboadvice?", but "how do I incorporate a roboadvice offering successfully into my business?” areas whereby they have technology solutions that are fast, inexpensive and efficient for consumer use, and can essentially be backed into an advice practice.

In simple terms, these are consumer product solutions which are already built in the fintech arena here in NZ, and the adviser practice merely needs to provide a portal for any consumer of theirs to access those solutions. The point in highlighting that is to

illustrate that an adviser doesn’t have to create the technology to incorporate the model into their practice.

The portal – your website – now becomes something more than a mere online advertising billboard to a transaction facility.

Moreover, it is a transaction facility that captures business and revenue in the short term, but which also creates opportunity for the long term.

By incorporating great data capture on these transactional consumers and building great interpretative and analytical skills internally there is an opportunity to begin to learn the triggers that indicate complexity is occurring in consumers lives. That in turn presents opportunity for highly personalised and highly valued advice solutions.

Fintech, or roboadvice, does not present the threat of extinction that the doomsday folk predict. It is not a revolution, but an evolution.

Practices which evolve their model to cater to the shifting research and buying behaviours of consumers, and who also understand how to incorporate technology-driven solutions for simple needs, will still have ample opportunity to provide advice in complex areas for busy consumers.

Tony Vidler is an adviser to financial advisers, helping them to grow their businesses via his coaching firm, Strictly Business.

031

ASSET ADVISER

For more information call 0800 888 361 Latest 1 Yr 3 Yr 5 Yr Transaction Return Return Return Exit Price % New Zealand Insurance Fund Miscellaneous Booster KiwiSaver Capital Guaranteed 1.0709 2.58 --Booster KiwiSaver Options 1.1852 -0.08 --Fidelity Life Super-Sup Options --0.54 4.75 5.93 Kiwi Wealth KiwiSaver Scheme -2.45 3.41 -CashPlus Fd NZ Funds KiwiSaver Growth Strategy 1.5884 4.63 7.39 11.51 NZ Funds KiwiSaver Income Strategy 1.2923 5.64 3.91 4.12 NZ Funds KiwiSaver Inflation Strategy 1.3297 6.49 4.97 5.84 Westpac KiwiSaver-Capital Protect Plan 1 2.1502 10.32 10.42 12.96 Westpac KiwiSaver-Capital Protect Plan 2 1.9301 10.31 10.42 12.95 Westpac KiwiSaver-Capital Protect Plan 3 1.8503 10.29 10.41 12.95 Westpac KiwiSaver-Capital Protect Plan 4 1.9112 10.31 10.41 12.95 Westpac KiwiSaver-Capital Protect Plan 5 1.6617 10.31 10.42 -NZ Insurance Cash AMP KiwiSaver Cash Fund 1.4617 1.85 2.61 2.66 AMP NZRT Cash Fund 1.45485 0.79 1.59 1.64 AMP Prem PSS OnePath NZ Cash 1.55634 1.97 2.77 2.80 AMP PSS Select Cash 1.46826 1.78 2.57 2.56 ANZ Default KiwiSaver Scheme-Cash 1.3911 2.38 3.02 2.98 ANZ KiwiSaver-Cash 1.2965 2.39 3.08 3.00 Aon KiwiSaver ANZ Cash 14.9869 1.93 2.56 2.54 Aon KiwiSaver Nikko AM Cash 13.9902 2.29 2.96 3.10 ASB KiwiSaver Scheme's NZ Cash 1.415 2.33 3.07 2.92 BNZ KiwiSaver Cash Fund 1.1216 2.68 2.88 -Booster KiwiSaver Enhanced Income 1.4755 2.04 2.87 2.97 Fidelity Life Super-Super Cash Portfolio 2.8344 1.02 1.49 1.60 Fisher TWO KiwiSaver Scheme-Presv 2800.53676 2.24 2.97 3.10 Kiwi Wealth KiwiSaver Scheme Cash Fund -2.75 3.35 -Mercer KiwiSaver Cash -2.34 3.03 3.00 NZ Defence Force KiwiSaver Cash -2.12 --OneAnswer KiwiSaver-Cash Fund 1.3464 2.25 2.96 2.87 SIL 60s + Sup Cash Fund 2.1485 2.01 2.53 2.44 Westpac KiwiSaver-Cash Fund 1.3571 2.40 3.02 2.96 NZ Insurance Equity Region Australasia AMP Prem PSS OnePath NZ Shares 2.13594 14.31 10.01 14.11 Aon KiwiSaver Milford 2.9293 9.33 10.52 15.79 Booster KiwiSaver Socially Rsp Inv Gr 1.5594 9.24 9.28 9.38 Booster KiwiSaver Trans-Tasman Share 1.3464 16.67 8.75 5.90 Milford Active Growth KiwiSaver 2.96402 9.44 10.63 15.95 OneAnswer KiwiSaver-Australasian Share 1.6413 13.87 12.67 16.48 NZ Insurance Equity Region Australia AMP KiwiSaver Australasian Shares 1.0237 ---New Zealand Insurance Fund Equity Region NZ AMP Prem PSS ACI NZ Shares 2.33906 11.62 14.38 16.99 AMP Prem PSS ACI NZ Shares Index 2.06818 14.64 13.77 16.97 Fidelity Life NZ Shares Portfolio 5.7092 8.65 9.94 10.14 Fidelity Life Super-Super NZ Share -14.82 11.98 11.37 SIL 60s + Sup NZ Share Fund 5.156 14.64 12.24 16.38 SIL NZ Share 5.2126 30.41 15.22 17.15 New Zealand Insurance Fund Equity Region World AMP KiwiSaver International Shares 1.0815 ---AMP KiwiSaver Passive International 1.0769 ---AMP Prem PSS ACI Global Shares Index 1.84478 5.40 9.41 11.92 AMP Prem PSS ACI Global Shares 2.10883 27.18 9.86 13.09 Index Hdg AMP Prem PSS FD Intl Share Fund 1 Value 1.16255 6.03 7.93 10.63 AMP Prem PSS FD Intl Share Fund 1.266 2.61 9.03 11.94 3 Growth Booster KiwiSaver International Share 1.6869 11.44 9.36 11.28 FANZ Lifestages KiwiSaver High Growth 1.05659 8.94 --Fidelity Life Aggressive 3.2214 3.09 7.97 8.61 Fidelity Life International 2.2476 7.56 6.74 8.31 Fidelity Life Super-Sup Intl -10.63 7.75 8.92 Fidelity Life Super-Super Aggressive -8.31 9.76 9.68 Fisher FuturePlan - Intl Coms 2.78708 11.19 6.13 8.11 Fisher TWO KiwiSaver Scheme-Eq 3915.23273 12.23 9.14 10.56 Mercer KiwiSaver Shares -15.19 --NZ Defence Force KiwiSaver Shares -15.02 --OneAnswer KiwiSaver-Intl Share 1.5642 2.77 9.66 13.23 OneAnswer KiwiSaver-Sustainable Int Shr 1.5013 -0.29 7.58 9.62 SIL 60s + Sup International Share Fund 2.9737 2.46 9.12 12.66 New Zealand Insurance Fund Equity Sector Global - Real Estate AMP KiwiSaver Property 0.9499 ---OneAnswer KiwiSaver-Intl Property 1.3291 6.83 10.98 11.54 New Zealand Insurance Fund Equity Sector NZ - Real Estate MFL Property Fund 3.8067 7.30 11.68 13.86 OneAnswer KiwiSaver-Australasian Prpty 1.7077 7.06 14.18 14.64 New Zealand Insurance Fund Global Bond AMP KiwiSaver International Fxd Intr 0.9864 ---AMP Prem PSS Blackrock Global Fixed Int 1.94154 2.67 5.34 5.20 AMP Prem PSS PIMCO Global Fixed 2.26713 4.90 6.28 6.17 Interest Name

Size Morningstar Rating $M Overall 45.08 87.03 13.36 76.76 81.43 17.61 59.17 11.73 9.81 15.37 21.90 18.15

-------------

83.96 114.80 4.17 1.17 4.32 311.83 4.13 1.61 398.17 110.88 18.82 4.06 27.76 112.13 16.28 0.24 32.14 1.71 298.62

--------------------

4.42 112.49 23.69 5.57 611.60 24.20

4 4 2 1 4 4

0.41

--

4.64 8.45 1.31 6.18 22.76 22.83

4 3 1 1 3 3

0.27 0.40 9.11 11.22 5.57 5.41 8.40 33.70 0.59 0.42 20.53 8.65 23.87 75.98 10.90 2.25 35.60 5.04 12.37

--4 4 2 3 3 -3 2 2 4 2 3 --4 2 4

0.96 8.54

-4

510.43 16.45

2 4

0.25 2.20 2.39

-4 5

Name

Latest 1 Yr 3 Yr 5 Yr Size Morningstar Transaction Return Return Rating Return $M Overall Exit Price %

AMP Prem PSS SSgA Global Fixed 1.93099 1.39 5.37 Int Index OneAnswer KiwiSaver-Intl Fxd Int 1.6503 1.08 5.06 New Zealand Insurance Fund Multisector - Aggressive AMP KiwiSaver LS Aggressive Fund 1.3916 14.33 7.54 AMP NZRT AMP Aggressive 2.85231 13.33 6.68 AMP PSS DynamicMkts Growth 1.71844 13.67 7.03 AMP PSS Select Growth 1.61949 13.63 7.04 Aon KiwiSaver Russell Lifepoints 2045 7.8789 10.33 9.86 Booster KiwiSaver Asset Class Growth 7.7513 12.57 -Booster KiwiSaver Geared Growth 1.8145 14.04 11.08 Booster KiwiSaver High Growth 1.3768 10.70 9.11 Fisher Funds Growth KiwiSaver Fund 1.8028 8.74 7.54 Fisher FuturePlan - Growth 2.73288 9.35 7.84 Generate KiwiSaver Focused Growth Fund 1.3538 5.35 9.51 Kiwi Wealth KiwiSaver Growth -6.47 8.24 Mercer KiwiSaver High Growth -14.01 10.25 NZ Defence Force KiwiSaver High Growth -13.78 -New Zealand Insurance Fund Multisector - Balanced AMP KiwiSaver AMP Global Multi-Asset 1.0354 --AMP KiwiSaver AMP Responsible 1.017 --Invmt Bal AMP KiwiSaver ASB Balanced 1.0195 --AMP KiwiSaver Fisher TWO Balanced 1.6633 8.66 7.97 AMP KiwiSaver LS Balanced Fund 1.5404 9.96 6.28 AMP KiwiSaver LS Moderate Balanced 1.5335 8.37 5.83 Fund AMP NZRT AMP Balanced Fund 2.72419 9.02 5.40 AMP NZRT AMP Global Multi-Asset 1.03187 --AMP NZRT AMP Moderate Balanced 2.0122 7.36 4.92 AMP NZRT ASB Balanced Fund 1.90411 9.90 7.83 AMP NZRT Fisher Balanced 2.23757 7.66 7.02 AMP NZRT Nikko AM Balanced 2.37825 6.56 7.99 AMP NZRT Responsible Investment Bal 1.0211 --AMP PSS DynamicMkts Balanced 1.7604 9.25 5.66 AMP PSS Lifesteps Consolidation 1.69718 7.48 5.34 AMP PSS Lifesteps Progression 1.77483 9.15 5.61 AMP PSS Select Balanced 1.70583 9.25 5.71 ANZ Default KiwiSaver Scheme-Balanced 1.6004 5.36 7.74 ANZ KiwiSaver-Balanced 1.6707 5.46 7.82 Aon KiwiSaver ANZ Balanced 23.0616 6.72 7.86 Aon KiwiSaver Russell Lifepoints 2025 8.3711 7.34 8.02 Aon KiwiSaver Russell Lifepoints Bal 8.4152 9.06 9.06 ASB KiwiSaver Scheme's Balanced 1.6479 9.65 8.88 BNZ KiwiSaver Balanced Fund 1.3293 9.99 7.97 Booster KiwiSaver Balanced 1.6027 7.81 7.50 Booster KiwiSaver Socially Rsp Inv Bal 1.2185 6.76 -Fidelity Life Balanced 4.1571 5.36 6.01 Fidelity Life Super-Super Balanced -6.75 -Fisher FuturePlan - Balanced 3.79011 7.47 6.92 Fisher TWO KiwiSaver Scheme-Bal 4529.84575 8.12 7.60 Kiwi Wealth KiwiSaver Balanced -4.71 6.82 Mercer KiwiSaver Balanced -9.51 8.12 Milford KiwiSaver Balanced 1.91875 8.51 10.53 NZ Defence Force KiwiSaver Balanced -9.32 -OneAnswer KiwiSaver-Balanced 1.6926 5.53 7.94 Westpac KiwiSaver-Balanced Fund 1.6089 6.73 7.80 Westpac Retirement Plan - Balanced Port 3.3672 5.67 6.66 New Zealand Insurance Fund Multisector - Conservative AMP KiwiSaver ANZ Conservative 0.996 --AMP KiwiSaver Default (Default) 1.5536 5.43 5.16 AMP PSS Select Income 1.72141 1.25 3.66 ANZ Default KiwiSaver Scheme Cnsrv(Dflt) 1.6246 3.52 6.08 ANZ KiwiSaver-Conservative 1.5888 2.92 5.74 Aon KiwiSaver Russell Lifepoints Cnsrv 9.0684 5.61 6.84 ASB KiwiSaver Scheme's Cnsrv (Default) 1.6355 5.42 6.00 BNZ KiwiSaver Conservative (Default) 1.2195 5.98 5.94 BNZ KiwiSaver First Home Buyer Fund 1.0567 4.75 -Booster KiwiSaver Default Saver 1.1504 4.43 -FANZ Lifestages KiwiSaver Income 1.02385 1.56 -Fisher FreedomPlan - Capital Prot 1.20502 --Fisher Funds Conservative KiwiSaver Fund 1.4912 4.80 5.61 Fisher FuturePlan - Capital Prot 1.20515 1.51 1.50 Fisher TWO KiwiSaver Cash 1.62626 5.10 6.00 Enhanced(Dflt) Kiwi Wealth KiwiSaver Conservative -2.56 5.01 Kiwi Wealth KiwiSaver Scheme Default Fd -4.70 -Mercer KiwiSaver Conservative (Default) -5.53 6.19 Milford KiwiSaver Conservative Fund 1.54246 7.12 9.67 NZ Defence Force KiwiSaver Conservative -4.95 -OneAnswer KiwiSaver-Conservative 1.6046 2.99 5.77 Westpac KiwiSaver Default 1.1399 4.09 -New Zealand Insurance Fund Multisector - Growth AMP KiwiSaver ANZ Balanced Plus 1.8423 7.84 8.36 AMP KiwiSaver ANZ Growth 1.0162 ---

5.04 4.48

8.71 2.75

4 2

9.58 8.52 9.21 9.28 12.35 -10.98 10.05 11.25 9.44 -11.63 11.96 --

240.25 241.49 3.97 33.22 13.26 38.42 6.85 158.32 1210.23 69.86 157.40 931.64 110.08 5.91

3 2 4 3 5 -4 3 4 3 4 4 5 --

---8.55 7.62 6.83 6.57 -5.78 8.29 7.56 8.80 -7.06 6.38 7.09 7.15 8.86 9.39 9.56 9.74 10.86 9.77 -7.26 -6.55 -7.83 8.52 8.79 9.33 12.79 -9.49 9.15 7.96

1.71 2.47 1.76 33.24 751.95 514.59 762.18 0.55 267.91 70.09 153.31 152.13 1.69 3.14 7.11 2.97 47.03 84.29 1561.35 25.78 16.76 92.11 918.87 188.12 342.90 24.83 5.55 226.85 119.59 566.79 1157.91 277.67 128.85 23.40 440.48 1062.04 100.24

---3 3 2 2 -2 3 4 3 -3 3 3 3 3 4 4 4 5 4 4 2 -3 -4 3 3 4 5 -4 4 2

-5.30 3.02 6.21 6.06 7.82 5.87 -----6.40 1.58 5.98 5.64 -6.68 --6.11 --

2.34 1292.64 2.00 1008.77 616.64 74.72 3360.18 357.70 36.33 29.68 47.30 1.35 497.54 22.63 686.49 492.11 94.80 1026.11 33.97 1.32 394.35 90.37

-2 2 4 4 5 3 3 ----4 1 3 3 -5 --4 --

10.30 197.62 -- 1.63

3 --

Latest 1 Yr 3 Yr Transaction Return Return Exit Price % AMP KiwiSaver ASB Growth 1.0355 --AMP KiwiSaver LS Growth Fund 1.4385 12.78 7.03 AMP KiwiSaver Nikko AM Balanced 1.6266 7.59 8.97 AMP KiwiSaver Nikko AM Growth 0.9957 --AMP NZRT AMP Growth 2.0253 11.79 6.18 AMP NZRT ANZ Balanced Plus 2.32018 6.70 7.47 AMP NZRT ANZ Growth 1.01431 --AMP NZRT ASB Growth 1.02731 --AMP NZRT Nikko AM Growth 0.9867 --AMP PSS Lifesteps Growth 1.71396 11.97 6.51 ANZ Default KiwiSaver Scheme1.5915 6.70 8.69 Balanced Gr ANZ Default KiwiSaver Scheme-Growth 1.5739 7.85 9.52 ANZ KiwiSaver-Balanced Growth 1.6901 6.76 8.81 ANZ KiwiSaver-Growth 1.6901 7.97 9.66 Aon KiwiSaver Nikko AM Balanced 16.5116 6.36 8.63 Aon KiwiSaver Russell Lifepoints 2035 8.1817 9.03 9.08 Aon KiwiSaver Russell Lifepoints Growth 8.2836 10.35 9.79 ASB KiwiSaver Scheme's Growth 1.6136 12.26 10.25 BNZ KiwiSaver Growth Fund 1.3892 12.32 8.82 Booster KiwiSaver Balanced Growth 1.5523 9.48 8.45 Fidelity Life Growth 3.9434 6.92 7.10 Fidelity Life Super-Super Growth -8.14 7.50 Fisher TWO KiwiSaver Scheme-Gr 1.58508 10.02 8.52 Generate KiwiSaver Growth Fund 1.336 5.95 9.60 Mercer KiwiSaver Growth -12.29 -NZ Defence Force KiwiSaver Growth -12.01 -OneAnswer KiwiSaver-Balanced Growth 1.7129 6.82 8.88 OneAnswer KiwiSaver-Growth Fund 1.711 8.04 9.77 SIL 60s + Sup Balanced Fund 3.8922 6.39 8.21 Westpac KiwiSaver-Growth Fund 1.635 8.02 8.98 Westpac Retirement Plan - Dynamic Port 3.7671 7.01 7.89 New Zealand Insurance Fund Multisector - Moderate AMP KiwiSaver AMP Income Generator 1.0083 --AMP KiwiSaver ASB Moderate 1.0086 --AMP KiwiSaver LS Conservative Fund 1.6468 5.07 4.67 AMP KiwiSaver LS Moderate Fund 1.5744 7.01 5.30 AMP KiwiSaver Nikko AM Conservative 0.9929 --AMP NZRT AMP Capital Assured Fund 2.39023 4.28 4.26 AMP NZRT AMP Conservative 2.62503 4.05 3.72 AMP NZRT AMP Income Generator 1.00674 --AMP NZRT AMP Moderate 2.00594 5.97 4.35 AMP NZRT ASB Moderate 1.01344 --AMP NZRT Nikko AM Conservative 0.98928 --AMP PSS DynamicMkts Conservative 1.72736 4.20 3.90 AMP PSS Lifesteps Maturity 1.64882 4.15 3.95 AMP PSS Lifesteps Stability 1.72026 5.84 4.54 AMP PSS Select Conservative 1.7175 4.17 3.94 ANZ Default KiwiSaver Scheme-Cnsrv Bal 1.61 4.09 6.74 ANZ KiwiSaver-Conservative Balanced 1.6378 4.13 6.81 Aon KiwiSaver Russell Lifepoints 2015 8.6648 5.68 6.95 Aon KiwiSaver Russell Lifepoints Mod 8.8603 7.37 7.96 ASB KiwiSaver Scheme's Moderate 1.6596 7.26 7.45 BNZ KiwiSaver Moderate Fund 1.2762 8.19 7.10 Booster KiwiSaver Asset Class Cnsrv 3.4251 6.06 -Booster KiwiSaver Moderate 1.5886 5.12 5.86 Fisher TWO KiwiSaver Scheme-Cnsrv 1.68503 5.46 6.12 Generate KiwiSaver Conservative Fund 1.2191 4.68 7.27 Mercer KiwiSaver Moderate -6.79 -NZ Defence Force KiwiSaver Moderate -6.56 -OneAnswer KiwiSaver-Conservative Bal 1.6526 4.13 6.80 Westpac KiwiSaver - Moderate 1.1625 5.10 -Westpac KiwiSaver-Conservative Fund 1.571 4.23 5.75 New Zealand Insurance Fund NZ Bonds AMP KiwiSaver NZ Fixed Interest 0.9854 --AMP Prem PSS ACI NZ Fixed Interest 1.99684 1.98 5.19 AMP Prem PSS OnePath NZ Fixed Interest 1.82464 1.48 4.74 Fidelity Life NZ Fixed Interest 3.9214 1.37 3.37 Fidelity Life Super-Super Fixed Int -1.56 3.44 OneAnswer KiwiSaver-NZ Fixed Interest 1.6183 2.01 5.22 SIL 60s + Sup NZ Fixed Interest 2.8487 1.49 4.56 Westpac Retirement Plan - Accum Port 3.2241 1.17 2.68 New Zealand OE Cash AMP AIT NZ Cash - UT35 1.09681 2.04 2.90 AMP ARS-Cash 1.93071 2.29 3.00 AMP Capital Cash Advantage Fund 1.41227 1.79 2.74 AMP Capital NZ Cash Fund 1.64004 2.46 3.16 AMP Capital Term Advantage ---AMP Prem PUT OnePath NZ Cash 1.37749 1.81 2.70 AMP PUT Select Cash 1.31989 1.60 2.49 ASB Cash Fund ---Name

5 Yr Size Morningstar Rating Return $M Overall -- 1.32 -8.76 572.29 2 9.80 38.81 3 -- 1.20 -7.70 185.95 2 9.29 259.09 3 -- 2.97 --- 0.68 --- 2.84 -8.41 0.41 2 10.31 91.67 3 11.70 75.16 4 11.00 1291.11 4 12.51 2038.81 5 9.67 6.60 3 11.16 14.55 4 12.01 28.54 5 11.68 989.37 4 -- 155.16 3 8.71 186.72 2 7.91 3.00 2 8.16 88.71 2 10.35 230.32 3 -- 131.15 4 -- 38.86 --- 6.14 -11.08 384.74 4 12.59 286.95 5 10.18 94.13 4 10.78 756.71 3 9.65 104.89 2 --5.04 6.00 -3.09 4.02 -4.95 --4.30 4.34 5.33 4.33 7.43 7.77 8.21 9.35 7.73 --5.36 6.39 ---7.79 -6.21

0.90 0.35 299.61 362.68 1.05 99.79 291.60 0.28 112.19 0.71 1.37 0.92 3.24 5.69 10.01 29.32 740.65 4.88 17.71 1176.71 249.37 13.38 124.80 122.50 76.49 51.77 1.43 147.58 165.66 2058.97

--3 3 -1 2 -2 --3 3 3 3 4 4 5 5 4 4 -3 3 5 --5 -3

-- 0.22 4.11 11.65 3.66 2.24 3.17 0.21 3.27 1.26 4.04 7.32 3.45 7.70 2.48 18.49

-4 3 1 2 3 2 1

1.87 3.06 3.02 3.18 -2.72 2.48 --

---------

11.70 13.00 128.69 4431.47 -3.21 3.34 304.91

Latest 1 Yr Transaction Return Exit Price % BT Enhanced Cash Fund 2.0624 2.43 Fisher Cashplus Fund 1.2907 2.15 Nikko AM NZ Cash 1.0228 2.87 NZ Funds Core Cash 1.3221 2.13 New Zealand OE Equity Region Australasia AMP AIT Australasian Shrs-Multi 2.69112 13.80 Mgr-UT07 AMP ARS-NZ & Australian (multi3.14818 14.78 manager) AMP ARS-NZ & Australian (Value) 3.5318 10.73 AMP NZRT Australasian Shares 1.23603 15.28 AMP Prem PUT OnePath NZ Shares 2.16686 14.12 BT PS Australasian Diversified Share 1.9516 11.35 Castle Point Ranger Fund 1.2938 22.82 Devon Alpha Fund 1.5411 2.82 Devon Dividend Yield 1.8541 -Devon Trans-Tasman Fund 3.5792 10.20 Forte Equity Trust 1.33225 20.60 Harbour Australasian Equity 2.1112 12.44 Harbour Australasian Equity Focus Fund 1.2929 6.03 Harbour Australasian Equity Income 1.6643 7.40 Milford Active Growth 2.93764 9.00 Milford Trans-Tasman 2.13636 12.22 Mint Australia NZ Active Equity 2.3577 11.48 Nikko AM Australasian Small Companies 1.7115 -1.83 Nikko AM Concentrated Equity 1.7995 8.91 OneAnswer SAC Equity Selection 2.1831 14.54 Pie Australasian Dividend 2.2105 18.10 Pie Australasian Emerging Companies 2.9248 14.30 Pie Australasian Growth Fund 4.7027 5.52 Pie Growth 2 Fund 1.2877 15.19 New Zealand OE Equity Region Australia AMP Capital Australian Share Fund 2.35277 6.74 Devon Australian 1.3697 8.33 Fisher Funds Australian Growth Fund 3.1156 2.01 Fisher Funds Premium Australian Fund 1.3699 2.29 Milford Dynamic 1.46555 8.57 OneAnswer SAC Australian Share 3.6918 -0.08 New Zealand OE Equity Region Emerging Markets AMP AIT Emerging Markets - UT65 1.202 10.51 New Zealand OE Equity Region NZ AMP Capital NZ Shares Fund 2.61129 12.29 AMP Capital RIL NZ Shares 1.75563 14.94 AMP Prem PUT ACI NZ Shares 2.39977 11.50 AMP Prem PUT ACI NZ Shares Index 1.81905 13.09 BT Dividend Share Fund 2.1519 16.69 Fisher Funds NZ Growth Fund 7.0132 16.36 Fisher Funds Premium New Zealand Fund 1.6472 15.77 Fisher Trans Tasman Equity Trust 4.5651 12.16 Forsyth Barr New Zealand Equities 2.3804 18.67 Harbour NZ Equity Advanced Beta Fund 1.2772 11.82 Nikko AM Core Equity 1.8219 15.28 NZ Funds Dividend and Growth 1.6493 16.00 OneAnswer SAC NZ Share 4.0312 14.89 Russell Investments NZ Shares 1.5188 15.20 Smartshares NZ Core Equity Trust 1.2436 15.11 New Zealand OE Equity Region World AMP AIT Global Equities-Multi Mgr-UT28 1.09844 20.16 AMP AIT Global Infrastructure - UT04 2.36947 10.84 AMP ARS-International Shares (Growth) 1.26194 9.24 AMP ARS-International Shares (Passive) 1.50135 20.27 AMP ARS-International Shares (Value) 1.23925 25.18 AMP Capital Core Global Shares Fund 1.27483 6.84 AMP Capital Core Hedged Global 1.3864 29.07 Shares Fd AMP Capital Emerging Markets Share 0.95935 12.34 AMP Capital Global Listed Infrastructure 1.62761 10.18 AMP Capital Global Shares Fund 2.488 17.45 AMP Capital Resp Invest Leaders Gl Sh 1.43321 12.80 AMP NZRT International Shares 1.29415 17.89 AMP NZRT Passive International Shares 1.29443 17.10 AMP Prem PUT FD Intl Share Fund 1 Value 1.21483 5.92 AMP Prem PUT FD Intl Share Fund 1.30221 2.62 3 Growth AMP Prem PUT SSgA Global Shares Index 1.60232 2.61 AMP Prem PUT SSgA Global Shares 2.15831 18.08 IndexHdg ASB World Shares 1.4336 14.65 BT PS International Diversified Share 1.559 9.17 Elevation Capital Value Fund 1.5291 6.16 Fisher Funds International Growth Fund 1.5921 1.87 Fisher Funds Premium International Fund 1.6567 2.05 Fisher Global Fund 4.7079 10.80 Milford Global Fund 1.28363 1.48 Name

3 Yr 5 Yr Size Morningstar Rating Return Return $M Overall 3.04 3.03 137.63 -2.64 2.52 36.23 ---- 212.87 -2.85 2.72 58.99 -8.77 10.34 20.55

2

9.39 13.01 7.30 9.96 12.89 9.36 6.97 -11.59 -11.10 -12.83 10.37 9.71 13.51 6.73 13.68 9.64 12.74 21.41 13.26 --

10.97 16.13 -14.13 16.79 -13.79 -14.04 -16.25 -15.20 15.74 14.39 18.60 10.25 15.00 13.57 19.70 -20.55 --

7.43 5.40 8.55 2.09 184.62 16.69 98.83 74.48 122.84 14.43 149.08 8.82 48.53 723.75 264.43 65.33 1.14 30.20 16.63 72.76 87.17 78.92 122.89

2 3 1 4 4 2 2 5 3 -4 -3 4 3 5 1 3 2 4 5 5 --

5.52 10.16 5.79 5.99 10.58 1.34

4.98 10.41 7.81 8.18 -4.06

162.89 31.90 58.43 58.95 164.95 29.34

2 5 3 4 5 1

1.96 -0.96 3.59

--

14.72 15.44 14.25 13.03 18.06 11.35 11.57 11.53 16.58 -14.80 14.01 12.61 13.46 --

17.32 -16.88 16.52 18.81 16.66 16.82 15.16 17.61 -17.57 12.09 16.66 ---

451.29 10.82 1.86 4.27 18.99 138.65 74.95 45.36 14.71 89.88 38.14 72.48 111.09 180.75 25.98

4 4 4 3 5 2 3 2 5 -4 2 3 3 --

9.01 9.16 12.67 9.05 10.58 10.17 10.84 4.59 8.70 9.74 6.91 8.65 8.87 7.90 8.96 8.81 10.35 10.76 8.63 7.46 4.15 4.82 6.22 5.66

10.71 12.25 16.28 12.93 13.81 13.26 14.94 3.71 -13.15 10.75 --10.62 11.90 11.85 14.76 12.98 11.13 9.30 8.41 8.88 10.12 --

23.84 15.95 6.52 3.52 5.18 787.54 509.62 65.60 281.39 133.61 55.19 7.78 4.10 2.38 2.08 4.64 7.42 145.81 286.42 22.12 29.55 63.28 88.06 259.09

3 3 5 4 4 4 5 1 2 4 3 3 3 2 3 3 5 4 3 2 1 2 2 2

Latest 1 Yr Transaction Return Exit Price % Nikko AM Global Equity Hedged 1.5918 20.35 Nikko AM Global Equity Unhedged 1.5777 2.63 NZ Funds Equity Inflation 0.8683 1.81 OneAnswer SAC International Share 1.785 2.61 Pathfinder Global Water 1.6959 8.42 Pathfinder World Equity Fund 1.555 4.47 Pie Global Small Companies Fund 1.3023 10.22 Russell Investments Global Shares 1.6295 3.64 Russell Investments Hedged Global 1.8314 18.20 Shares T.Rowe Price Global Equity Growth 1.1661 1.75 New Zealand OE Equity Sector Global - Real Estate AMP AIT Global Property - UT54 3.04119 4.26 AMP ARS-Listed International Property 3.61812 4.37 AMP Capital Global Propty Securities Fd 1.51213 3.98 NZ Funds Property Inflation 1.4867 2.54 OneAnswer SAC International Property 1.3459 6.56 New Zealand OE Equity Sector NZ - Real Estate AMP ARS-Listed NZ & Australian Property 3.17375 5.14 AMP Capital Listed Property Secs Fd 2.29306 5.36 AMP Capital NZ Property Fund 2.15226 6.34 BT Property Fund 3.948 8.57 Mint Australia NZ Real Estate Investment 1.7139 5.10 OneAnswer SAC Property Securities 3.0013 7.01 New Zealand OE Global Bond AMP AIT Fixed Interest Income - UT36 1.18773 2.29 AMP AIT Global Bonds-Multi Mgr-UT13 1.95067 1.03 AMP ARS-International Fixed Interest 2.40692 1.75 AMP Capital Global Short Duration 1.08281 2.87 AMP Capital Hdgd Gbl Fixed Intrst Fund 2.29107 3.20 AMP NZRT International Fixed Interest 1.13761 2.10 AMP Prem PUT Blackrock Global Fixed Int 1.80034 2.45 AMP Prem PUT PIMCO Global Fixed 2.26624 4.69 Interest AMP Prem PUT SSgA Global Fixed 1.78751 1.30 Int Index ASB World Fixed Interest 1.1035 1.74 BT PS International Diversified Bond 2.1508 2.55 Fisher BondPlus Fund 2.1239 4.09 Fisher Funds High Income 1.0318 4.95 Nikko AM Global Bond 1.1379 3.91 NZ Funds Global Income 1.4087 5.31 OneAnswer SAC International Fixed Intrst 1.1836 1.02 Russell Investments Global Fixed Int 1.1751 4.65 New Zealand OE Miscellaneous AMP ARS-UK Cash 0.66578 -23.21 BT PS Alternative Investments 1.0825 1.57 Fisher Funds Property and Infrastructure 2.0469 13.58 KTAM NZ Australian Long Short Equity 1.28405 -Nikko AM Income 1.2154 1.86 Nikko AM Multi-Strategy 1.1006 3.30 NZ Funds Core Inflation 1.2875 4.89 NZAM Alpha Fund 1.1675 -NZAM Global Growth 1.4444 -Pathfinder Commodity Plus Fund 0.9255 -0.02 Salt Long Short Fund 1.46 10.05 Salt Long Short Fund 1.4209 14.27 New Zealand OE Multisector - Aggressive AMP AIT Aggressive Portfolio - UT31 1.77019 12.79 AMP AIT eInvest - Aggressive - MDF7 1.23246 14.09 AMP AIT Growth Portfolio - UT03 1.70678 11.59 AMP Capital Growth Fund 2.38457 11.05 AMP PUT DynamicMkts Growth 1.74673 13.14 AMP PUT Select Growth 1.54641 13.25 New Zealand OE Multisector - Balanced AMP AIT eInvest - Balanced - MDF5 1.18279 9.69 AMP AIT Moderate Portfolio - UT01 1.75863 6.13 AMP ARS-Balanced 1.90026 10.42 AMP Capital Global Multi Asset Fund 1.18367 8.46 AMP Capital Responsible Inv Leaders Bal 1.74636 7.44 AMP PUT DynamicMkts Balanced 1.73766 8.81 AMP PUT Select Balanced 1.63976 8.97 ANZ Invmt Fds Balanced 1.6326 5.12 ASB Balanced 1.489 9.06 Milford Balanced 1.88699 8.22 NZ Funds Core Growth 1.3553 -0.31 OneAnswer MAC Balanced 1.6326 5.12 Westpac Active Balanced Trust 2.0212 5.87 New Zealand OE Multisector - Conservative AMP PUT Select Income 1.60512 1.10 ANZ Invmt Fds Conservative 1.4458 2.71 ASB Conservative 1.5195 4.81 Name

3 Yr 5 Yr Size Morningstar Rating Return Return $M Overall 10.40 -- 214.30 4 9.09 -- 130.42 3 6.30 5.68 79.20 1 10.61 14.70 159.66 5 8.24 11.86 10.66 3 10.43 -- 31.43 5 7.43 -- 65.25 2 8.85 -- 53.75 3 9.98 -- 55.28 4 --- 13.17 -10.76 9.36 9.70 6.44 10.46

11.27 10.98 11.82 7.39 --

3.25 5.73 189.61 78.46 5.20

5 2 3 1 3

12.96 14.19 9.54 15.58 13.27 14.03

12.50 14.36 9.56 14.33 13.29 14.43

4.73 21.65 115.51 77.44 50.73 125.37

1 3 -4 2 3

3.47 3.88 4.54 3.69 4.98 3.98 5.13 6.14

3.38 3.83 4.52 -4.89 -5.03 6.16

116.43 13.11 1.87 193.82 84.99 2.13 1.45 2.57

1 2 2 2 3 2 3 5

5.25 3.69 4.04 5.62 5.15 5.42 3.51 4.86 6.16

4.95 3.15 4.74 5.63 5.03 -3.62 -6.47

4.97 300.13 363.62 155.64 64.80 23.13 114.90 3.25 749.68

3 1 2 4 3 4 2 3 5

-5.78 0.56 11.38 -5.93 -3.42 ---0.69 ---

-2.53 1.49 12.42 -6.14 -4.24 ---2.44 ---

9.67 9.33 65.35 19.45 10.36 114.85 125.18 52.13 59.97 72.92 203.41 176.26

-------------

5.97 7.01 5.90 6.86 6.94 6.91

7.17 -7.05 9.14 9.13 9.13

123.76 75.84 37.71 5.39 3.82 13.77

1 3 1 4 3 2

6.13 4.46 6.63 6.08 6.08 5.55 5.58 7.46 8.28 10.08 3.85 7.46 7.04

-5.01 7.69 -8.43 6.99 7.01 9.08 9.16 12.41 8.43 9.08 8.68

89.35 107.37 151.81 154.91 42.79 4.99 38.74 189.83 141.98 352.21 95.68 224.77 204.23

2 1 3 3 3 3 2 4 4 5 2 4 3

3.67 5.48 5.37

3.00 2.94 5.82 52.24 5.24 131.92

1 3 2

Latest Transaction Exit Price Milford Conservative 1.05761 OneAnswer MAC Conservative 1.4458 New Zealand OE Multisector - Growth AMP AIT Balanced Portfolio - UT 02 1.80378 AMP AIT eInvest - Growth - MDF6 1.2199 AMP ARS-High Growth 1.68425 ANZ Invmt Fds Balanced Growth 1.743 ANZ Invmt Fds Growth 1.8233 ASB Growth 1.4376 Fisher Multi Sector Fund 2.9747 NZ Funds Global Equity Growth 1.4162 OneAnswer MAC Balanced Growth 1.743 OneAnswer MAC Growth 1.8233 OneAnswer SAC Balanced 2.777 Westpac Active Growth Trust 1.9491 New Zealand OE Multisector - Moderate AMP AIT eInvest - Conservative - MDF2 1.13909 AMP AIT eInvest - Moderate - MDf3 1.16727 AMP ARS-Conservative 2.12219 AMP Capital Conservative Fund NZ 2.29567 AMP Capital Income Generator Fund 1.08886 AMP PUT DynamicMkts Conservative 1.67486 AMP PUT Select Conservative 1.68497 ANZ Invmt Fds Conservative Balanced 1.5386 ASB Conservative Plus 1.5035 ASB Moderate 1.5094 Harbour Income 0.9865 Milford Diversified Income 1.59224 Mint Diversified Income Fund (Retail) 1.0339 NZ Funds Global Multi-Asset Growth 0.6686 OneAnswer MAC Conservative Balanced 1.5386 Westpac Active Conservative Trust 1.7809 Westpac Active Moderate Trust 1.3855 New Zealand OE NZ Bonds AMP AIT NZ Bond - UT36 1.16991 AMP AIT NZ Fixed Interest - UT60 1.6921 AMP ARS-NZ Fixed Interest 2.40683 AMP Capital NZ Fixed Interest Fund 1.6608 AMP Capital NZ Short Duration 1.25951 AMP NZRT NZ Fixed Interest 1.18731 AMP Prem PUT ACI NZ Fixed Interest 1.98402 AMP Prem PUT OnePath NZ Fixed Interest 1.70131 BT Corporate Bond Fund 1.6082 BT PS NZ Diversified Bond 1.2989 Fisher New Zealand Fixed Inc Trust 1.2347 Forsyth Barr NZ Fixed Interest 1.6229 Forsyth Barr Premium Yield 1.6553 Harbour NZ Core Fixed Interest 1.091 Harbour NZ Corporate Bond 1.054 Nikko AM NZ Bond 1.0049 Nikko AM NZ Corporate Bond 1.1388 NZ Funds Core Income 1.51385 OneAnswer SAC NZ Fixed Interest 1.6218 Russell Investments NZ Fixed Interest 1.1606 Westpac Active Income Strategies Trust 1.1699 Name

1 Yr Return % 7.25 2.71

3 Yr 5 Yr Size Morningstar Rating Return Return $M Overall --- 112.21 -5.48 5.82 61.44 3

9.00 12.35 13.15 6.42 7.65 11.62 6.88 1.27 6.42 7.65 6.12 7.06

5.32 6.88 7.25 8.46 9.28 9.60 6.63 7.92 8.46 9.28 8.23 8.13

6.19 -8.89 10.76 12.16 11.00 8.25 11.00 10.76 12.16 10.30 10.20

112.48 33.68 52.56 137.02 64.37 28.17 11.45 57.26 622.23 17.50 49.77 67.84

1 1 2 3 5 4 3 2 3 5 4 3

4.86 6.89 5.47 3.87 9.09 3.92 3.75 3.79 5.66 6.71 3.89 11.90 3.46 18.05 3.79 3.38 4.52

4.27 4.98 5.01 4.48 -3.80 3.78 6.45 6.17 6.88 -12.25 --5.88 6.45 4.83 5.96

--5.41 4.85 -4.20 4.21 7.40 6.14 7.14 -13.45 --4.80 7.40 5.41 --

31.74 98.24 55.22 8.12 95.04 2.20 16.72 164.71 609.62 251.45 2.43 1533.64 39.31 36.50 175.14 213.72 358.24

2 3 3 4 -2 2 4 3 4 -5 -1 4 3 3

2.33 1.58 2.23 2.32 3.01 2.31 1.94 1.23 2.76 2.21 1.22 2.26 2.73 2.71 2.67 1.99 2.77 6.22 1.92 2.29 2.28

5.00 4.76 5.30 5.40 4.47 5.43 5.17 4.64 4.66 4.98 4.41 5.23 5.37 4.94 4.81 5.10 5.59 4.12 5.04 5.02 3.08

2.64 3.69 4.24 4.33 4.21 -4.12 3.57 4.63 4.35 3.65 3.97 4.61 4.39 4.67 4.65 5.35 4.79 3.71 ---

34.08 7.94 6.97 1851.16 353.11 8.64 8.99 1.89 70.88 235.49 56.72 14.23 60.04 147.58 296.84 62.38 341.38 125.53 12.26 150.56 15.75

2 3 3 4 3 5 4 3 3 4 2 3 4 4 4 4 5 4 2 3 1

Returns are calculated to 31/01/17 Returns are calculated before tax and after fees, except for the non-PIE categories, which are after tax and after fees. For more information about this table and the methodology behind the data, contact helpdesk.nz@morningstar.com or go to www.morningstar.com.au © 2016 Morningstar, Inc. All rights reserved. Neither Morningstar, nor its affiliates nor their content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution.

To the extent that any of this information constitutes advice, it is general advice and has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 and/or Morningstar Research Limited (subsidiaries of Morningstar, Inc.) without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant Product Disclosure Statement (in respect of Australian products) or Investment Statement (in respect of New Zealand products) before making any decision to invest. Neither Morningstar, nor Morningstar’s subsidiaries, nor Morningstar’s employees can provide you with personalised financial advice. To obtain advice tailored to your particular circumstances, please contact a professional financial adviser.

Please refer to our Financial Services Guide (FSG) for more information www.morningstar.com.au/fsg.asp

DATA

CFP NUMBERS GROW INTERNATIONALLY

T

he US-based Financial Standards Board (FSPB) says there has been strong growth in the Certified Financial Planner (CFP) program outside of the United States in 2016.

The FPSB network added 18,435 CFP professionals and the total number of CFP professionals rose to 170,101 worldwide. With a net increase of 8,280 CFP professionals, FPSB and its member organisations experienced robust annual growth of 5.1%, almost double that of the previous year.

“To establish financial planning as a recognised global profession, FPSB has set itself an ambitious goal to have 250,000 CFP professionals in 40 territories by 2025,” FPSB chief executive Noel Maye said.

“With a global CFP professional growth rate of 5.1% last year, the FPSB network has made great progress in increasing the public's access to competent and ethical financial planners, who work in their clients' interest.”

New Zealand is recorded as having 304 CFPs. There was considerable growth in the Netherlands, which now has 3,649 CFP professionals through a smartly planned consolidation strategy that merged two organisations to embrace CFP certification and elevate the financial planning profession as a whole.

FPSB’s member organisation in the United

034

WWW.GOODRETURNS.CO.NZ

States, which boasts the longest running CFP certification program, continued s strong showing with a net growth of 3,076 professionals last year. FPSB’s member

organisation in Japan, a territory offering CFP certification for 25 years, had net growth of 389 for a total of 20,683 CFP professionals at the end of last year.

WHAT ADVISERS ARE READING ON

GOODRETURNS.CO.NZ

Top 10 The top 10 stories on our website included a tribute to former Managing Director of ANZ's wealth business, John Body, a new manager for AMP as well as a new minister for financial advisers:

1

Obituary: John Body Body, 52, died on Christmas Eve at Mercy Hospice after a battle with cancer. (See page 10) During his career he spent 29 years at ANZ, holding a number of senior executive roles in New Zealand, Australia and Asia, focused on markets, foreign exchange, private banking, insurance and investments.

6

Jack Regan gets a new role in AMP reshuffle Changes to AMP’s senior leadership team sees Jack Regan become Group Executive, Advice and New Zealand.

7

. AMP NZ gets a new managing director AMP has appointed Blair Vernon as the new managing director to replace Jack Regan.

.CFFC calls for seven changes to KiwiSaver The Commission for Financial Capability has recommended to the Government that KiwiSaver providers should disclose the total dollar cost of all fees on annual statements in its just released 2016 Review of Retirement Income Policies.

3

8

4

9

2

.Financial advisers get new minister Jacqui Dean is the new Minister of Commerce and one of her roles will be to finalise the delayed review of the Financial Advisers Act. . Fidelity's new boss rings in the changes Fidelity Life's new chief executive Nadine Tereora has made a number of key management changes to prepare the company for the future.

5

. Insurance group Preferred NZ looks to come out of the shadows Adviser group Preferred NZ has been flying under the radar, but is looking to change that approach with the appointment of its new chief executive, Simon Fisher.

.Back to the novel for holiday reading Good Returns managing director, Philip Macalister writes an editorial on the delay of the Exposure Draft of the revised Financial Advisers Act. .FAA review delayed The much anticipated Exposure Draft of the new Financial Advisers Act won't be out before Christmas as previously promised.

10

. Fee debate welcomed The Commission for Financial Capability has welcomed fresh debate on the touchy subject of KiwiSaver fees after a new report suggested there was an "unhealthy focus" on fees - rather than the overall outcome delivered by various schemes.

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