New Zealand financial planners are struggling to attract and retain clients in the wake of Bridgecorp and a string of finance company failures, according to key industry players.
Both national newspaper the Sunday Star Times and current affairs show Sunday recently carried reports relaying harrowing accounts of Kiwis who have collectively lost millions of dollars.
The Institute of Financial Advisers (IFA) is investigating 11 complaints against its members in relation to Bridgecorp and others; and if planners are found to have erred, they may be fined NZ$10,000 or suspended or barred from the profession.
However, because the industry is largely unregulated (the Government has developed a new, co-regulatory regime, but it wont be fully implemented until 2012) and IFA membership voluntary, some planners have escaped investigation.
IFA chief executive David Hutton said distrust in the industry had been further exacerbated by the sub-prime mortgage crisis and subsequent global credit crunch. He also laid blame with the media, claiming sensationalist reports have reinforced negative misconceptions about the industry.
Craig Dealey, managing director of Auckland-based New Zealand Financial Planners, said the negative press surrounding Bridgecorp was having a detrimental effect on business, with clients withdrawing funds from even sound investment schemes.
Bernard Long, managing director of Tauranga-based Goldridge Wealth Management, agreed media reports about Bridgecorp had made it tough to attract clients and convince existing ones not to withdraw their funds.
Tower chief executive Jim Minto, who has worked in Australia and New Zealand, said the situation highlights important issues for advisers in both countries.
“Regulators on both sides of the Tasman have been left-fielded a little by the appropriateness of the supervisory and disclosure regimes around the products we are describing. This always happens when … the market moves faster than the regulatory and supervisory framework.”
