NZ News,Membership vital for independence

The Financial Planners and Insurance Advisers Association (FPIA) needs to in-crease its membership to a least 1,600, if it is to become a truly effective, independent body, according to incoming president, Andrew Charles.

The Financial Planners and Insurance Advisers Association (FPIA) needs to in-crease its membership to a least 1,600, if it is to become a truly effective, independent body, according to incoming president, Andrew Charles.

Charles, who replaces FPIA co-presidents David Milner and Denys Wright as head of the organisation from April 1, says the FPIA has currently signed up about 1,200 financial members.

"The FPIA needs to reach a critical mass of membership of around 1,600 to 1,700 and then it would have the financial resources to be independent of fund manag-ers and other product providers," Charles says.

He says this should enhance the professional image of financial advisers by re-moving the perceived conflict of interest between them and product providers.

Charles hopes FPIA initiatives, such as its new Web site and educational ad-vances, will attract new members in the coming year.

"I have the feeling that the need for a professional body for financial advisers will increase as consumers demand better ethical behaviour as part and parcel of their expectations," Charles says.

"The FPIA is the only credible body that can fill this role but it needs the members."

The organisation has a four year plan to reduce funding from product providers, from its present level of about 25 per cent of revenue to zero, in order to mar-ket itself as a totally independent body.

Charles says the FPIA board also hopes to appoint a permanent chief executive officer in the near future if funding will allow.

"We're also working away at the issue of registration of financial planners. Most of the board believe it is a good idea to bring in a voluntary system be-fore the Government impose a compulsory one similar to the Australian model," Charles says.

Two procedural issues have also been cleared up at the latest FPIA board meeting with the rules laid out for the conduct of the twice-yearly council meetings and a ratification of the disciplinary process by-laws - the last of the merger mat-ters to be finalised.

New FPIA board member and part of the Standard Review Committee, Simon Hassan, says the introduction of a disciplinary process shows the FPIA is serious about compliance to its ethical and behavioural standards.

"A compliance officer will need to be appointed. Maybe this role could be filled by a CEO who could also take on an educational function," Hassan says.

He says the job would suit a retired practitioner or "someone else who has an appreciation of the issues".

While no policing plan has been formalised by the FPIA, Hassan says there is a possibility planners would be faced with audits to ensure they meet the ethical and behavioural standards laid out in the rules.

The FPIA is still perceived by many as a divided organisation, dogged by the long and often bitter merger process between the Insurance and Investment Advis-ers Association (IIAA) and the Association of Investment Advisers and Financial Planners (IAFP).

However, Hassan says that at the national FPIA board level, at least there is a renewed spirit of co-operation.

"Initially, I did have misgivings about the FPIA board and remained to be con-vinced the FPIA was a good idea," Hassan says.

"But I've seen the commitment of the board to raising the professional standards of the industry. There is a real community of ideas there and no significant di-vision."

@h2:

Fund managers are right behind the proposed amalgamation of the New Zealand and Australian stock exchanges, according to a recent William M Mercer survey.

Mercer investment consultant, Peter Veerhart, says over 70 per cent of fund man-agers, including all six overseas-based firms, favour the creation of a single trans-Tasman stock exchange.

"The most cited reasons for supporting the idea were that the level of integra-tion between the Australian and New Zealand markets is already high, and the small size of the New Zealand sharemarket," Veerhart says.

Bruce Abraham, head of Colonial First State Investments (CFSI), says a merger of the two bourses would have no effect on CFSI business, as the company already treats the two markets as one.

"The creation of one exchange with one set of regulations makes sense. Big is better in my view," Abraham says.

However, head of New Zealand equities at AXA, Andrew Bascand, says the adoption of the harsh Australian takeover code could damage New Zealand and make it more difficult to raise capital in the Shaky Isles.

"I'm aghast that Michael Cullen [New Zealand Minister of Finance] is considering adopting the Australian takeover rules," Bascand says.

He says the issue of whether the Australian Stock Exchange (ASX) and the New Zealand Stock Exchange (NZSE) merge is largely irrelevant, as it is more or less one market.

"Also, New Zealand companies could list on the NASDAQ or the Pacific Stock Ex-change or the single Asian exchange, which I think will be created soon," Bascand says.

He believes stock exchanges the world over face a wider challenge, as e-commerce and institutional share trades that by-pass stockamarkets bite into their tradi-tional area.

Chief investment officer at BT Funds Management, Mr Stobo agrees that New Zea-land and Australia are already effectively one market and is indifferent to any plans to officially merge the ASX and NZSE.

"The ASX already has some access to the New Zealand market through its owner-ship of the Sydney Futures Exchange, which in turn owns the New Zealand Futures Exchange," Stobo says.

"Also with dual listings and courtesy or ???????? Œgrey' listings (that allow New Zealand brokers to buy and sell some Australian stocks not on the NZSE), I think the merger has happened already by stealth."

He says other issues are more important to fund managers than who owns the sharemarket. "What really matters is the overall regulatory regime."

AMP Asset Management (AMPAM) remains upbeat despite the failure of its Private Capital fund to meet its target figure of $25 million.

By the close of the retail section of the offer the fund was $5.5 million short of its stated objective of raising at least $25 million.

However, AMPAM says it is pleased with the result and expects the popularity of the private capital asset class will lift, as New Zealand investors come to re-alise its benefits.