The introduction of the Financial Advisers Act (FAA) in 2008 drew, for the first time in New Zealand, clear borders around an industry that had been operating in a definitional void.

Conceived in a financial crisis, and after enduring a complicated gestation process, the FAA eventually hatched as a curious multi-headed beast attached to the body of a single regulator, the Financial Markets Authority (FMA).

In particular, the FAA created a two-tier regulatory regime primarily based on what kind of financial products advisers claimed expertise on.

Under the new rules, advisers content to deal in products deemed 'less complex', such as life insurance and mortgages, could choose to be a Registered Financial Adviser (RFA), subject to a lower level of regulatory oversight than the perceived higher-risk, investment-based advisers who would need to earn the Authorised Financial Adviser (AFA) stamp of approval from the FMA.


It's fair to assume, then, that the AFA market represents everybody who wants to advise retail clients on investment matters (with a few exceptions).

And it seems that, almost five year since the FAA regulatory regime kicked in, the AFA numbers are, at best, stagnant.

The FMA records 1,921 AFAs on its register, down from a peak of just under 2,000 in 2012.

However, according to my exhaustive study of the market, only 1,895 people are currently registered as AFAs.

As the report shows, that 1,895 figure does not represent the true number of advisers qualified to give broad investment advice.

By my reckoning (based on a painstaking trawl through the FMA data and elsewhere) there are most likely only 1,260-odd 'investment advisers' in New Zealand.

Most AFAs, too, are housed in financial institutions, rather than independent operations. My research shows that AMP, banks and stockbroking firms together account for about half of the total AFA market.

I could identify only 129 AFAs linked to what could be described as 'non-aligned' financial advisory firms. As well, my study categorised 416 AFAs as 'self-employed', of which only 172 appeared to specialise in investments (the majority in this category were insurance-based advisers).


New Zealand investors are routinely advised by government authorities, market commentators and prospectuses to 'seek independent financial advice' before doing anything stupid with their money: but where do you go to find it?