Looming financial adviser shortage prompts insurer to offer training

Bronwyn Kirwan, Fidelity Life chief sales and service officer. Photo / Supplied

A shortage of new financial advisers coming into the industry combined with high numbers expected to retire in the next three years has prompted a life insurer to launch its own training course.

Fidelity Life, which is 49 per cent owned by the New Zealand Superannuation Fund, will run the six-month part-time course with two intakes in February and July next year of 20 candidates per intake.

As well as including the minimum level 5 qualification to be a financial adviser and the Financial Advice New Zealand ethics course, it will offer eight extra modules to support those who want to enter the industry.

Bronwyn Kirwan, Fidelity Life chief sales and service officer, said the decision to run the course was driven by dual concerns about the need for the public to get financial advice and the sharp contraction in the number of advisers.

"The first challenge lies with the New Zealand consumer and some of their lack of confidence and difficulty in navigating the financial service industry, particularly life insurance."

At the same time they felt anxious and uncomfortable when speaking directly to an insurance provider.

"That is where the role of the financial adviser can be very supportive in raising those confidence levels, helping customers select the right products and services for their particular needs."

Kirwan said on the other side of the issue was the lack of new advisers coming into the industry.

Industry research from the Financial Services Council forecasts up to 50 per cent of New Zealand's 10,000 advisers could leave the industry in the next three years mainly due to retirement.

Compounding the situation, the number of new advisers joining the industry had slowed to a trickle.

Kirwan put that down to the industry getting a bad rap in recent years.

"It is partly an industry issue - there are some challenges from a reputation and trust perspective. So when one thinks about being a participant in an industry that has those hallmarks of distrust and complexity that obviously is less desirable for someone wanting to pursue a profession."

But she said it was also hard to build a business in an environment where there was a lot of change and uncertainty.

"It is like any business. Something that needs to grow over time and [have] access to things like working capital to sustain the growth of that business while it is in its build phase, amidst the shifting sands from a regulatory perspective, and some of the other challenges are well known in the New Zealand environment - make it a little less attractive than other professions.

"We haven't done a fantastic job of marketing the amazing work that financial advisers do and how incredibly rewarding a profession it can be."

Kirwan said if there were not enough financial advisers New Zealand risked having an "advice gap".

"At the moment less than 20 per cent of the eligible population is accessing advice and when we see the number of advisers reducing, that is likely to reduce."

She pointed to research from the Financial Markets Authority and Financial Advice New Zealand which showed those who received professional financial advice often felt more confident and had better long-term financial outcomes.

"We also are aware of what has happened in other mature markets where advice has been one of the core channels for financial institutions."

She pointed to Australia where 3000 advisers had left the industry this year driving up the cost of advice for the average customer.

"That is something we would like to avoid in New Zealand.

"There are certainly a few challenges if we don't solve this problem."

The course will aim to teach the softer side of being an adviser like building rapport and trust with clients. It was hoping to attract a broad range of people. Candidates must be over 21 years of age or hold a graduate diploma.

"We have no fixed agenda that they need to be of a particular age or cultural background.
We are really encouraging a diversity of applications and that's because financial advisers today need to look very different to what they have done 10, 20, or 30 years ago.

"Financial advice is not just for the affluent - we really need to make sure this industry is diverse."

The course costs $2,300 which covers the qualifications. Fidelity is offering 10 scholarships a year of around $5000 each.

But those who do the course will have no ties to Fidelity afterwards.

"This is not self-interest dressed up as principle, it is a genuine commitment to support the next generation of financial advisers."

"Rather than just assume others will pick up the baton and do something about this we are looking to try and make a difference."

Kirwan said its course graduate numbers were not going to fully solve the advice gap but it was a start.

Fidelity Life will host online career evenings about the programme and provide an overview on what it's like to be a financial adviser on October 18 and November 3 for the February 2023 intake.