Occasionally I receive email questions from readers of the blog, but I don’t always have time to answer them, with life being so busy now with two kids under three, two jobs and a blog. So I decided to answer the most common question as a blog article and kill two birds with one stone so to speak. The most common has been how do I become a financial adviser and what is it like?
Well, the first part of that question is easy.
How to become a financial adviser in New Zealand
The minimum qualification to becoming a financial adviser in New Zealand is the New Zealand certificate in Financial Services (Level 5). You can complete the certificate through a number of providers, including the Open Polytechnic, or the Strategi institute.
The learning tends to be online. The certificate requires you to complete two compulsory courses covering the financial services industry and the regulatory environment. This takes about 350 hours. You must also complete at least one of four specialist strands to achieve your accreditation. The strands are investments, life, disability and health insurance, general insurance, and residential property lending. Each strand taking about 300 hours. Choose your strand carefully, because as an adviser you are only allowed to give advice in areas that you are competent and trained in. So if you choose the residential property lending strand, you aren’t able to give investment advice.
So all up looking at a minimum of 650 hours training.
Once you have passed the training and received your certificate, the next step is to apply for authorization to practice from the Financial Markets Authority. Then depending on if you go out on your own, or work for an employer, then you may need to register with a dispute resolution scheme, be listed on the financial services provider register, and produce a disclosure statement.
To remain an adviser, you must then complete at least 20 hours of training/professional development each year.
Types of financial advisers
This is where it becomes tricky to offer my opinion, as I am only one type of adviser. I am an independent adviser who is self employed. That is one way to go.
Another is to work for a company to gain some experience and guaranteed income first. There is such a wide range of companies offering financial advice so it is really up to you which direction you want to take.
Personally, I didn’t want to work for another company as the majority of financial advisers have significant conflicts of interest. They are paid by KiwiSaver providers, investment providers, insurance and mortgage providers, to make recommendations towards their products and services. I am not OK with that. I want to give people the best advice. How can I do that if I am paid by companies to recommend their products, even though they are not in the best interests of the client.
The downside to this is that remaining independent is very difficult to earn an income. If I were earning money from my recommendations, I would be much better off financially. But my business model, although it allows my conscience to remain clean, is very difficult to earn an income, since the only income is directly from the client.
So, if you have grand plans to go solo, it is possible, but it can be a long and hard slog, especially if you wish to remain independent. I’ve been operating for close to three years now and it is still not producing enough income to be full time. So either do what I do, and work two jobs for a period, or realise it could be very low paying for some time.
The upside is after a few more years I hope to be earning enough to provide for the family and as a solo adviser, it is a job that can be done anywhere. That is very appealing to me.
The majority of my work is comprehensive financial plans, which typically entails investment advice, retirement planning, risk management, personal money management, and scenario trade offs. I don’t cover insurance in any detail as I didn’t complete that specialist strand.
However, other areas that you may like to get into include investment adviser, insurance adviser, and mortgage broker, depending on your specialist strand. Some of these companies may be independent whereas others are predominantly sales focused. There aren’t a lot of independent advisers, so do your research before deciding on this course. I have seen a few people go through the course only to be disheartened by aggressive sales tactics of the firms they worked for. If you are client first focused, then that won’t be fun for you.
Other thoughts on finanical advice in new zealand
A lot of advisers in New Zealand are getting on in age, white, and male. New Zealand needs more advisers that are representative of our population. That being said, there should be plenty of opportunities for young advisers. Not only that, but our population is also ageing, meaning more people will need assistance with their finances as they hit retirement.
Other handy skills to have are:
Strong professionalism – Clients trust you with their most personal information. You need to remain professional and confidential at all times, whilst passing no judgment.
Strong communication – This includes listening. It is in my opinion, an industry that should be client first focus. This requires excellent communication.
Analytical – The best advisers are strong problem solvers who can identify the best recommendations and outcomes for the client.
I love what I am doing. Helping people get further ahead, and faster, than they would otherwise. So they can live their best life sooner.
In fact, I would love nothing more than for this to be my full time job. But as I said, independence comes at a cost. It’s much easier to earn money from commissions than from clients. If you are OK with that, then there are ample opportunities. But if I weren’t independent, I would hate that job. Customer service is number one for me and I would not be comfortable pushing sales and offering advice that is not in the clients best interest.
My hope is that in time, kiwis will become more comfortable paying for independent financial advice. Good advisers should provide far more in value to the client than the cost of the service and kiwis should realise that good financial advice is not a cost, but rather added value. In the meantime though, kiwis continue to pay less up front, for substandard, conflicted advice. Which costs far more than independent advice over the long run.
Those are my thoughts as my experience as a financial adviser. Don’t take my word for it. I am only one man. Everyone’s experiences will be different and all you can do is what works best for you. Because that is what I have done and I love the work I am doing.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here