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Can Brash still make cash?
Friday 5th of March 2010
I attended the Morningstar Fund Manager of the Year Awards during the week and there was one topic on everyone’s lips. It wasn’t who was going to take out the gongs that night, but what was going on at Huljich Wealth Management.
A couple of people did wonder if Peter Huljich was going to turn up on the night. Who knows, before all this news broke of what had happened Huljich could have been in the running for one of Morningstar’s awards.
The unanimous theme is what had been done was wrong.
The funny thing though is that it was wrong, but wasn’t a situation where investors were being ripped off. The closest, I think you can come, is that people signed up to the fund under false pretences. They were sold on returns which it turns out are questionable.
There are still unanswered questions though. For instance, why didn’t Brash and Banks know what was going on in the business? They are directors and sign off accounts.
They are not scot-free on this one and have some explaining to do themselves – although I note an explanation is not likely to be coming anytime soon.
Brash makes a point in his press release that says “some of these allegations (made against Huljich) are unfair and some are untrue.”
It would be helpful if he explained them.
Secondly I don’t think changes in the rules around funds would ever prevent this sort of thing happening in the future. The only likely outcome is that penalties for anyone caught could be tougher.
I also note many people have jumped on this story to push their own agendas – particularly the business presses page three pinup Gareth Morgan. Surely we can find someone with less conflicts of interest?
Added to that, Morningstar used it as a hook to push its call for fund managers to disclose all their holdings.
I do have to defend the research houses though. They can’t be expected to audit every managers’ books to confirm the data sent to them. That is ridiculous.
The other oddity here is that Brash is now running the show and is chief investment officer. Sure he ran the country, and used to print money, but can he manage money for investors?
We will be watching the returns to see.
Comments (7)
Austin Fisher
Completely agree. Without the extra payments they still would have been top performer - but not *excessively* so. Not enough to convince 70,000 people that they are onto a good thing with a special, Midas-like fund manager. A decision was made to mislead the public. On purpose.
Huljich traded heavily on the fact their performance *far exceeded* the competition. Very few providers have performance stats actually on their Investment Statement - but Huljich did. They had bar charts showing a great big high skyscraper for Huljich and tiddly, teeny-tiny bungalow-sized ones for everyone else.
The language around Huljich's resignation is amusing. Falling on his sword? paying the ultimate penalty? crucifixion? When did this get so noble and biblical? I can't see any nobility in this episode at all.
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14 years ago
Clayton Coplestone
Thank you for responding 'Kimble' - at least you're thinking about the issues here.
Believe it or not, experience in many walks of life counts. Unfortunately we are both involved in an industry whereby many of the participants are myopic (at best) or unaware of how to effectively operate an investment/wealth management business. Unfortunately for many investors, the preservation and growth of their retirement savings is not merely an outcome of market movements as you suggest. The reality is that whilst forces are attempting to drive the NZ financial services industry to catch up with global best practice, the absence of local experience is proving to be a significant hurdle in this process. We simply don’t know what we don’t know – with that statement pertaining to everyone from the media to the regulators to the industry participants to the investors.
When an industry participant broadcasts their perceived expertise to solicit public monies, they are not only representing themselves - but the entire industry. If the financial services industry was serious about enhancing (and potentially preserving) its future, it should be supporting robust appraisals/research of all investment schemes (including Kiwisaver) before supporting these schemes with investor dollars. Further, the industry should not accept lapses in transparency of any kind – irrespective of the intentions. After all – it is the philosophies of transparency and trust that are (at least they should be) the foundation upon which this industry will survive.
And finally – it is not the investors that have done anything wrong here, it is the industry. Hopefully in time, the industry can share the blame with investors who are at least partially educated / informed about simple concepts of wealth management
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14 years ago
Clayton Coplestone
The Huljich episode highlights a number of serious inadequacies in the NZ industry:
1. That there are plenty of industry folks who are involved in the gathering of assets, who are without any background/training/experience to do so
2. That Kiwi mum & dads are still being lured into investment schemes that involve high profile celebraties who have little/no relevant industry experience
3. That the Kiwi Regulator was once again caught napping at the wheel
4. That Kiwi-saver programs have shifted from mediocrity towards being our next big failing for consumers... how can a population of 4.4m support in excess of 270 various Kiwisaver schemes... who will be the winners & losers over the next decade?
5. That industry peripheral watchdogs (including research houses and Trustees) are rubbish, and should stop being supported. If they had been doing their job effectively, they would have highlighted the inadequacies in the investment process long before it got to this
6. That mum & dad average require a major leap in education before they can confidently appraise appropriate investment options
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14 years ago
Austin Fisher
I think the selling of a product on the back of false returns is very wrong. Tens of thousands of people joined after being given false information about the investment prowess of this company.
So I think they were ripped off, certainly.
This was not an admin slip-up or an accounting oversight.
You don't accidentally do stuff like this.
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14 years ago
Phil Menzies
Peter obviously shouldn't have done what he did. I would find it hard to believe that a whole bunch of people signed up just because of the returns published.
But if only every other fund manager put cash into their funds when they made a mistake where the investor had suffered. How good would that be!!
It'll never happen of course so in that vein Peter H is one in a million.
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14 years ago
Austin Fisher
Sorry Phil, but your response beggars belief.
Those thousands joined Huljich KS *precisely* for the reason that the performance figures were far in excess of the market. This was their main selling point. It was all over their documents and their website. To get those excessive returns, it cost Peter Hujlich a fraction of what a good marketing spend would have been. So why isn't this fraud? Why aren't people more angry about $70m + of taxpayers money being spirited away like this?
Is there some part of us that admires these people? I don't get it.
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14 years ago
Austin Fisher
OK, I will try one more time. That small amount of money injected ramped up investment returns to make their performance look extraordinary. Then they bragged about it to the masses as if they were masters of the investment universe. They could have easily published the true returns but chose not to. If the Powers that Be think that is a minor transgression, then so be it.
Denim, I for one am not a journalist - wannabe or otherwise. How dare you etc.
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14 years ago
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