Friday 23rd of July 2010

What planet is Gareth Morgan on? His rant, I mean article, in the NZ Herald this week attacking advisers is an odious, boring piece of copy which is best used to wrap up fish and chips. I wonder if it was timed to coincide with the Institute of Financial Advisers conference which I have been at this week. As it turned out it was published on the day the Code Committee and Commissioner of Financial Advisers, David Mayhew, addressed the conference. Morgan’s piece was a talking point of the conference. A common theme being here he goes again. One highly placed man in adviserland described it to me like this: “My eyes glazed over after the first couple of paragraphs.” “Gareth’s an unhappy man.” Sure some of Morgan’s points maybe valid, but not all of them. His claim that the Code Committee is subject to “industry capture” is plain wrong. This group has worked diligently to deal with some difficult and complex issues and it has listened to submissions from a wide range of people and organisations. The Code has to be approved by the Commissioner and also the Minister of Commerce. They won’t be signing it off, if it doesn’t meet the requirements of the Act. A huge amount of time and effort has been put into creating a set of minimum standards for advisers. Thousands of advisers have been working hard on meeting these new requirements which come into force next year. Why, oh why, do people like Morgan and Consumer go out of their way to build up this public perception that all financial advisers are bad? There are plenty of excellent and professional advisers helping New Zealanders. Using the Consumer Institute mystery shop of advisers as proof the sector is flawed is in itself flawed logic. The mystery shop has been discredited by Auckland University Director of Research and Policy Solutions Dr Michael Mintrom. The survey is like Morgan’s book he talked about, After the Panic. Full of errors. In fact his book was so inaccurate it had to be pulled off the shop shelves and fixed. If there is a problem, then it rests with product providers and investors themselves. There have been plenty of investments allowed into the market that have been duds and failed to deliver promised returns. Secondly, as I have said countless times, the majority of people who lost money in finance companies chose to make the investment themselves. They did not use intermediaries such as advisers. The main issue is here we have someone who is both an adviser and a fund manager criticising the adviser reforms. It seems there is only one good adviser in New Zealand – Gareth Morgan. The good thing is that once the Code is implemented Gareth will have to become an AFA. One of the items in the code is about good behaviour. Will it make Gareth shut up?