Call Gareth for capital ideas

Gareth Morgan. Photo / Bay of Plenty Times

I love the photo Gareth Morgan supplied to the Ministry of Economic Development to accompany his bio for the Capital Market Development Taskforce (CMDT).

Phone-in-hand, man-of-action, Morgan stands out from the competing staid corporate headshots of his CMDT colleagues who include such luminaries as Adrian Orr, Mark Weldon, Franceska Banga and Mary Holm - why aren't they on the phone, or at least emailing?

But Morgan has always been a superb marketer. He's also done a great job of inserting his pet peeves about the investment and advisory industries into the official CMDT agenda. In fact, parts of the latest CMDT report read like excerpts from Morgan's many books, which are available from just about everywhere.

For example, his long-running campaign for the 'bare non-discretionary trust' as the vehicle of choice for investment funds gets another leg-up in the CMDT report.

But that's by-the-by. Despite it's over-reliance on the flawed Morningstar report on New Zealand's fund management industry, there are many excellent suggestions in the CMDT report - simplified disclosure documents, standardised fee disclosure and a call for all financial firms to treat their clients fairly (amazingly, that statement had to be made explicit).

Lovely, aspirational stuff.

There's also more guff on how bad the standard of financial advice is in New Zealand. While the CMDT does acknowledge new legislation, including the Financial Advisers Act 2008, will go some way to improving the situation "implementation will be critical".

"If incorrectly implemented [the Financial Advisers Act] could produce an occupational licensing regime which ultimately benefits service providers rather than retail investors," the report says.

And there is a real divide between the way the CMDT would like to see financial advice governed - principles-based, adviser as 'fiduciary' - and how the regime is actually developing (a mix of product definitions feeding into a two-tiered, with mezzanine levels, industry).

So while Morgan and co are wishing for an adviser market that is "ethical, competent, competitive, independent and accessible", the Ministry of Economic Development, which is implementing a large part of the new adviser rules, is instead deliberating over such delicate matters as whether bonus bonds should be a category 1 or a category 2 product.

Call Gareth, he'll know the answer.

 




David Chaplin

 

Pictured: Gareth Morgan. Photo / Bay of Plenty Times