Over the past few weeks it has been interesting to watch two of trade associations, one on each side of the Tasman, rolling out advertising campaigns to promote their members’ services to the public.

In Australia the Financial Planning Association has finally gone live with its campaign which includes television ads, promoting the benefits of using a financial planner.

In New Zealand the NZ Mortgage Brokers Association has established a new brand identity and is also about to start a public campaign encouraging people to use a mortgage broker.

Its campaign also includes television advertising.

One of the positive things about the NZMBA one is that the association has set some targets around its campaign (as all campaigns should have). It wants to increase the market share of the mortgage brokers from about 30% of all loans written to 40%. While it doesn’t sound much it is a 33% increase for each broker and the question is can they handle such growth?

One broker I met the other day does six hour weeks and 12-plus hour working days are the norm.

The other interesting thing about the NZMBA campaign is that it is being funded by a levy on members. There has been a high degree of buy-in from their members and it will be fascinating to see how the strategy evolves. (There is plenty more on this subject in the next issue of the NZ Mortgage Mag which is due out on October 10).

What’s missing in this picture is some promotion of the financial planning industry in New Zealand. Yes the FPIA are going through a planning exercise to decide how they are going to market and promote themselves, and I assume they are watching the FPA and NZMBA.

One of their challenges is how do they promote their membership which is split across several groups; investment and insurance, CFP and CLU qualified, and those without these designations who don’t want to progress down those paths.

What I think is clear is that there needs to be a big push to educate and inform the public about why they should use a financial planner.

One of the hot topics of the moment is finance companies – and how bad they are supposed to be. But let’s get one thing straight here – not all finance companies are bad.

We are currently researching a story on fixed interest investing and it’s good to get other views of what is happening in the market. Our goal is to provide something that is informative and balanced.

You could quite easily though, get the impression that finance companies and their secured debenture products are not a safe place to put your (or your clients’) money. Such a myth is perpetuated by the likes of the ASB Bank and its recent survey.

The problem I have with the ASB research is that it looks like sour grapes. It’s a competitor having a crack at another competitor.

I say this as the bank was happy to make sweeping statements but refused to provide examples to back up its position. (Maybe as publishers we should have handled the story differently?)

It is important not to generalise about any sectors and it is worth re-reading this piece from Broadlands Finance along those lines.

James Lockie at Cairns Lockie put out an interesting note the other day, and you have to agree with some of his comments.

For instance finance companies have become popular because other investments haven’t delivered in recent years.

They offer guaranteed returns. If an investor deposits funds with a finance company for two years at 9.85%, that is the return they will receive.

He is quote critical of fund managers and their inability, or lack of desire, to offer some form of guaranteed return.

I do note that Money Managers’ owned Orange Finance went some way down this track recently.

Lockie also raises the issue of “transparency of fees”.

He argues that there are “absolutely no fees paid by those who invest in finance company debentures”. Fund managers seem to have a plethora of fees that are often hard to rationalise.

One must remember though that finance companies aren’t offering these investments out of the goodness of their hearts – as some advertising has shown some make fantastic profits.

Lockie also puts forward consistency of returns as a plus, saying “finance company returns have performed well, despite many changes in the economy.”

The challenge though is how to pick the good from the bad. I have some thoughts on some of the research, or so-called research, out there, and will write on that soon.

Hopefully the piece we are putting together on fixed interest will also help you understand the sector.

After my last post I have been having an interesting discussion with an adviser – who suggests I keep out of politics! More seriously he suggests one votes on what is good for the long-term future of the country not what is good for our industry.

His view is that Cullen inherited an economic structure put together by the last National government and Roger Douglas before that and they simply rode a wave of good luck.

Clark is insufferably arrogant. Cullen is insufferably arrogant.

“Having said that I was low key Nat supporter until threee weeks ago now I think they all suck – they forget they work for us,” he says.

His view is that the only way forward for New Zealand is two terms Labour and two terms National – a lurch left and then a lurch right and so on.

“Never give them three terms – the arrogance takes over.”

He also thinks Labour lost all credibility when they said there is no spare money and then came out with the (not costed) student loan bribe.

I don’t disagree about the arrogance. Is arrogance reason enough to throw out a government which has presided over six good years? To me it seems to be a toss up between arrogance and known factor v bumbler and ditherer. With Brash it seems to be the problem of teaching old dog new tricks.

I reckon that the Nats aren’t ready yet, but in three years time they will be. If you put them in now lacking experience and with a worsening economy they will only be a weak one-term government.

Where we do agree is that I don’t have a lot of time for either lot at the present and I am sick of bribes and the petrol tax one the worst especially coming from Brash the economist.

As for Labour and its hand out – I disagree with that and suggest that the media, economists and commentators let us down by not showing that in the budget there was all this unallocated money to spend.

What’s best for the long-term future of the country is certainly the key and I don’t think one-off short term tax cuts are the answer (be different if they were corporate tax cuts). The key is to increase productivity and wages.
One piece I enjoyed as it summed things up well is this one written by Rod Oram.

The idea of the blog was to get people talking – I figure the industry are mainly right leaning (or in some cases lying on their right hand side) and it would be good to challenge their thinking. Your comments are welcome.

I was heartened to see Andrew Freeman-Greene’s positive comments about building up the funds management industry in New Zealand. It’s something I concur with.

It reminds me of a speech Tyndall boss Anthony Quirk made nearly five years ago about making New Zealand the Edinburgh of the South Pacific.

His comments were that back in the UK not all the financial prowess is concentrated in the City of London. Rather a vibrant funds management industry exists in Edinburgh.

Freeman-Greene’s comments pick up on this idea and dovetail quite nicely with two other issues at the moment namely: The health of retail funds management and the election.

The former issue is one you can read lots more about in an up-coming issue of ASSET.

But, I would suggest a vibrant funds management industry has retail funds as a vital organ.

As for the election – well… Which party would be best for the funds management industry? In my view it is nearly a no-brainer.

Cullen has been the best finance minister this industry has had for decades. (I can’t believe the claptrap in the Herald this morning that business considers John Key a better Finance Minister than Cullen. Hasn’t Cullen just presided over one of the best periods of growth this country has seen for years?)

Cullen is interested in our industry, he engages with it, he knows the issues and he tries to find answers. English, Birch and Richardson did none of that.

Key hasn’t shown a great understanding, and the National Party seems to have bugger all detailed policy across the spectrum.

The NZ Superannuation Fund is potentially the core of a renascent industry in New Zealand.

I view the fund as being a great example of how managed funds can produce good returns. Also, because of the public attention the fund gets it could be used – with a little creative thinking – as a great tool to educate Kiwis about how to save.

Proposed tax changes, while not perfect, will assist the industry.

Don’t think tax cuts will help the industry – the last time that was tried there was a view people would save some of this extra dosh.

The facts are they spent it instead.

At the start of this year I predicted at least one of the leading associations would see a change in its leader – and I am right!

Yesterday the Financial Planners and Insurance Advisers Association announced the departure of its chief executive Phillip Matthews.

This is a major event for the association and indeed comes at a critical time in its development.

Matthews was the inaugural ceo of the association, and when he took on the role five years ago I must admit to say I was a little surprised that a planner would leave his business to run the newly merged association.

I know that there are people out there who did not like Phillip and the way he operated, and there were others who actively wanted him to go.

People should put aside their differences and look back on his achievements. Besides the day-to-day running of the association, Matthews has spent a lot of time putting the building blocks for the FPIA in place.

Possibly his biggest influence has been in the area of the future regulation of the advisory industry. Matthews had been promoting the idea of co-regulation, long before the Task Force came up with that model in its paper last month.

A question I have pondered about his departure is this…Is it a bad time for the association to lose its ceo?

Sure the regulatory issues appear to be on hold for a while, but the association itself is going through change with a major strategic planning process underway

It is a little unfortunate that the CEO has left and no replacement is in sight. One of the worst outcomes would be for the board to leave the position in limbo and try and run the show itself. I have seen this with two similar organisations recently and the results are less than optimal (that’s really a euphemism for near disastrous).

So the answer to my question is: Quite possibly, and definitely if the transition isn’t handled well.