With all the goings-on at Fisher Funds the company is finding that when you reach the heights of being the market darling, it can be a long fall back down to earth.

While many of the company’s funds are taking a battering at the hands of the sharemarket, the company is causing its own waves with internal changes.

Firstly on the market front, the risks of taking large, concentrated bets on small and mid-sized companies is becoming clear.

When a call goes wrong, like Barramundi’s investment in ASX-listed Credit Corp then the damage is painful.

While investors in this fund must be wondering what to do, so must those holding Kingfish warrants. The last exercise date for the warrants issued with the IPO is looming, and what looked like a handy investment is looking far less attractive now the market (and the fund) have fallen.

Then we move to the messy departure of former chief investment officer Warren Couillault.

I have a couple of observations here. One, and no doubt this will annoy some, is that every time I have seen Couillault and Carmel Fisher together over the years they never appeared to be close. There is no questioning their professional skills, rather this is an observation about how they worked as a team. Something was missing.

Secondly, there is a story circulating that last year Couillault wanted to float the funds management company rather than doing the Marlin global share fund. He may have lost that debate (if ever it was held), but by selling his 27% stake to Fisher I guess he has achieved his exit.

Finally, I struggle to believe the company line there was no rift between Fisher and Couillault. Messy splits like this can’t be called an amicable divorce.

If ever there was a group of “advisers” who needed regulating then it’s the ones who sell all this Blue Chip stuff, or what we call packaged property investments.

NZ Property Investor Magazine has been examining the collapse of Blue Chip. What is amazing is that “investors” bought nearly half a billion dollars worth of property through Blue Chip in a year.

If you think about all the other crowds who are selling this stuff then the sector has been getting more money than managed funds have in recent years.

Although people are being sold this stuff as an investment and “for their retirement” it falls outside of the securities laws.

This is absolutely ridiculous.

New disclosure laws which come in on February 29 won’t have any impact as the people selling this stuff aren’t investment advisers.

According to the Securities Commission an “investment adviser is a person who gives investment advice about securities.”

All this packaged property stuff isn’t a “security”.

My discussions with the Securities Commission indicate they don’t have any jurisdiction over this, rather it falls to the Commerce Commission under the ambit of Fair Trading Laws.

I can’t see this being particularly useful.

The next bit of adviser regulation is the bill currently before Parliament which “licenses” advisers and makes them all join an Approved Professional Body, who then regulates them. Again it appears that these rules won’t capture people selling – I wouldn’t call it advising – on packaged property.

Commerce Minister Lianne Dalziel says she has an open-mind to changes to the bill. Here’s a chance to see how open it is.

It’s not the investment advisers who use managed funds, finance companies and the like that need reigning in. It’s the group who “sell” property.

You may think Blue Chip and the financial advisory industry have little in common.

Think again.

One of the things that struck me is the similarities to what has been happening in the finance company sector. Obviously people were investing in these things to save for their retirement and they thought they were safe (as houses).

Another thing is that Blue Chip and the likes (I’m not sure what you call them – managed property investments maybe?) are quite a big sector.

Reports are that Blue Chip alone had 3-4000 investors. There seem to be plenty of these schemes, big and small, so the total number of investors is substantial.

Then I pondered how do you pick a good one? Here, my guidelines for choosing finance companies come into play.

You need to be able to understand how the investment works, the backgrounds of the people involved and the structures. It seems when you get either complicated investment structures, or complex corporate structures, there is a higher probability of trouble.

Also these complicated structures often provide a great way for the provider of the investment to clip the ticket multiple times.

That is fine, as long as the investor knows.

Often they don’t know and by the end of the line, the ticket has been clipped so often there is little left for investors. This seems to be the case with Blue Chip as it has been with other types of investments, including some from big financial planning firms.

All this leads me to a growing belief that the simpler the investment product, the safer it is.

One of the features of the MFS debacle is the dearth of information which has been made available to both debenture holders in the finance company and shareholders of the NZX-listed parent.

This vacuum only seeks to raise more fears about possible outcomes.

When the whole MFS issue blew up in Australia, it seemed appropriate that MFS in this country, which is listed on the NZX and used the strength of its parent company and the so-called “put option” as a selling point, should have been making announcements to the exchange straight away.

I, like many others, was stunned that the company could get away with saying nothing for days and days – or was it weeks. Is anyone at the NZX listening???

At debenture holder level information has been sparse, and we found calls aren’t taken or returned. Discussions with others, including advisers, is that they have struggled to get information about what is happening too.

What’s happening now? Well it seems from last night’s NZX announcement that MFS Pacific is in wind up mode, the put option isn’t worth the paper it’s written on and quality of the loan book is “sub-optimal”.

Looking back it seems that MFS has always been a little loose with its disclosure. One wonders why it changed PR agencies last year?

Another tell-tale sign disclosure was not high on the list is that recently MFS’s NZX announcements always come out around 5pm – a very inconvenient time.

Then there are all these other questions that surface? I guess MFS in New Zealand won’t exercise its option to buy assets like Vestar from the Australian company. One guesses the advisory firm will be on the market (if it isn’t already) soon. And this promise to make good (not compensate) Vestar clients caught up in Bridegecorp and the like seems equally worthless.

Working out the fees on KiwiSaver funds is something, it seems, even the experts can’t do.

From memory there are at least three calculators out there. First was one from Trident Research in Christchurch.

The second was from Gareth Morgan – who promptly bagged his competitor as soon as he entered the market.

Then many people bagged Gareth’s one as it appeared to be a blatant push for his own product. This has been achieved by making a lot of assumptions about other funds.

Now we have a piece of work from the Retirement Commission, which has been bagged by fund managers.

Just to make things even more interesting, one of the peer reviewers of the Retirement Commission – Michael Littlewood – bagged Consumers’ KiwiSaver site.

What can you make of all this?

Basically, no-one really knows how fees will stack up in funds. This is a bit of an inditment on the savings industry, highlighting what is a weakness.

One argument put to me, and one I like – is that it seems we won’t really know what the levels of fees in KiwiSaver funds are till next year when MERs (management expense ratios) are available for the funds, plus their performance.

But of course then there are those who bag the guidelines for calculating MERs!

What is happening at MFS in New Zealand? Is it the end of the line?

Yesterday the company had its shares suspended from trading on the NZX and it appears that the company has gone into lock down mode.

We know advertising has been pulled and it is unclear whether the company is accepting money. From what I hear it needs to.

The story we hear is that Vestar placed a reasonable sum of clients’ money into 30-day debentures with MFS Pacific and rolled these over each month.

However, yesterday Vestar told MFS Pacific it wasn’t rolling over the investments at the start of February, therefore MFS Pacific had to redeem the debentures.

Trouble is there is no money in kitty and its request to its Australian parent, which also has its shares suspended from trading, was given a firm no.

That’s not a surprise as it is currently trying to sell assets to sort out debt issues.

If this version of events is correct it raises the odd situation that the combined businesses are shooting themselves in the collective foot as Vestar is owned by MFS in Australia.

Personally I hope MFS doesn’t follow other finance companies into collapse as it had some good plans for New Zealand and it appeared to have been run much better than some of the dodgy crowds which collapsed.

This is the version of the story we have heard – if you can shed any more light on the matter please let me know.