There are so many things going on in the industry at the moment it is hard to know which one to comment on. ING would be the prime candidate, but I will leave that for another 24 hours or so.

The only comment I will make is that its latest proposal over its CDO-backed funds is miles better – indeed millions of dollars better – than the original one. Good on them for dumping the old plan.

Instead of ING it is worth looking at the fixed interest sector again and commenting on finance companies and advisers.

One of the recurring themes I keep hearing at the moment is around advisers and their loyalty, or lack of it, to finance companies. A number of companies have commented that they have worked hard over the years to support advisers, assist them in their businesses and even supporting the industry through sponsorship of conferences and educational events.

The companies I am referring to here are the solid, often-rated, variety; not your shonky Bridgecorp/C+M variety.

Obviously part of the reason for their support of the industry is to help them distribute their products. No different to what other parts of the industry, such as managed funds and life insurance providers do.

However, the theme which has come out of these discussions is that advisers haven’t been particularly loyal in return and have turned off the funds flow tap pretty quickly.

As a result these companies are changing their business models. They are no longer interested in using advisers anymore. Instead they are selling their investments directly to the retail market.

What I find curious about all this is that there is a place for finance company products in some portfolios. Investors clearly want to buy and use these products.

That has been made abundantly clear by the government guarantee scheme where companies have been flooded with millions of dollars of investment.

And it would seem that these people should be getting advice about where to put their money.  But because advisers went off the sector following its meltdown and troubles, they have lost a lot of potential business.

And it seems a supportive ally.

The flood of retail money into corporate bonds at the moment has a whiff of the type of investor behaviour we saw over finance companies.

With interest rates at very low levels and bank term deposits barely providing a positive return after tax and inflation, it is no wonder that investors will be attracted to anything starting with a seven and if it starts with an eight it’s like a bright light.

Likewise, banks aren’t showing a lot of appetite for lending so corporates are being forced to the bond market, with much of the money raised being used to pay down debt.

I’m not sure how much of the money being invested in these bonds is going through financial advisers, but I suspect a fair bit is going through broking firms. Indeed one made a comment that if it wasn’t for Fonterra they would be making a loss this quarter.

The corporate bond rush has highlighted a point which has been bugging me for some time about the savings industry, that is the lack of research available to investors.

I’m not sure how much is floating around on these offers and it seems very little makes its way into the public domain for the retail investors.

Therefore these offers are being bought on rate, just like finance companies were, and brand name.
There seems to be little regard to things like balance sheets, credit ratings, economic risks and the like, therefore little consideration of whether the return being offered was commensurate with the risk.

I’d have to make it clear here that I’m not saying these companies are dodgy, or high risk, like some of the finance companies, indeed the companies known to be in the bond market are reputable organisations. But there is a wide divergence in their qualities, which doesn’t seem to show through in the rates on offer.

I guess one thing the bond offers are doing is taking potential interest away from shares and property. A view expressed here, was that with interest rates down people would start looking to growth assets. Judging by comments from the real estate sector and a look at volume figures on the exchange, that hasn’t happened – yet.

All this talk about changes in companies, structures and staffing got me thinking about what could happen in the advisory industry.

There has been talk about the number of associations we have representing advisers and where they all fit together. Maybe now, when there is a lot of pressure on funding and membership numbers, we could see some of them get together.

The most obvious is that the PAA and LBA join together in some form. This got close a while back but was scuttled by some IFA people. Since the PAA and LBA have similar memberships I can see real benefit here. Also each have some very complimentary parts.

The state of the NZMBA is something which got me thinking about this subject too. As reported, it axed the chief executive role held by Megan Salt last year due to financial pressures. I would have thought that at a time of regulatory change and a time when associations need to deliver benefits to their members having a full-time CEO would be a must.

But then again mortgage brokers are increasingly looking to sell life insurance and even KiwiSaver, so maybe it makes sense that one of the logical marriages is between the PAA and the NZMBA. It’s worth a thought and I have no idea if anything is happening here, but it would be worth talking, especially now there is a change of personnel at the NZMBA.

The other thing which is useful to note is that the PAA is somewhat in the box seat here as it has been playing the long game and is financially the most robust of all the associations.

And this thought also made me check the Companies Office to see if the IFA had filed its accounts. There is still no sign of them, although they have traditionally completed them around November each year. The last accounts were filed November 27, 2007.

Hopefully members will get something soon.

Whatever, I think it would be worthwhile if the various associations opened dialogue with each other over these big issues.

PS: There is still no word on the appointment of a commissioner of financial advice, but there are a couple of interesting responses to the Blog about it.