It may be naive of me to think this, but one day markets will recover and return to what we remember as normal. (As long as it happens before our memories go on us.)

When that happens the whole KiwiSaver space will have a massive shake-up and the performance of managers will change significantly.

I started thinking about this after seeing the latest performance numbers and saw that many which had done well have hidden behind cash. A smart move today, but when things change surely they will get left behind in the returns race.

It would be useful to know what will be the catalysts for getting managers, particularly with growth mandates, to change their portfolios.

The other bit I pondered was that it seems many younger, and arguably higher risk investors, are in low risk funds. How do we get advice to them and make sure what they invest in is appropriate for their investing horizon?

I did see something recently which suggested that the rules should be changed so default options are more suitable to the client. Many managers now use a “lifestages” type approach where the asset allocation is automatically altered to reflect the investor’s time horizon.
This is something which would be a positive enhancement to KiwiSaver.

While lifestages is one option, I was also fascinated to see what NZ Funds is doing at the moment with its funds.

In essence, it is taking a lot of the academic, jargon-filled bits out of investing and tailoring portfolios on a behavioural finance approach. In other words, they are approaching it on human terms.

If you want to learn more about what I think is something very fascinating in asset allocation, then get your hands on a copy of the April issue of ASSET.

I was hoping not to write about the ING credit funds for a while – or at least until their restructuring proposal is published – however some of the commentary in the industry has encouraged me to revisit what’s happening.

Also I was thinking there is a similarity between the attention Tony Veitch had over bashing his former partner and ING. What similarity you may wonder? Well it seems to me Veitch has had a disproportionate coverage of his dreadful assault, as has ING over its credit funds.

ING isn’t the only institution which has suffered massive losses in credit funds. Look at Credit Sails – it recently said its notes were worthless. Fortress Notes aren’t much better. There is a host of other failures, but have they had the same level of attention that ING has had? The answer, as you know, is no.

Next is this barmy argument that there should be a “product recall” and ING should pay investors par for their DYF and RIF units. Sorry, credit funds aren’t like washing machines or toasters (well you could argue the money goes around and around or gets burnt, but I think you know what I mean with this comparison).
The funds were never marketed as riskless.

I also have some concerns over the comments about research. There are two points. The first is someone who has an axe to grind with a research house is using this story for that purpose, yet there is little disclosure about that. When you read some of the stuff out there just pause for a minute and think about who is behind it and their past and that will help you put things into perspective.

Secondly, I’m afraid advisers can’t hide behind some report from a research house and say we put money into such-and-such a fund as that’s what we were told to do.

Advisers must do their own research and be satisfied with what they see and do. Basic risk reward theory tells you that if a fixed interest investment is going to return a net 200 points more than the bank bill rate then there must be quite a bit more risk in the fund. Yes, it is probably not a low risk investment as touted.

To go around and blame everyone else and not take responsibility for your own advice is unacceptable in a profession.

My final point is that ING and ANZ are stumping up with maybe as much as half a billion dollars to sort out the issue. Sure they were too slow to do it, but hey, that’s a lot of money in anyone’s terms. Show me another organisation which is prepared to put that much into a problem investment like this.

To put it into perspective one of ING’s strongest critics described the offer ING is making as “terrific”. Pity some advisers can’t see it for what it is.

I’ve been a bit slow on this one. It was fantastic to see that the Professional Advisers Association (PAA) successfully presented its first Adviser of the Year Awards at its conference last year. (And it was really nice to see it done at the home of Good Returns – Rotorua).

Those of you who have been around for a while will know that Good Returns used to run some similar awards, which were focused on the financial planning and investment sectors.

We know how hard it is to get the awards together, get entries, sponsors and judges, and then put on a function. It ain’t easy, but the PAA did it well.

We always had an aim of adding in an Insurance Adviser of the Year award, but after our partner withdrew its support for the awards we put them on hold.

Personally it was great to see the PAA pick up the baton here focusing on its two key areas, insurance and mortgages.

In the next issue of ASSET we profile the overall winner, Stephanie Wiki (yes, a relly of Reuben’s) as well as the winners of the firm of the year and the business insurance adviser of the year. To me the awards are about celebrating the good things advisers do – and there is plenty of that.

The other bouquet for today is to all the associations. The G4 group of advisers had its first meeting of the year this week in Wellington. Reports we hear are that things are going swimmingly well and everyone is getting on fine. (The one little cloud to this good story is at the end of our report here).

Added to the good news side it is pleasing to see the NZ Mortgage Brokers Association join up and make it the G5. It’s about time they came into the collective bosom of the industry rather than sit on its own.

I won’t be so bold as to suggest where this grouping will go or what it may morph into in the future. Rather, I believe that by working together the associations will get a better outcome from regulation for their members and the public, than if they all went it alone.