What planet is Gareth Morgan on? His rant, I mean article, in the NZ Herald this week attacking advisers is an odious, boring piece of copy which is best used to wrap up fish and chips.

I wonder if it was timed to coincide with the Institute of Financial Advisers conference which I have been at this week. As it turned out it was published on the day the Code Committee and Commissioner of Financial Advisers, David Mayhew, addressed the conference.

Morgan’s piece was a talking point of the conference. A common theme being here he goes again.

One highly placed man in adviserland described it to me like this: “My eyes glazed over after the first couple of paragraphs.”

“Gareth’s an unhappy man.”

Sure some of Morgan’s points maybe valid, but not all of them. His claim that the Code Committee is subject to “industry capture” is plain wrong. This group has worked diligently to deal with some difficult and complex issues and it has listened to submissions from a wide range of people and organisations.

The Code has to be approved by the Commissioner and also the Minister of Commerce. They won’t be signing it off, if it doesn’t meet the requirements of the Act.

A huge amount of time and effort has been put into creating a set of minimum standards for advisers. Thousands of advisers have been working hard on meeting these new requirements which come into force next year.

Why, oh why, do people like Morgan and Consumer go out of their way to build up this public perception that all financial advisers are bad? There are plenty of excellent and professional advisers helping New Zealanders.

Using the Consumer Institute mystery shop of advisers as proof the sector is flawed is in itself flawed logic.

The mystery shop has been discredited by Auckland University Director of Research and Policy Solutions Dr Michael Mintrom.

The survey is like Morgan’s book he talked about, After the Panic. Full of errors. In fact his book was so inaccurate it had to be pulled off the shop shelves and fixed.

If there is a problem, then it rests with product providers and investors themselves. There have been plenty of investments allowed into the market that have been duds and failed to deliver promised returns.

Secondly, as I have said countless times, the majority of people who lost money in finance companies chose to make the investment themselves. They did not use intermediaries such as advisers.

The main issue is here we have someone who is both an adviser and a fund manager criticising the adviser reforms. It seems there is only one good adviser in New Zealand – Gareth Morgan.

The good thing is that once the Code is implemented Gareth will have to become an AFA. One of the items in the code is about good behaviour. Will it make Gareth shut up?

I had to laugh when this was sent through. It’s the brochure for the ISI’s business replacement policy and an ad from Contact Energy.

Have a look.

Which one’s got more gas!

HT John Ashby

It’s not a good look when the head of an association representing an industry group has to walk.

But Vance Arkinstall probably had little choice in the matter after charges were laid against in his role as a director of failed finance company Dominion.

What has been the surprise is that it took a week between the two announcements (charges being laid and resignation) and that the resignation wasn’t immediate

I note Chris Lee had a go at directors the other day. Here I agree with him to some degree. There are a number of directors out there with form and just seeing them being involved with a company is a warning sign to investors and advisers.

I don’t, for a minute, put Arkinstall into that camp.

I never understood why Arkinstall accepted a board position at Dominion Finance (I haven’t asked either). There was always the possibility it could be seen as a conflict of interest.

Curiously you could argue that finance companies were the enemy, or at least fiercest competitors, fund managers (whom the ISI represent) faced.

It seems to me that Arkinstall has become collateral damage in the finance company fallout. Only time (and a court case) will reveal the full story.

Arkinstall’s resignation is a blow for the ISI. It is an association without a lot of profile and one which was in the process of change. Arkinstall was leading that process and had already done at lot at the ISI including getting it more streamlined and functional. During his time he succeeded in getting good engagement with officials, bureaucrats and politicians in Wellington.

It’s the sort of stuff we don’t see, but is a critical for the industry when it comes to lobbying for change.

I have no doubt Arkinstall has always had the best interests of the industry (including advisers) at heart.

The timing of the move couldn’t be worse for the ISI in many ways. It has been in the news quite a bit this year advocating some changes.

Readers of Good Returns will see the great debate going on about its “anti-churning” policy around life insurance.

Also the ISI has announced that its members were going to introduce a voluntary code of practice and stop remunerating advisers on a commission basis for investment product sales. While the policy was promised sometime ago, details haven’t been revealed – yet.

Maybe they will come before July 31 when Arkinstall steps down?