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Consumer slams advisers

A survey of 16 Christchurch advisers by Consumers' Institute produces some controversial findings.

Friday, March 13th 1998, 12:00AM

by Philip Macalister

Financial advisers in general have come in for a caning in the latest issue of Consumer magazine.
Consumer conducted a "blind testing" of 16 planners in Christchurch and concluded that none of them "managed to provide, independent, sound advice, presented well and properly tailored to the client's needs, at a reasonable fee."
"We think this is disgraceful," the article says.
Consumer's test involved a "client" (woman, 40, married, children and mortgage of just over $100,000) visiting 16 advisers telling them she was about to inherit $60,000. She wanted to know where to invest the money for her retirement.

Consumer then ranked the advice and service given against what it believed was the correct approach.
It ranked 11 categories including; questions, reports, disclosure and independence along with whether the adviser used growth funds, index funds, put some money overseas and considered the mortgage in the plan.
While it singled out Spicers, Money Managers, KPMG and ASB Bank as doing a good job Spicers and Kevin Seque were the highest scoring gaining excellent rankings in seven of the categories. The next highest scoring were WestpacTrust and Money Managers with five rankings of excellent.
The one area all the advisers scored the same was independence. Consumer reckons every adviser was poor or independence was non-existent.
Association of Investment Advisers and Financial Planners (IAFP) board member Craig Myles describes the article as predictable and of questionable value to consumers.
"We have major problems with establishing a criteria in the way they did and comparing advisers working in different ways against a notional benchmark."
He says it is inappropriate to categorise the quality of advice around issues such as mortgage repayment and the use of index funds as there are different schools of thought on both.
IAFP, along with other organisations, made comments on a draft of the article.
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