Controversial economist Gareth Morgan has told financial planners they need to keep the lowlifes in the industry as a point of differentiation.
Talking at the Financial Planners and Insurance Association conference in Christchurch last week he argued against adviser regulation saying it was no magic bullet to respectability.
Likewise taking and the bad guys and shooting them isn't going to give confidence to Mum and Dad investors, he says.
Morgan's argument is that taking the bad operators out of the market isn't going to make it suddenly respectable.
To be credible advisers need to set high standards and earn the respect of consumers.
"You cannot legislate excellence," he says. "Excellence has to be earnt."
"Your strongest asset is earning client satisfaction."
So on one hand advisers need to strive for excellence and be seen to be the best.
On the other side there needs to be bad advisers to allow the good ones to differentiate themselves.
"Bottom feeders are essential if you want to differentiate yourself," he says. "You need losers to make the winners shine."
Morgan says the worst thing that could happen for the industry was to have the Government implement a regulatory regime.
"The worst thing you could do is actually get the Government to play a role here and regulate - that would be a disaster."
His view is that the association, or some other body, should set the bar for standards at a high level and keep raising it over time.
Morgan says regulation makes the business sterile: "It turns you into a bunch of vanilla accountants."
He also questioned the value of education: "The biggest biggest handicap to me in the enterprise economy is my education."
"The more years I spent at university the further I got from reality."
"You can't become a good investor by doing a 9-week Jenny Craig course."
Morgan says formualising investment and making strong rules isn't the way to be a successful investor (or adviser).
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