Fund managers may be breathing a sigh of relief after a quarter of positive returns – but as news stories this week show - there are plenty of other issues to keep the hair greying at an accelerated pace.
The big news story is undoubtedly comments from tax expert John Shewan that the future of tax-favoured AUTs is under threat. While only a few managers used these structures in the past, in recent months there has been an explosion of new products. This begs the question is there a future for New Zealand domiciled unit trusts as long as offshore trusts enjoy the current tax advantages ?
While Shewan’s comments have got many people worried, word in the street is that while IRD is pushing for changes to the FIF regime, Treasury and the Minister still have to be convinced – not necessarily an easy job in itself. And what position will the Investment Savings and Insurance Association take? Last time this happened it was caught in the unenviable position of having some of its members lobbying the minister for change and others lobbying for the status quo.
Also ruffling feathers is the new business set up by Peter Baynes to help investors who have real grievances. For those of you unfamiliar with Baynes, he formerly held senior positions in the financial services industry including being the boss at Tower Trust, establishing Spicers’ administration platform Assure, and having a crucial role in writing the Act which covers adviser disclosure (and is about to be changed). Baynes, who owned a small slice of Spicers, has been sitting tight ever since the business was sold to AXA.
Earlier this week he announced he was setting up Investor Advocacy, a firm which would help investors who have been given poor advice recover their money.
This comes at a time when the whole issue of adviser regulation and control is under the spotlight.
What will be interesting is whether his firm manages to extract money from either advisers or fund managers. They won’t get anything through the FPIA process, and the Ombudman schemes are only effective if the firm is a member. That leaves the power of persuasion and the media.
Are we going to see an endless stream of investors paraded on Holmes and Fair Go? Hardly a good look for the financial planning industry, especially if it’s just a few bad eggs which are the problem, as opposed to systemic failure within the industry.
It's one thing when matters outside your control impact your business, quite another when you shoot yourself in the foot, as BNZ found out this week. An error in the way it valued its tax assets has seen exiting unitholders overpaid to the tune of $7 million.
Finally on the positive side of the ledger is news that Club Life has grown so fast it needs more capital, and its existing shareholder, Hellabys, doesn’t want to put more money in.
Rumour has it that ING are looking at taking a stake in the business, however others are also looking. Could we see former Sovereign executives taking a stake in Sov MkII?
See stories:
Australian unit trusts under threat: Shewan
Advisers have nothing to fear: Baynes
BNZ’s bad news is good for investors
Club Life looking for more capital to grow
Quote of the week (last week actually)
“Nobody calls me petal.”
Mai Chen’s unequivocal response to FPIA conference MC Jim Hopkins.
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