Money Managers closes to make way for new firms

NZ Funds, which has been a part owner for the past two years is taking full ownership of the company and plans to close it down; at the same time creating at least 14 new, independent advisory firms.

Under the deal NZ Funds has negotiated to buy the MMG franchises back and help the firms establish themselves as separate, independently-owned financial advisory businesses.

Currently MMG has 17 firms around the country and about $700 million under management. Of that money around $350 million is with NZ Funds. The other main areas it is invested in are DNZ, Centro Properties and LM Investments.

So far 14 have decided to become stand alone business and the others are considering their futures.

NZ Funds will provide services to these firms, however the new firms can use other products .

NZ Funds chief executive Richard James says there is a process around this for firms to follow. Where appropriate for their clients, the new advisory businesses will continue to utilise NZ Funds’ proprietary advice technologies and the Assyst investment platform.

The MMG franchisor business will be progressively wound down as individual arrangements are reached with each of the remaining franchisees.

James said “a number of the MMG franchisee businesses are large and successful enterprises run by high quality, high integrity advisers. We strongly believe that those businesses will thrive in the coming environment and continue to be supported by a large and loyal client base”.

James believes the big corporate financial advisory models are not right for New Zealand. “Contrary to the widely held view that being part of an institution will be prerequisite as we move into a regulated financial advice regime, the clear preference expressed by MMG’s investor client base has been a desire to deal with a locally owned and operated advisory firm."

He says clients want to deal with local independent firms where they can talk to the principal. He says this is how accounting, doctors and other professions work.

James says while the move was made primarily to help the advisory firms grow their businesses. Under the corporate model there were a lot of overheads and these aren’t required in an advisory business. He acknowledges that although the firm had dumped the Money Managers name and rebranded ther brand damage was considered in the move.

As NZ Funds is taking full ownership of MMG it will also be the end of Money Managers founder Doug Somers-Edgar in the advisory business.

Comments from our readers

On 10 September 2010 at 1:39 pm Michael Donovan said:

A priveledge to be the first comment???

I wrote a paper some years ago which argued the toss between a BIG company and a small one, and this latest announcement has categorically proven that in this particular case, the argument was absolutely correct.

Money Managers became so big that it HAD to choose an option of providing their own products in order to help satisfy the huge amount of incoming investors funds.

There is however one point I wish to raise, and that is specifically the one surrounding the 1% pa "MONITORING" fees applied against investors money...and your claim that there are at least a few GOOD advisers amongst the group.
Why is it that their MONITORED investors have been left in "reverse-performing" investments for what you suggest (probably correctly) a decade?

Will those "good" advisers simply pass the buck (now that they can) and blame the big culprit suggested by most, being Doug Edgar, who I guess they can say told them to do what they did???

Most of those who would challenge the "goodness" of such advisers would have to be those who realise the fact that those advisers are going to have to prove that they are truly strong in their approach to MONITORING...for a start, and as has been suggested, maybe re-name it to TRUE MONITORING?

This fact will apply to all advisers even outside of the now defunct MMG, unless they are going to rely on maybe having investor clients who are just going to remain numb to thinking they are actually having their money TRULY monitored.

I remember someone (Bob Jones was it not?) who posed the question that a long term investment was just a short term one gone wrong?

No-one can get it right all the time, however.....

Waiting a decade for an investment to come right does seem a rather long time, especially if you are only 5 years away from the average age of death???

Plus a kick in the face for those investors to read that Doug Edgar got paid $20 million for a company that lost them hundreds of millions?
Michael (ex Money Manager)

On 18 October 2010 at 8:37 am Paul Keohane said:

We were paying the 1% fee but it was levied on what MM reckoned was the current value of the investments including upward movements in exchange rates.These values were greatly inflated to benefit MM. I was told by the advisor that the 1% was called a monitoring fee because as a commision it was not a legitimate tax deduction. This was a rort as no monitoring was done except to provide a report 6 monthly which told how badly your investments were doing. Information which could be found by reading the big daily newspapers or internet.

Money Managers closes to make way for new firms

MMG Advisory Partners (formerly Money Managers), which was once the biggest financial advisory firm in New Zealand, is to be no more.

Monday, September 6th 2010, 5:25AM 3 Comments

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