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Cowboy ad leaves advisers' saddle sore

The Financial Markets Authority's (FMA) new advertising campaign, with the tag line 'cowboys belong in the movies, not the financial markets' has sparked anger among advisers and a formal complaint to the Advertising Standards Authority.

Monday, July 4th 2011, 5:13PM 27 Comments

Camelot adviser Stephen Parr has written to the Authority to formally complain about the advert.

"As a public education, it's just horrifying," he said.

Parr said the advert portrays all advisers as cowboys, unable to be trusted until the arrival of the new regulator last week, and it unfairly places the emphasis for prior financial problems at the advisers door.

"It discredits what the IFA (Institute of Financial Advisers) and its predecessors have built up over a couple of decades. It's just playing on the fact I strongly believe the adviser group as a whole have been done over by those covering their own butts."

However, FMA chief Sean Hughes has defended the advert, saying he is surprised by the negative reaction from advisers.

"[The adverts] are targeted at the people who shouldn't be in the industry," he said.

He said the FMA was not targeting good advisers with the advert, and that advisers approved to work in the new environment should treat their status as a competitive advantage.

"Why throw away all that good effort and work and have some cowboy come in and steal your lunch?"

In his letter to the ASA Parr says he believes the advert is "likely to bring the financial advisory industry into disrepute" and that it breaches a number of sections of the Advertising Code of Ethics and the Code for Financial Advertising.

"The advert is socially irresponsible and seeks to depict financial advisers as cowboys," he writes.

"This is deeply offensive to financial advisers and their clients and the industry at large. The advertisement appears to seek only the self-aggrandisement of the Financial Markets Authority."

Parr said he has requested the withdrawal of the advert and "a public apology by the FMA to the financial advisory community."

Hughes said the adverts were tested before launch and had been shown to both the IFA and NZ Mortgage Brokers Association (NZMBA).

"I'm not out there to make enemies," he said.

"But I don't have any regrets either."

Tags: financial advisers IFA regulation

« Hughes sees new dawn as ‘win-win’ for all Hewitson leaves FMA »

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Comments from our readers

On 4 July 2011 at 11:48 pm Forthright said:
There’s a town full of pure investors, here comes the financial adviser gunslingers with a dance hall girl on one arm and an open hand, looking for a quick buck. Standing tall and staunch, protecting the town, is the good sheriff Sean, with his deputies Mel, Mels and Mellie. Yippee ki ya it’s the FMA, they gonna save the town from the cowboys. Must be the new film by Jean Hughes “Blazing Bureaucrats”. All the advertisement needs is the background theme of Bonanza. Totally unbeerleevable Jedediah.

The only conclusion an investor can reach from this futile piece of advertising is all financial advisers were not putting their client’s interest first until the law made them do it. How can the FMA possibly believe such a negative can produce a positive and confidence boosting result? Moreover the collective intelligence of the IFA and NZMBA must have been out to lunch for them to have given the advertising campaign the thumbs up.

Sean Hughes said “I’m not out there to make enemies and I don’t have any regrets either”. Well Jean if that is the attitude you have to financial advisers, then RESIGN is a good word for you to keep in mind.
On 5 July 2011 at 9:11 am Curious said:
Unfortunately the FMA ad is symptomatic of the regulatory mood in this country. Advisers seem to be being targeted for all of the losses over the last few years. Never mind that according to this site 75% of finance company investors did not get advice. Never mind that Kathryn Rogers from Sec Com indicated in the "Bulletin" in July 2006 that all of the information required for investors and advisers to make appropriate decisions on finance company investments was available in the offer documents. Never mind that the promoters of these issues were obliged by law to keep their offer documents current.
If an adviser ran a similar ad to the FMA one they would be in breach of code 2. Pity code 2 doesn't apply to the FMA.
The ad doesn't even explain code 1 correctly. Where is the integrity part?
Finally I think that it is totally unacceptable that advisers are expected to pay levies to support this kind of shallow advertising.
On 5 July 2011 at 9:14 am JAFA said:
The FMA is doing fertile work. The cowboys & the cows have long gone, leaving the FMA to spread the bullshit around.

FMA clearly has too much money, and not enough governance.

The Securities Commission should be in the dock beside Bridgecorp, Hubbard & Five Star.
On 5 July 2011 at 9:30 am Yee-ha said:
Oh per-lease! To those advisers packing a sad, get over it and get on with it. This regime is only the beginning, hopefully.
On 5 July 2011 at 9:44 am Allistar Walker said:
The FMA would seem to have an agenda to run independants (a word they don't want used) out of the market. We can do without a load of do-gooder, inexperienced and unbalanced lefties telling us what to do with our money. They need to be accountable too. Perhaps we can start with publicly firing the approvers of the ad. In the meantime I am having sharp-shooting practice.
On 5 July 2011 at 9:49 am Curious said:
@ an Yee-ha
Perhaps you would like to explain- the beginning of what?
On 5 July 2011 at 9:51 am Mac said:
We have all the cowboys gone? Have a look inside the QFEs and the 20,000 employees who can provide investment advice. The range of products for their clients are restricted by the advisers product manufacturer. Makes a joke out of best advice principles.

On 5 July 2011 at 10:06 am Regan said:
Has anyone from GR spoken to the IFA and NZMBA? I think we need them to please explain, or at the least give us their side.

The ad is a terrible portrayal of the advice industry, and by promoting the fact that there may be 'cowboys' operating, even if they dont belong, does nothing but damage the very confidence the FMA purports to be trying to improve.

On 5 July 2011 at 10:14 am Independent Observer said:
Sean – this advertising campaign is in bad taste, is disrespectful to the scores of quality financial advisers in the industry, and will undoubtedly come back to bite the FMA (who if I’m not mistaken – can be accused of displaying acts of amateurism since inception).

My strong advice would be to reconsider the tone of the adverts, and move towards installing confidence in both the industry & its Regulator.

It would be wise to recalibrate the thinking if the objective is for the industry & FMA to move forward in partnership.
On 5 July 2011 at 11:28 am Dan said:
It really amazes me the number of advisors out there who really are cowboys but are simply in denial about how bad and self rewarding their advice has been, while this does not apply to all the advisors out there, there is still a large number that it does, many of which are self touting "leaders of the industry" and members of the IFA

Curious you mentioned that 75% of those who invested in Finance companies had no advice, what about the 25% that had advice, the reason that advisors are getting beaten up is that people went to these advisors and paid these advisors so that the same thing that happened to the 75% of investors did not happen.

The really scary thing is that the Cowboys are still around, and not just hiding in QFE's but some are AFA's, I had one lady come in the other day, with a portfolio containing all the usual suspects that are in receivership, I looked up her old advisor and he is now an AFA ( after having changed his company name twice in the last two years).

To be honest, if the Cowboy campaign has a go at the "cowboys" of the industry, then why not, they deserve it.
On 5 July 2011 at 12:02 pm Jeff Royle said:
The Ad is offensive to those of us who have long held the 'customer first' principal. The public are confused with what an RFA or AFA actually is and the new RFA Disclosure is a joke.
On 5 July 2011 at 12:03 pm Consumer said:
I'm not an adviser, working in investment advice industry or even financially literate. However, when I saw these ads (I had to stop and watch them cycle thru as the message wasn't immediately obvious) it told me that I need to take some personal responsibility should I decide to invest etc. and check out the FMA's website beforehand for what is legal/not legal etc. I certainly did not get the impression that the adviser industry is full of rouge cowboys, nor do I have that impression. I also thought the ads were mildly entertaining. it pretty much told me there's always a few bad apples (as there is with anything these days) and I need to keep that in mind. Just two cents from someone outside this circle...
On 5 July 2011 at 2:05 pm Gary Wise said:
Who's the NZMBA anyway?? Do they even still exist? Fat lot of use they have achieved over the last 15yrs as a supposed industry voice for the brokers. I left it 3 yrs ago when they showed no spine when the banks halfed our commissions and took way the trails!!! How we are supposed to promote a professional image when we don't have the funds to do so belies me. I'm all for regulation, but let's as an industry, FMA, Banks, and Ins companies, put a package together that will allow businesses, not cowboys working from the stables, to promote that we are here for the long haul, are regulated, professional, and have the support staff to help keep us compliant.
On 5 July 2011 at 3:05 pm Terry Raggett said:
Sean who?
On 5 July 2011 at 3:23 pm fred Broker said:
This is what advertising does to the consumer. an email I received from someone referred to me by a professional.

"In shopping around for an adviser, could I first ask the following questions (as recommended by before we take things any further:
What is you experience and qualifications?
Do you have any criminal convictions?
What fees do you charge?
What interests do you have that could influence your advice?
What relationships do you have that could influence your advice?"

Not a good start to a trusting relationship I thought. After asking me if I was a criminal who my friends in crime are and whether I was going to sell him based on self serving reasoning, I politely pointed out that his 'trusted' professional adviser had referred me and that his recommendation should speak for itself. I sent him my disc statement and referred him to my website to which he replied that he would read them and check me out. it seems to me that 'branding' advisers collectively as cowboys is simply going to make the public even more suspicious of everyone in the finance industry which puts up more and more brick walls in the relationship business. With 70% of the country either inadequately or just not insured there are some very big points being missed with all this infighting and gutter sniping. Does anyone in the decision making arena ACTUALLY think about what is the best outcome for the consumer. Seems to me it has been borne out over and over that they certainly do not.

to quote Abraham Lincoln

You cannot strengthen the weak by weakening the strong, .... you cannot build courage and character by taking away a mans initiative and independence (there's that word again) you cannot further the brotherhood of man by encouraging class hatred.

He was indeed a wise man. pity so many generations repeat the same mistakes..........
On 5 July 2011 at 4:01 pm John Wayne said:
I'm beginning to think the regulators are the cowboys not us advisers...
On 5 July 2011 at 8:06 pm Independent Observer said:
The FMA would be wise to remember that every action has an equal and opposite reaction.

The alternative for consumers, who lose faith in financial intermediation, is to adopt a self drive approach.

This has historically contributed towards numerous financial disasters (remember that the bulk of investments into finance companies were direct; let’s not forget the housing bubble & mass investor speculation; or the current over emphasis on yield in preference to capital appreciation on the eve of an inflationary environment), as investors allow emotion and prejudice replace independence and professionalism.

Again – the FMA’s advertising tone would be far more productive for all concerned (including the Regulator) by reiterating the difference that a good financial adviser can make, rather than making grandiose headline grabbing generalizations.
On 5 July 2011 at 9:04 pm Annoyed & frustrated said:
In order that I cannot be accussed of bringing the Industry in disrepute I am posting my comment without my name! Shame that the FMA has brought my career into disrepute - the Ad was appalling giving the impression that I was a cowboy until I became an AFA.
Non prescriptive - I am appalled that as an industry we are allowing this - you ring FMA and the first words are for us to get legal opinion - the FMA should be providing us with guidelines as to the minimum requirements for needs analysis, investment profile questionnaire etc - after all we could all think we are doing it correctly and then loose our careers if FMA do not agree - yet they are providing no guidance. Secondary Disclosure - industry bodies are now talking about Secondary Secondary disclosure - how is this making the Industry easier for the clients to understand what they reading when we will have at least 3 of these damn documents - the old disclosure system was great and made sense - now my first secondary is likely to be 15-18 pages long because I need to list all the Life, Health, F&G and Investment companies I deal with - I have had to ring them all to find out what I get paid because I have believed it is better for me to be unaware so the clients interest are in no doubt. The overwhelming confusion in our industry is unfair on clients what is going to be done to sort this out? I think the action Stephen Parr is taking to be correct but unfortunately with our careers on the line if we do stand up and complain he is also a brave man!
On 5 July 2011 at 9:10 pm Wilbur said:
I think Sean Hughes said it all when he said the advert targets on people who shouldn't be in the idustry......why focus an advert on a negative and not a positive its title.
On 5 July 2011 at 9:57 pm denis said:
Fred, that person is absolutely right to ask those things. It's nothing personal.
On 5 July 2011 at 10:04 pm billy the broker said:
There are a lot of insurance agents still selling investment and they will keep doing it unless it becomes commission free. The whole market has been tainted by investment companies now gone. But some groups feel they have things in place to keep carrying on and flogging crap product. The whole investment deal is a huge scam...they click it everywhere..and what returns do they get....bugger all. I have seen ..I have done it..I have seen the light. I don't do it...I am ashamed that I did it, no training with investment...but they take my business..the companies love it...the holier then though groups say they can help you...they cant!! I will speak again. It is all a huge CON!!! Beware Mr and Mrs Public ....they talk about transparency ....rubbish...don't believe it...Be careful out there all I can say.
On 6 July 2011 at 10:09 am Tonto said:
Well I was also going to jump on the complaining bandwagon until i read the article about the broker Kerry Buddle in the latest mortgage mag. Looks like the NZMBA had no spine or took no action because of a bit of infighting between Greer and Salt- Her membership was terminated only because she had not paid her fees - not because of any disciplinary action (either by her aggregator group or NZMBA) - in fact they were presenting her awards !! - despite a number of complaints from fellow brokers and members of the public. She was then opened with welcoming arms by the PAA who did not have any problems and she resigned from there voluntarily. Maybe we do need these heavy handed bodies afterall as the industry as a self regulated body seems to have failed its members and the public over this issue.
On 6 July 2011 at 10:45 am Johnny Adviser said:
You're not Phil U from Kiwiblog are you Billy Broker? All that poor sentence structure and "...." business.
On 6 July 2011 at 11:08 am Andy said:
TO GARY WISE - Spot On mate. You are totally right.
On 6 July 2011 at 5:35 pm Forthright said:
So we now know who the FMA ran the concept of the advertisement past. FAANZ – spokesman Tony Vidler, IFA – Peter Lee, NZMBA – Darren Prately, Simon Hassan and Mary Holm. A group of people I had a lot of respect for and a group of people I thought had more common sense. To not realise the impact the tenor of the advertisement would have on advisers is at best a very modest judgement. The collective assessors now have much to be modest about.
On 6 July 2011 at 8:20 pm Ron Flood said:
Please note that Tony Vidler is neither the spokesman or a member of FAANZ.
On 7 July 2011 at 8:12 pm Tony Vidler said:
Sorry Forthright, I have not been involved in FAANZ (or its spokesperson) for nearly 2 years. It is only in recent days that I became aware I was listed on their website as spokesperson.

I had no prior knowledge of this advertising, and simply saw it when it went public, along with you and everyone else. It is worth noting that a number of the leading people in the industry who are presumed to have pre-screened it are adamant that they did not do so.

Do not presume immediately "guilty" merely because an insinuation is made.

For the record, I think the advertisement negative, apalling and the (unintended?) consequence is to pit regulator against industry. Not the position I would have hoped for at the front end of regulatory reform.
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