About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Friday, January 17th, 6:05PM
rss
Latest Headlines

Advisers urged to question fund managers

Financial advisers need to ask fund managers the hard questions when offer documents don't provide enough detail, according to Pathfinder executive director John Berry.

Tuesday, November 29th 2011, 6:33AM 2 Comments

by Niko Kloeten

Berry said concerns remain about the level of disclosure in offer documents in New Zealand for offshore investments.

He said the use of derivatives, leverage, liquidity of underlying assets, third party transactions, fee burdens and currency risk are issues that are often not fully or clearly disclosed.

"For example in relation to currency risk, many offer documents which invest in international assets do not even mention currency exposure or currency hedging in the product description," he said.

 "This is a grave oversight as the investment statement should give a clear explanation to investors."

And Berry warned that under new financial regulations, advisers have to make sure they have enough information to make accurate representations of products to their clients, or it could come back to bite them later on.

"There's a lot of moving parts in any fund.  The fund manager has to disclose them and the advisers have to grasp what the structure is and what the risks are for their clients."

He said advisers should ask three questions of fund managers after reading an offer document:

      What value does the manager add?

2.      What are the key risks for investors in the fund (and how does the manager mitigate these)?

3.       What other good questions do advisers ask?

The last question is good for flushing out key concerns an adviser might not have identified, although he noted it requires fund managers to be willing to disclose risk.

In the new environment fund managers could lose business if their offer documents are too opaque for advisers and investors, Berry said.

"You want to make it in a way people can understand - the days of people investing in things they don't understand are over."

Niko Kloeten can be contacted at niko@goodreturns.co.nz

« News Round Up: November 28KiwiSaver mismatch a 'huge challenge' for advisers »

Special Offers

Comments from our readers

On 1 December 2011 at 1:54 am Gary O said:
What other good questions do advisers ask...
What sort of question is that, moreover what sort of answer are you likely to get back?

Where is number 4. How much trail commission do I get?
On 1 December 2011 at 3:41 pm Craig Simpson said:
John does raise a good point in that most investment statements don't give you the full picture.

I would suggest that far too much emphasis in New Zealand is given by advisers towards returns and not enough on the systems and processes the manager has in place.

A couple of questions advisers may wish to ask are:

What risk management systems and mechanisms does the fund manager have in place to exit a stock.

What back office / administrations systems and resources are in place.

What reporting is available to clients and advisers.

A starter for 10.....
Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Partners Life criticises Vitality
    “bay broker good points but I get the point about premiums increasing when sick. I have Vitality personally and I have qualified...”
    16 hours ago by taka dan
  • Don't hold your breath for life insurance reform
    “That's a good observation from @JPHale there. "2% of sales" has even less meaning when you don't know if it's 2% of premiums...”
    16 hours ago by Denis
  • Partners Life criticises Vitality
    “I've added Vitaltiy to a number of clients' new covers. I have also sold AIA cover without it. As with all advice it is...”
    21 hours ago by BayBroker
  • Don't hold your breath for life insurance reform
    “Having read both the article and the comments I can only agree with what has been said in the comments. Further, I am...”
    21 hours ago by BayBroker
  • David Whyte's 5 predictions for 2020
    “@ number 2: LOL - don't hold your breath. And besides, even if they did do it, if someone needs it they should probably already...”
    2 days ago by All hat no cattle
Subscribe Now

Weekly Wrap

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.55 3.89
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.97 4.05 4.39
Kiwibank 5.20 4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 3.45 3.89
Sovereign 5.30 3.89 4.05 4.39
Sovereign Special - 3.39 3.55 3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.19 4.35 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.39 3.55 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.55 3.99
Median 5.34 3.99 4.07 4.39

Last updated: 8 January 2020 3:37pm

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com