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A bit of reality about perceptions

Friday, January 28th 2011, 10:29AM 4 Comments

by Philip Macalister

Perception and reality are two pretty confusing things sometimes. Last week we ran the story about NZ Funds partnering with the Institute of Financial Advisers to help provide professional development. My first take was excellent. It's good to see the IFA providing t his sort of service to its members and it  s great to see a firm, which has flown below  the radar for most of its life, come out and play a role in the industry. Well strike me down. I read the comments to the story about the deal over at NBR and talk about negative. Add to that ramblings from Chris Lee in his newsletter (it's here but you have to scroll down the page to find it) and also a note from some adviser over in Hawkes Bay and you end up with the perception that NZ Funds are an awful bunch. For the record we have always got on pretty well with the firm and found them pretty open. In the past the company made some products which you could say weren't award winners (well not the good awards anyway). It has also been criticised for the role it played with Doug Somers-Edgar and Money Managers. To its credit though it has worked through these issues and closed down MMG (Money Managers). The way I see it now is that the NZ Funds you have now is a different beast to the previous one. Product issues have been sorted, there has been a change of guard at the top, it is more openly engaged with the wider adviser market than previously and it is pretty innovative with some of its investment solutions. One would argue that the company is one of the most transparent fund managers in New Zealand It publishes, every month, a 110 page Portfolio Insights document on the web for clients and anyone else who is interested. Among other information it sets out virtually every asset it owns in every portfolio it manages. It also publishes and describes all of the associated companies in which it holds a financial interest. And for every client it provides the facility to receive individualised, since inception, performance reporting which includes every investment they have ever owned, both those that have done well and those that have not. In that regard its "value add" (or not) is also fully transparent. So yes there is a perception about the firm based on its past, but that is not reality today.
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Comments from our readers

On 28 January 2011 at 1:09 pm Forthright said:
The unwarranted criticism of the NZ Funds and IFA education alliance has again highlighted the lack of professionalism amongst the advisory community. You don’t see Doctors and Nurses keeping score of who made a mistake and holding it against them for eternity. The critics owe a duty of care to conduct some basic research before jumping to conclusions about the NZ Funds IFA education alliance. NZ Funds did what professionals such as Doctors and Nurses do; they identified past failings and came up with solutions to prevent it happening again. The IFA being the professionals they are, have correctly invited NZ Funds to share these techniques with Advisers.

My message for Advisers, either stay with the old unprofessional blame game or get on with learning new stuff to make sure you don’t repeat any past mistakes. This means doing some research yourself. Not believing you are the smartest or most professional Adviser around just because you didn’t use finance companies or credit based funds. Embrace the new era of education based competencies. Finally have some respect for your colleagues, after all they only want to earn a living and do the best for their clients over the long term.
On 28 January 2011 at 3:25 pm Peter Urbani said:
I have always found NZ Funds to be a very professional and well run outfit.
On 31 January 2011 at 8:08 pm Anon said:
Forthright you are correct about the lack of professionalism, except that you confine it to the advisory community - quite incorrectly!

The IFA as you say, has identified past failings, not least of which is theirs (although to a lessor degree) and the product producers (fund managers, etc) at large to remove themselves from the roles of trainer and educator. Those who didn't undertake tertiary training would have been at a loss to learn much in the industry. Except of course how to meet targets to make a living, and in turn meet the targets and bonus levels of managers therein (but they have slipped silently into the background - except of course where they call on adviser failings.)

The IFA is correct to introduce training opportunities as part of its mandate. However the impression taken from the public is that there is compromise in the relationship. Members I would think do not want to loose or have their independence compromised by "opportunities" obtained by the IFA. However, on this occasion I think simply a PR strategy failing as opposed to anything else.

While we are on the subject of the IFA. There is a need to address their mentor arrangements. There is a huge conflict of interest for a mentor to be a manager within a company that directly benefits from the actions of the individuals being mentored (or for that matter any individual within the same organisation who can be influenced by the policies and politics of that company). These type of arrangements also fail to provide a wider net and context for an adviser to gain knowledge, understanding, and to be critically evaluated.
On 16 February 2011 at 3:49 pm Nigel Tate said:
Anon,
You make some interesting observations but I would like to clear up your point regarding the requirement for Mentoring while on the path toward a professional designation such as CFP or CLU.

There are four E's that need to be met for any Certification, the IFA at present requires a candidate to be mentored for a two year period covering their processes as well as knowledge and skills base (the first E = Experience), but this is not done in isolation as a candidate also is required to have completed an approved Graduate Diploma in Financial Planning or Business Studies - endorsed in Financial Planning or Personal Risk Management (the second E = Education). To add to this they are required to adhere to our Code of Ethics and Practise Standards (the third E = Ethics). Finally they will in the near future, need to complete and pass a final exam before applying for Certification (the forth E = Examination)

Mentoring has long been a difficult area as we restrict those that are able to act as Mentors to thos already certified or for CLU we allow some Dealer Principals as there simply is not enough independant professionals available to meet the current need. It is very likely that mentoring as it is could change in the not too distant future as a result of FSPB developments and this will be comunicated then, but there there will still the need to meet demand and this is likely to mean closer rather than more distant relationships between the mentor/supervisor and candidate in the mentoring component (Experience) of the four E's.

Nigel Tate CFPcm,CLU
IFA President
Commenting is closed

 

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