If ever there was a group of “advisers” who needed regulating then it’s the ones who sell all this Blue Chip stuff, or what we call packaged property investments.
NZ Property Investor Magazine has been examining the collapse of Blue Chip. What is amazing is that “investors” bought nearly half a billion dollars worth of property through Blue Chip in a year.
If you think about all the other crowds who are selling this stuff then the sector is a significant player in New Zealand’s investment markets.
Although people are being sold this stuff as an investment and “for their retirement” it falls outside of the securities laws.
This is absolutely ridiculous.
New disclosure laws that came in on February 29 don’t have any impact as the people selling this stuff aren’t investment advisers.
According to the Securities Commission an “investment adviser is a person who gives investment advice about securities.”
All this packaged property stuff isn’t a “security”.
My discussions with the Securities Commission indicate they don’t have any jurisdiction over this, rather it falls to the Commerce Commission under the ambit of Fair Trading Laws.
I can’t see this being particularly useful.
The next bit of adviser regulation is the bill currently before Parliament that “licenses” advisers and makes them all join an Approved Professional Body, who then regulates them. Again, it appears that these rules won’t capture people selling – I wouldn’t call it advising – on packaged property.
Commerce Minister Lianne Dalziel says she has an open mind to changes to the rules, but it is also understood any changes have to be careful and not capture ordinary real estate transactions.
That’s fair enough, but it can’t be to difficult to develop some rules which capture sellers of packaged property.
It’s always easy to point out what and why something should be regulated. However, the tricky bit is how to do just that. Furthermore, more often the regulation with good intention have unintended outcomes which may things worst. (Interesting readings here www.nzinstitute.org) How to find a great Financial Advisor.
1. OFFICE Do you have to meet your Financial Advisor at their office? That’s where they should work! And you want to see how they work and what staff they employ. If they come to you they have too much time at their hand. 2. First Question When you meet with them do they ask first who you are or how much you have to invest? Financial Advisors need to know you to give good advice and tell you what to do with your money. Hence, the first question should never be “how much do you have to invest”. 3. Disclosure If they fail to disclose to you how they get paid find someone who does tell you. 4. Recommendation Ask your friends and family for their recommendation. 5. Experience How long have they been a Financial Advisor? If they have not been a Financial Advisor for 10 years or longer or don’t work with someone who has find an Expert with Experience. 6. Results What results have they achieved for the person who recommended them to you? 7. Charge How much do they charge? Flat fee or per hour.
Regulation will not tell people to ask better questions. But asking better questions would assist them to invest wisely.
Daniel Feller
On 13 March 2008 at 1:53 pm Hamish said:
If you are really good at selling crap for a lot of money do you need regulating? Hmmmm, I reckon that everyday people are selling rubbish for a lot money and doing it legally. If you do not consult an independent advisor on such a large investment, thats one thing. But if you have been told that this is an independent valuation and it is in fact anything but an independent valuation then you have been duped. And you should seek recourse with in the current legal system.
On 16 December 2010 at 11:57 am Bart H said:
Hmmm... Seek recourse with the current legal system. Good luck with that. The thieves have got away with it, again. Just as they did during the Share/gold schemes a few years back. They'll be back with a new scheme soon, crime pays.
3 Comments
If ever there was a group of “advisers” who needed regulating then it’s the ones who sell all this Blue Chip stuff, or what we call packaged property investments.
It’s always easy to point out what and why something should be regulated. However, the tricky bit is how to do just that. Furthermore, more often the regulation with good intention have unintended outcomes which may things worst. (Interesting readings here www.nzinstitute.org)
How to find a great Financial Advisor.
1. OFFICE Do you have to meet your Financial Advisor at their office? That’s where they should work! And you want to see how they work and what staff they employ. If they come to you they have too much time at their hand.
2. First Question When you meet with them do they ask first who you are or how much you have to invest? Financial Advisors need to know you to give good advice and tell you what to do with your money. Hence, the first question should never be “how much do you have to invest”.
3. Disclosure If they fail to disclose to you how they get paid find someone who does tell you.
4. Recommendation Ask your friends and family for their recommendation.
5. Experience How long have they been a Financial Advisor? If they have not been a Financial Advisor for 10 years or longer or don’t work with someone who has find an Expert with Experience.
6. Results What results have they achieved for the person who recommended them to you?
7. Charge How much do they charge? Flat fee or per hour.
Regulation will not tell people to ask better questions. But asking better questions would assist them to invest wisely.
Daniel Feller