Kiwi Saver, Mary Holm financial writer and columnist

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  from Mary Holm, New Zealand's most widely read investment writer

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Info On Advisers

PLEASE NOTE: While Mary is a member of the board of the Financial Markets Authority, the information on this page - and the whole website - has no connection with the FMA.


People often ask for advice on which financial adviser to go to. Mary is not in a position to recommend anyone, but readers may find the following Q&As and table helpful. The Q&As were first published in Mary's NZ Herald column in July 2011. The table is regularly updated.

Question: I am in my mid 30s and due to inheritance, own my own home with no mortgage and have $300,000 to invest. I am unsure where to go for advice as I don't know which financial institutions are safe. I would have thought Hanover was really safe.

I don't want to just leave it in the bank earning this low interest rate, but I'm very risk averse. I don't know what I'm doing at all. Any advice would be helpful.


Answer: I don't think you're as financially ignorant as you think. You've set yourself up with a mortgage-free home, which is a great first step. And you've put the rest of your money in a bank - the best place for it while you consider your options. Not everyone is that savvy.

So what now? Questions like yours used to be problematical. They're too broad to answer here, without knowing lots more about you. But I've been reluctant to suggest going to a financial adviser. Their advice has sometimes been worse than no advice at all, leaving people facing big losses.

Until now. As of July 1, new rules are in effect that cover financial planners, brokers, people in banks offering financial advice and others in similar roles. And - despite one reservation that I'll go into in a minute - I think the rules might actually work, raising the standards of financial advice and the trustworthiness of advisers.

For some time now, advisers have had to give you a disclosure statement before they do any work for you. It outlines their qualifications, the fees and commissions they receive and so on. But now there's much more. For one thing, advisers have to be one of the following:

  • A registered financial adviser, or RFA, who can advise only on the simpler financial products, such as insurance, bank term deposits and mortgages.
  • An authorised financial adviser, or AFA, who can offer a much wider range of advice. AFAs have to pass exams about finance, which I'm told are no walk in the park - or perhaps we should say stroll to the bank.
  • An employee of a Qualifying Financial Entity, or QFE. QFEs include the likes of KiwiSaver providers, banks and insurance companies. Some of the people who work for them can give investment advice, but only on the products offered by the QFE - unless the person is an AFA.

Both RFAs and AFAs are checked for past criminal conduct. They have to act in your best interests, exercise reasonable care, and not engage in misleading or deceptive conduct. If you are unhappy with anything they do, there are several steps you can take, including going to an independent disputes resolution scheme that's free to you.

An AFA would be best qualified to help you find the right investments for you - bearing in mind your total financial situation and how much risk you are comfortable with.

To check if somebody is an AFA, go to the Financial Markets Authority's website, www.fma.govt.nz, and click on "How to Invest" and then "Using an Adviser". There's a link to the list of AFAs, as well as other useful information.

An AFA's license tells you which categories of advice they are authorized to offer. The categories are listed on the adviser's disclosure statement, which you can probably find on their website, or you could ring or email and ask them to send the statement to you.

Alternatively, you could look at the Financial Service Providers Register, at www.fspr.govt.nz. Search - at the top of the page - by either an adviser's name or their firm's name. The categories are in the financial services box after the words "Authorisation Status". I suggest you look for someone who offers "financial advice" and "investment planning services".

Another thing: some AFAs limit themselves to advising on products from only certain companies, while others cover a wide range - which is clearly better. Ask an adviser how many different companies' products they offer.

So where do you start in your search for the best AFA for you?

My reservation about the "new and improved" financial adviser regime is that advisers are still permitted to receive commissions or other incentives from a financial product provider as a reward for putting clients' money into that provider's products. This practice is being phased out in other countries, and I hope we follow suit. There's too big an incentive for advisers to recommend products just because they pay higher commissions.

Clients sometimes say they are happy with this, as they may be charged low or no fees, because the adviser receives enough commission income. But the quality of the advice they receive must suffer. Ask yourself: would you be happy if your doctor prescribed Drug A, even though Drug B was better, because the makers of A gave the doctor a bigger reward?

I far prefer advisers to turn down commissions, or pass them on to their clients, and then charge the clients fees. The adviser's only motivation is then to serve their clients as well as they can.

For more on this, see "Fees-only Advisers", below.

Question: My wife and I are both 56. I anticipate working until I am 65 although my wife probably will not. We have no outstanding loans and combined earn gross $180,000. We have good superannuation plans.

We are fortunate to have in addition $250,000 in cash. What shall we do with it? Is it better to go with a financial adviser who will manage this actively for a fee of 1.5 per cent or put it with a passive fund manager whose costs are lower?


Answer: That's not really a valid comparison. The two offer quite different services.

An adviser will look at your particular situation, what other assets you own, any debts, your risk tolerance, when you expect to spend the money and so on.

A fund manager - active or passive - accepts many people's money and invests it according to their system. If it's passive, they might buy every share in a market index. If it's active, they select which investments to buy and sell. You decide if you want to invest with them, and they take no responsibility for whether you've made a wise choice. Usually they don't even know you.

If you know you want to put your $250,000 into, say, shares or bonds, and you understand the risks and expected range of returns, you could invest with a fund manager. And if you do that, it's good to choose a passive fund, which will charge lower fees.

However, it sounds as if you might benefit from personalized assistance from a financial adviser. They might charge a proportion of your investment, or by the hour, or they might charge you nothing because they receive commissions. But see the Q&A above.

It's well worth putting time and effort into finding a good adviser. And once you find her or him, it can be well worth paying them reasonable fees. Over the long run, you could end up considerably better off.

Question: My husband and I noted with interest your recent comment suggesting part saving in KiwiSaver accounts - to the level of maximum benefits - and saving with another provider for accessibility.

We're beginners in the personal investment side of things and my question to you is: Where do we go to for trustworthy professional advice on this - and indeed for a professional to have a good look over the rather minimal assets and more significant liabilities we currently have - investment property, residential mortgages, retirement savings etc?


Answer: The info above should help. And in your situation there's a great way to test whether a financial adviser is putting your interests first. A good adviser should always ask every client at the start if they have debt. If yes, and the interest is higher than mortgage rates, the adviser should always recommend repaying that before doing any investing.

Ditto - perhaps - for repaying a home mortgage. However, there are some advantages to also saving a little in shares, bonds and so on, for diversification and to learn about markets. And this argument is particularly strong if that saving is done in KiwiSaver. If you contribute just the minimum to get all the KiwiSaver incentives, that will almost always be better than putting that money into mortgage repayment. Beyond that, though, attack the mortgage.

What about the mortgage on your investment property? That's not quite so clear-cut because the interest on that mortgage will be tax deductible so it doesn't cost you as much. Still, if you are fairly risk averse, it wouldn't be silly to reduce that debt too.

You might be wondering whether you should simply repay debt and skip the adviser until at least the home mortgages are paid off. Possibly. But a good adviser should help to ensure you are handling the rental property optimally, and investing your KiwiSaver money wisely. They might also assist with mortgage choices, wills and so on. At an initial meeting, ask what they could do for you.

A quick point for other readers: You don't necessarily have to go to a different provider to do non-KiwiSaver savings. If you like your KiwiSaver provider, ask if they also offer other investment products beyond the scheme. Many do. However, for our correspondents, with their mortgages, such saving isn't the best choice at this stage.


FEES-ONLY ADVISERS

The advisers in the following table responded to a request in my Herald column for information on advisers who charge fees only. I don't know most of them, and I am not in a position to recommend them. But their way of charging for their service is a good start! For further advice on choosing an adviser, see www.fma.govt.nz, as mentioned above. I suggest you "interview" several advisers before choosing one.

The advisers in the table are all AFAs, except the Australian firm, Roskow, which has an equivalent qualification.

Everyone except Martin Hawes and Craig Wylie offers a free first meeting with a potential client. Hawes and Wylie both offer a free initial phone conversation. Some advisers stipulate the first free meeting is only for half an hour. Readers should ask about this, so they know where they stand.

Every adviser has agreed to the following:

  • "I guarantee that when I give any new client investment advice or help them to make any investments, the only money or other consideration I receive is explicitly stated fees that I charge the client. Any commissions or other considerations I receive from financial firms or others are passed on in full to the client."
  • "I promise to give any clients who request it a signed letter that says, 'I truly believe I have given you the best advice I can, having considered a wide range of products, and that I have told you about all real or potential conflicts of interest.'." I urge readers to ask for such a letter.

Note the "new client" in the guarantee. A few advisers said they had current clients who prefer to keep getting "free" service while the adviser receives commissions. But that won't apply to new people approaching the adviser.

Advisers also had to state that they give advice on all types of investments, including property. By "property" I mean general advice in that area, not necessarily advice on specific property purchases. For example, the adviser could help a client weigh up whether to invest in rental property generally versus investing in a share fund.

Some advisers suggested we exclude advice on KiwiSaver, because hourly fees could be high relative to low KiwiSaver balances, whereas commissions might be around $5 or $10 a year. Said one, "We take the commission, disclose this and don't charge fees for KiwiSaver for now." That sounds reasonable. Readers should ask advisers how they handle KiwiSaver.

Note, too, that this whole exercise does not include insurance - only investment advice and products. Some advisers listed here do receive commission on insurance products. If readers want to go into insurance, you should ask the adviser how they will be rewarded.

And, of course, it's important to ask about fees charged upfront and ongoing fees. I think good firms should disclose all this clearly on their website and in their literature.

Some advisers charge high "monitoring" fees and don't seem to do much for that money. Said one adviser on a website recently, "I like it when clients challenge me over the fees I charge because it allows me the opportunity to reinforce what we actually do for them." A good adviser shouldn't mind your asking.

A few more points:

  • Many of the advisers sometimes travel elsewhere around New Zealand, so if you are particularly interested in an adviser, phone or email them to ask if they could meet you.
  • The Australian firm in the table, Roskow, emailed me, "It's useful for both NZ advisers and Aus advisers to know where the quality is so that we can refer other people there. We're hard to find (due to our small marketing budgets compared to the 'big boys')." Fair enough.
  • Please note: I'm not in a position to check what the advisers in this table have told me. I'm relying on readers to report back if an adviser doesn't stick to what they've said, so please tell me!

Investment advisers who charge fees

Note: These people are not necessarily recommended.

Firm and Website Adviser's Name Offices or Areas Regularly Visited Minimum Initial Investment
Accordia
www.accordia.co.nz
Katrina Hawker,
Selwyn Paynter,
Sian Ruth,
Andrew Verrall
Christchurch, Nelson, Blenheim, Takaka, Motueka, Westport, Hokitika, Greymouth, Ashburton, Dunedin, Invercargill, Waikato, Bay of Plenty, Auckland $5,000
Advice Financial
www.advicefinancial.co.nz
Janet Natta Waikato, Bay of Plenty including Rotorua, greater Auckland $100,000 for investments, no minimum for planning advice
Alan Clarke Financial Services Ltd
www.acfs.co.nz
Alan Clarke Auckland, Northland $10,000 or $200/month
Axiome Consultants Ltd
www.axiome.co.nz
Philip de Lisle,
Murray Lazelle,
Auckland, Wellington Usually $200,000
Baker Hawes Consultants Ltd
www.martinhawes.com
Martin Hawes Auckland, Wellington, Christchurch No minimum
Balmer, Jeffs & Co Ltd
www.bjcl.co.nz
Duncan Balmer,
Rob Jeffs
DB: Auckland, Tauranga, Hamilton, New Plymouth, Palmerston North, Wellington
RJ: Christchurch, Dunedin, Invercargill, Queenstown, Nelson
$500,000
Bloomsbury Associates
www.bloomsbury.co.nz
Philip Stevenson Wellington No minimum
C Squared Consulting Ltd
www.c2consulting.co.nz
Craig Wylie Wellington. Work remotely throughout NZ. N/A. Provides advice on strategies and types of investments.
Endeavour Financial Planning Ltd
www.endeavourinvest.co.nz
Royden Shotter Greater Auckland Usually $500,000 but subject to investment mandate
Financial Prosperity Partners Ltd
www.financialprosperity.co.nz
Joy Durrant Wellington, Queenstown $10,000 (sometimes less)
G3 Financial Freedom Ltd
www.g3freedom.co.nz
Jane Benton,
Tracey Coxhead,
Charlene Overell

Bay of Plenty, Auckland, Waikato, Taupo, Wellington No minimum
Hassan & Associates
www.hassan.co.nz
Rosemary Hassan,
Simon Hassan
Greater Auckland, Waikato, Bay of Plenty, Northland No minimum for comprehensive financial advice, $50,000 for investment advice
International Financial Planners Ltd
www.independentfinancialadvice.co.nz
Robert Oddy Auckland, North Auckland, Waikato, Coromandel No minimum
Investment Management Solutions Ltd
www.imsnz.co.nz
Selwyn Parker Bay of Plenty, Waikato $400,000
Lyford Asset Management Ltd
www.lyfords.co.nz
Alison Renfrew,
Richard Renfrew
Wellington, Auckland, Christchurch $50,000
Maxim Wealth
www.maximfinancial.co.nz
John Makowem,
Mike Green
Wellington, Kapiti, Upper and Lower Hutt, Wairarapa $50,000
Milestone Financial Services (Central) Ltd
www.milestone.co.nz
Stephen Collier,
Peter Tetzlaff,
Matthew Watt
Wanganui, Taranaki, Auckland, Wellington, Christchurch, Nelson $50,000 in Wanganui, Taranaki; $300,000 elsewhere
Mukiwa Limited
www.financeandinvestment.co.nz
Keith Kietzmann Northland, Auckland $50,000
Newton Ross Private Wealth Management
www.newtonross.co.nz
Mike Newton,
Wayne Ross
Auckland, Wellington, Waikato, Bay of Plenty, Whangarei $500,000
Pascoe Barton Ltd
www.pascoebarton.co.nz
Steven Barton,
Susan Pascoe Barton
Bay of Plenty, Manawatu No minimum
Quartz Wealth Management Ltd
www.quartzwealth.co.nz
Glenn Read Auckland, Waikato, King Country $500,000 for discretionary managed investments; no minimum for financial/investment advice
Richard Harden Investment Services
www.rhinvestments.co.nz
Richard Harden Nelson, Blenheim, Golden Bay
Usually $100,000
Roskow Independent Advisory
www.roskow.com.au
Matthew Ross,
Neil Salkow
Melbourne, Brisbane No minimum
Rutherford Rede
www.rutherfordrede.co.nz
Phil Ashton,
Roy Dykes,
Jocelyn Weatherall
Auckland, Bay of Plenty, Waikato, Wellington, Nelson $300,000
Staples Rodway Asset Management
www.staplesrodway.com
Michelle Forster,
Wayne Powell,
James Scarr
Auckland, Northland, Waikato, King Country, Hawke's Bay, Taranaki, Bay of Plenty, Coromandel, Canterbury $350,000
Strategic Wealth Management Group Ltd
www.swmgroup.co.nz
Richard Austin,
Phil Ison,
Steve Mander,
Alastair Marsden
Auckland, Hamilton, Taupo, Tauranga, Whangarei, Christchurch, Dunedin,
Queenstown, Nelson
$200,000
Strongbox Wealth Management Ltd
www.strongboxwealth.co.nz
Joan Kiernan Queenstown,
Auckland,
Christchurch,
Dunedin,
Invercargill
$200,000
Stuart + Carlyon Ltd
www.stuartcarlyon.co.nz
Sue Baldwin,
Deborah Carlyon,
Susanna Stuart
Mainly Auckland, Northland $500,000
Sumner Ryan Investment Advisers
www.goldridge.co.nz (click Branches, Napier)
Graeme Ryan,
John Sumner
Hawke's Bay $150,000
Transact Wealth Management Ltd
www.transactwealth.co.nz
Dennis Lennan Tauranga, Greater Auckland, Greater Wellington Usually $100,000
Trustees Executors Private Wealth
www.trustees.co.nz
Warren Corston,
Vernon Philips
WC: Auckland, Northland, Waikato, Bay of Plenty, Taranaki, Hawkes Bay,
Gisborne, Manawatu, Wairarapa, Wellington
MH: Otago, Southland
VP: Canterbury, Marlborough, Nelson, Westland
No minimum
Vazey Child
www.vazeychild.co.nz
Colin Vazey Waikato, Bay of Plenty $250,000
Vision Financial Management Ltd
www.visionfm.co.nz
Michael Beuvink Greater Auckland $25,000 and/or $1,000 per month
 
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