How not to sell KiwiSaver
Offering people $10 to sign up to a KiwiSaver scheme has landed Patrick Diack in trouble with the authorities.
Friday, June 10th 2011, 5:00AM 
16 Comments
Diack is the brother of Laurence Diack who set up Mr and Mrs KiwiSaver with Nick McCorkindale. Before being a KiwiSaver salesman he held customer service positions with the National Bank and WiNZ.
Diack told Good Returns that it was a good thing to get people to save. Many of the people he had signed up didn't know they could join KiwiSaver and getting $1000 from the government was "a good thing".
He had signed up 4000 people to KiwiSaver and had used four different providers.
He says the money was not in the commission he was paid to sign up members but with the trail commission.
His original provider paid a $40 commission and a 15 basis point trail.
He changed providers and worked for Mr and Mrs KiwiSaver after being "fired" by the first provider.
He had a brief flirtation with Grosvenor and worked for SuperLife.
Diack acknowledged there had been complaints against him and he had had run-ins with WiNZ.
The department had reported him to the police more than 15 times and had trespass notices issues against him in Napier and Flaxmere.
The Financial Markets Authority says Diack was engaging in illegal sales activities.
It says besides offering people money to sign up to KiwiSaver he was not providing them with an Investment Statement.
Diack has also failed to comply with the requirement to be registered as a financial services provider under the Financial Service Providers Act which came into force on March 31.
FMA chief executive Sean Hughes said "high pressure or coercive sales techniques are inappropriate for KiwiSaver schemes and residential door-to-door selling of any security is prohibited by the Securities Act."
Hughes said the FMA's actions against Diack's activities should "serve as a warning to other KiwiSaver and financial product providers of their legal responsibility for those acting on their behalf and their moral obligation to protect their customers."
Diack had been censured by the FMA. He says his time as a KiwiSaver salesman was coming to an end anyway and he wasn't making much money out of it.
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Comments from our readers
On 9 June 2011 at 9:17 pm patrick diack said:
yip thats about right. I have given over $40.000 to my customers thats why i am loved in Napier, Flaxmere, Naenae, Wanganui, Porirua and Palmerston North. On 10 June 2011 at 10:51 am Andy said:
I am not endorsing or praising Mr Diack in any way here, but one has to acknowledge the enterprising, hard work, and different attitude I guess. And despite the obvious shortfalls in disclosure and compliance, I am reasonably certain that most (if not all) of the people that Patrick introduced to Kiwisaver will be thankful when it comes to retirement - even if they only have a small balance. It will be better than nothing.
Conversely, it will be interesting to see if Mr Diack will be prosecuted at all, and to what degree. If he has no assets, then clearly any financial penalty will certainly be wasted.
Again - I think the law has missed the point entirely. He has clearly done 4000 people a favour, and is not likely to abscond with the funds himself. Yet he is just the person that the law is seeking to persecute, rather than the shady finance companies and directors out there who continue to slip through the net and cost investors (and our industry) millions annually.
While I do not agree with Mr Diack’s methods, there are a certain number of people in our society who will never get off their backsides and start planning for their future. And isn’t what Patrick did (paid $10 to each new saver) just a smaller version of what the government was doing (the $1000 kick-start)?
To be blunt, I think if we are to criticise Mr Diack’s methods to introduce Kiwisaver to the uneducated public, then we are also displaying our lack of faith in the whole Kiwisaver scheme security and trustworthiness. It seems that the lawmakers are failing to back their own scheme.
I would much rather the money was put towards educating New Zealanders, or encouraging other advisors like myself to educate ALL Kiwis, not just those who can afford or who are prepared to pay for quality financial advice. If a better education and distribution model for Kiwisaver is not implemented soon – I see the numbers dropping off, and it will become one of those luxuries only sought by the upper echelon. Kiwisaver should compliment a retirement plan, and should be available to everyone, not treated as a one-stop retirement plan.
Just my opinion…
On 10 June 2011 at 11:30 am Regan said:
Is this the same guy who was door-knocking advisers to buy his "book"? On 10 June 2011 at 11:39 am chris said:
Andy, that's a brilliant comment. Good on you Patrick, you saw a great opportunity. But keep it up, kiwisaver need to be sold to the general public. Let's hope more people turn on to kiwisaver and off finance companies. A couple of comments for the industry... hopefully those trailing fees will come down. And I hope you are putting people into the right risk profile, erring on the side of caution. On 10 June 2011 at 12:35 pm Rae said:
This is a sad and wonky story. I think the guy was doing a good thing for WINZ people who dont understand anything about investments. Why would they? Having no extra cash, investments are not part of their world. But thats not a reason for them to not get the kick-start break that every NZ citizen is entitled to. Give that guy a medal for thinking outside the box and compasionately.
That said, a word of warning: I am 62, have cancer, get WINZ invalids benefit and have had Kiwisaver for a couple of years. WINZ has been notified (not by me) of my Kiwisaver contributions and immediately reduced my accomodation suppliment and refuses to give me any of the occasional extra benefits like dentistry, glasses, $2000 funeral coverage etc. to which I would normally be entitled, because it claims I have 'assets'. Thus the $1000 kick-start actually becomes a liability, both in the short and long term.
Rae
On 10 June 2011 at 12:38 pm Broker said:
Might be an effective selling practice but it's illegal under the new AFA regulations. Why are people defending this guy? On 10 June 2011 at 1:48 pm Peter Clapham said:
I have known Patrick for all of his 40 odd years. The real problem here is that the kick start $1,000 will earn very little (perhaps $50 per annum) and that sum will be absorbed, plus a per centage of the $1,000, in administration costs and the trailer commissions. The providing companies will get more out of it than the person Patrick puts into the scheme eventually will - the $1,000 will reduce at a faster rate each year, and the tax payer pays for it. Patrick, you know I think it's a rip off. Peter C
On 10 June 2011 at 2:21 pm LPL said:
KiwiSaver was set up so individuals who work are defaulted in. If they then don't understand/can't be bothered they are in, stay in, and contribute via their employer.
Kiwisaver is not supposed to be another handout to beneficiaries. It is designed to get people saving for their retirement.
Good on WINZ to have the smarts to means test benefits for those who have entered the scheme; herein lines an advice issue for you Patrick. A good example of why advisers were regulated.
On 10 June 2011 at 3:44 pm CHL said:
You have to applaud the entrepreneurship! Even if slightly illegal. The irony is that it's OK for loan sharks to cruise around South Auckland in trucks selling expensive food, Xmas hampers and cash loans at ridiculous interest rates but someone helping (in a broad sense of the word) people save gets in trouble!...it's rather ironic! On 10 June 2011 at 7:59 pm Michael The Don said:
What a beauty. There are valid fors and againsts, however the fors win by a mile.
I have stated the fact before, that to get people saving in their working life you must firstly instil the "habit" at a very early age. eg; i was taught to take my shilling along to school every Wednesday and save it into my Squirrel Post Office savings account. It was not to necessarily make me super wealthy...just to instil the habit. remember how I described a "habit" by reminding you all that you had one instilled in you at a very young age and it is still there......"you wash your hands after the toilet"...automatically.
Patrick and you others, don't listen to the sour grapes advisers who bleat on about the new AFA regulations.
Regulation will not save investors.
PROOF= ALL the finance companies were regulated (they all had a prospectus) and NOT ONE INVESTOR was "saved."
And those being helped by WINZ are not all dummies who do not understand investing...there are many who have far greater knowledge than many of today's investment advisers who gave their clients a "diversified portfolio" across half a dozen or more finance companies.!
Entrepreneurs like Patrick are a necessary part of society.
what is now needed is for a few of you half asleep advisers to get out there and take over the overseeing of the programs Patrick at least started, and put in all your knowledge to help those WINZ people to earn a wee bit more to be able to add to their retirement fund so they will be a lesser burden on future governments.
After all, is it not true that you are allowed to earn up to $80 per week without affecting your benefit?
You advisers who are so knowledgeable could get in there and help show all the WINZ beneficiaries how to earn an extra $80 per week...can't you?
On 10 June 2011 at 11:40 pm Forthright said:
Diack is unprofessional, unscrupulous and appears unrepentant for his terrible behaviour. He has done absolutely nothing to restore investor confidence in encouraging investment in NZ. Any praise for Diacks tactics brings shame and ridicule to all investment professionals. On 10 June 2011 at 11:48 pm denis said:
the only irony here is that the growth on the $10 in a term deposit will probably give a better return over 30 years than the KiwiSaver account itself! I would laugh but I don't find exploiting the vulnerable very funny. On 13 June 2011 at 10:59 am traveller said:
whilst there are advisers out there who condone the activity of Mr Diack, the whole "industry" will suffer from negative public attitudes and will never make the grade as a "profession" attracting honourable people. On 23 June 2011 at 3:53 pm patrick diack said:
hi guys me again, can't door knock, can't approached people in a public place, like outside winz (not appropiate) how are you suppose to sell kiwisaver? On 23 June 2011 at 7:31 pm Andy said:
Patrick - you have just put your foot in it there, and I have gone right off you. I am getting too many referrals to handle, and because I am only an RFA I cannot advise or dissuade them - I have to send them elsewhere.
Any good adviser will tell you that a good job brings effortless referrals. You shouldn't even need to ask!
So... You reap what you sow! Plant manure and you will get jack sh*t. Nurture quality seeds, show them you care, and you will have business coming out of your ears. You get to choose the quality.
Sorry Patrick - with that attitude, I think you got what you deserved.
On 25 June 2011 at 1:00 pm patrick diack said:
Tried referalls, to much hard work and following up, remember only paided $30.00 per sale, often you could lose money petrol, time etc,. It was easier to approach them on the street and sign them up there and then, try it one day. Commenting is closed
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