Cotton explains why Code Committee members pushed

We still have no idea as to the reasons these plans were rejected. Having made a study on the quality of Consumer surveys in the past I seriously doubt their validity of some of their results. By firing these members Annabel Cotton has given the Consumer survey extra credibility and undermined public confidence in the industry.

This is a gross overreaction to what is simply a bit of unqualified sensationalism. If Annabel Cotton is going to make such knee jerk reaction to every story that hits the media then we are all in serious trouble.
Given that the media seems to now see us as easy targets, and their stories are generally very damaging to all advisers we can realistically expect to see further dismissals.
I for one am sorry to hear that Patrick has been removed as I know him to be a man that is passionate about cleaning up this industry.
A bit of advice for you Annabel (without my disclosure document); stop listening to questionable reports and focus on fixing the problem.

Quality of survey aside that leaves only 1 practicing financial adviser on the Code Committee and no independent advisers at all. What was that again about having confidence in the process......

Wayne sums it up about there also being the need for the industry to have confidence in this process. The lack of practising advisers on the committee drew adverse comment at the outset, now it is worse than it was (particularly in light of seeing no need to replace the two lost).... and they say they don't want numbers of experienced 'good' advisers leaving the industry or stepping out of the investment side of the business as happened in Oz. The loser then is the NZ public with less access to advice when they are already deficient in financial literacy terms.
The quality of the Consumer reports will go unchallenged (given financial journalists are not covered by the act) and it's appointment of an ex-newspaper Editor as it's CEO sadly confirms what business it is actually in - selling memberships & subscriptions.

I am staggered. Patrick Middleton is a man of integrity. I know, because I used to work with him. How can the Annabel Cotton get it so wrong. The use of mystery shoppers is totally unethical and deceitful, attributes that the new law is supposed to stamp out. The Consumer survey should be viewed for what it is worth, i.e. nothing. The only real cases you will see are those that have gone bad, which is an unfair reflection of the industry as a whole.

The findings from the Consumer Survey are one thing, the reactions by the Code Committee are another. It is unusual for the Code Committee to leave two positions vacant, when I recall that numerous financial advisers applied unsuccessfully for a Seat. Usual practices would have immediate replacements appointed for outgoing Committee Members.

I have never met either of the "retiring" financial advisers, but would have grave concerns around the remaining composition of the Code Committee... but then (as commented earlier) I doubt whether the findings of this Committee will have any significant impact upon decisions that have most likely already been made.

At least one of the experts on the Consumer Panel is incompetent. How can a Gareth Morgan representative sit on the Panel when they are judging their competitors plans. Consumer has let itself down terribly on this one.

Skeptic, there is nothing inherently wrong with having an adviser judge other adviser's plans. That is what's know as 'peer review'.

Now, if you feel that the Gareth Morgan adviser's opinion would be less than valuable, for some reason, that is a different matter. But there is nothing wrong with peer review.

I have no complaints with peer review. I do, however have problems with Consumer Magazine enlisting a competitor to undertake the review in such a supposedly independent and public forum.

Surveys can be a great thing...for any body or group.
It is the 'outcome' which is either enjoyed or as appears in the case of the Consumer survey scorned, and labelled as a dismal failure.

For the "goodies" who have dedicated literally years toward building their reputations, to now have it all undermined in just minutes must be a huge blow....salt into the wounds created by the biggest market 'bomb-out' for literally decades.

Consumer has it's barrow to push, and has tended to thrive on a form of media sensationalism.
Too much energy continually expended on 'stick-pointing'is not likely to do as much toward rebuilding a failing profession (financial planning) as comment-providors may think...!

They say that one of the best forms of defence is attack.
I suggest to call for 'more surveys', but those which you have some controls over, in selection of topics, and methodology.

A usefull topic would have to be an in-depth survey on fees charged.
eg: The larger financial planners like the original Money Managers (now renamed in what appears to be an attempt to rebuild a reputation) have charged what is called a 'monitoring fee' of 1%pa.
Yet if you compare a monitored portfolio with an UN-monitored one, the monitored one performs precisely 1%pa lower than the UN-monitored one..!

Can you agree that this suggests that monitoring is not actually applied???

Another example of a fee which could be included in such a survey is that of 'related-party' fees, where investors money is filtered through several funds before it arrives at it's intended fund, with small margin fees applied each time....all at an unnecessary cost to the investor..!

My suggestion is to call for more surveys, however, to make sure that you add your own guidance as to the methodology, and take the negative focus and publicity away from this recent one.
That way, you can take more control of the all-important outcome, and help to keep it all 'competent' and real.

Otherwise, it may end up with the investing public doing all their business into Kiwisaver, and the role of the financial planners being to merely point to the one they think might be the best option for the investor/s...!
No need then for all the academic qualifications, but hardly enough to warrant the title of a profession.!

Financial planners need to take their future path choices off their peers, such as the legal fraternity, who for centuries have controlled any publicity to the current stage where they virtually run the world..!
Get stuck into promoting surveys...to an honest self-advantage, and the 'baddies' end up naturally going.
Michael Donovan "old" Money Manager.

Looking at all the comments and the original item, there seems to be a few points of reality worth mentioning;
1. Survey methodology is crucial for the credibility of any research. Having been involved with a prominent and highly respected Melbourne-based research company, I can confirm the distaste professional researchers have for shadow-shopping. By default, there is in implication that there is "something" to be discovered, and that a conclusion, already reached will be confirmed by the research. This is contrary to the principles of independent and unbiased research. The Consumer Magazine's efforts should be viewed in this light - as seeking to confirm what was already suspected, but reliable objective and statistically significant research - it is definitely not. If more surveys are to be conducted - can I recommend the retention of a professional organisation which can conduct research in a fit, proper, and ethical manner.
2. However, it seems that Consumer were not acting alone and on their ownm initiative. I am aware of approaches being made to research houses in Australia with requests from NZ authorities to have similar surveys conducted. The nature of the requests were clearly designed to produce a result which blackened the reputation of financial advisers - in other words they followed the direction taken by the recent Consumer initiative. Conclusion? There is a cross-party appetite for participating in any measures deemed appropriate to weaken the status of advisers in the eyes of the general public, thus justifying the regulatory and legislative measures being promulgated.
3. The absence of financial adviser representation should come as no surprise. Any faint semblance of self or co- regulation should now finally be dispelled. This industry cannot self regulate as there are too many conflicting pressures pulling in diametrically opposite directions, so advisers need to recognise that the regime will be imposed and that the two responses are to accept the 'invitation' or leave the industry.
4. Finally, despite some views which I read earlier in this process, regulation will not be a smooth, easy experience. This is not to suggest anything nearly as negative as the Australian experience at the same stage, but I would urge all involved advisers and providers to plan for all practical scenarios, examine the releases from regulators and their advisers very carefully, and include some Enterprise Risk Management practices in their strategic planning process. Whilst our regime may not be as draconian as the Australian model, it will have teeth and we all best be prepared to avoid being bitten.

From my experience the depth of Consumers analysis is very poor. The firm I worked for was involved in the three previous surveys and achieved a top ranking on one occasion. There was no doubt this was great for business as I assume the three recommended firms are finding in this case.
Interestingly the best plan of the three submitted over that time period got the lowest consumer ranking as it was not in line with the issues they were looking at at that time.

It appears that once again they have gone out with a great number of pre-conceptions and choosing a Gareth Morgan staff member has only helped to accentuate these (and undermine the credibilty of their work). Surely if they were questioning investment advice they should have chosen some real investment experts, those with truly professional qualifications and wide experience in the area.