[Weekly wrap] Morrison a big loss

The death of Infratil founder Lloyd Morrison this week is a big loss not just for the business and financial community but for the whole of New Zealand.

Friday, February 10th 2012, 10:11AM

by Niko Kloeten

Morrison, who had been battling leukaemia since 2009, had an influence in financial services with HRL Morrison and Co's investment in Fisher Funds. He was a passionate supporter of a number of causes, advocating for more clean-tech investment and a change in the New Zealand flag. He had also been touted as a potential Prime Minister.

It's not deadly like cancer, but risk illiteracy can ruin people's lives, according to a New Zealander researching the collapse of Queensland financial advisory firm Storm Financial. Aaron Bruhn of Australian National University said most investors don't understand risk, and are loss-averse.

Advisers need to emphasise loss over gain in many cases, and explain risks in clear terms that investors can understand, he said.

If advisers don't get it right they could find themselves dealing with one of the four financial services dispute resolution schemes in New Zealand. The Ministry of Economic Development has suggested folding them into one, a proposal that has come in for heavy criticism.

There are also calls to review the role of the government-run scheme Financial Dispute Resolution (FDR), particularly the subsidy it receives from an annual levy on financial service providers.

RFAs beware - using the initials in an advertisement could land you in hot water with the Financial Markets Authority, which is cracking down on ads that, it says, make 'RFA' seem like it signifies some sort of qualification or membership of a professional body. AFAs are ok, however.

The Reserve Bank is also on the lookout, but in its case the focus is preventing another housing bubble. It is considering a number of options such as restricting loan-to-value ratios (LVRs) if the housing market starts to heat up again, it told Finance Minister Bill English.

While the Reserve Bank worries about housing bubbles, the Health Funds Association (HFANZ) has raised concerns about a drop in the number of New Zealanders with health insurance. HFANZ has called for tax breaks to reverse the slide and reduce pressure on New Zealand's public health system.

Guinness Peat Group has flexed its muscles at Tower, forcing a director to resign. GPG also says it is in no hurry to sell its 35% stake in the insurer/fund manager.

And finally, if you're unsure what to expect in the financial advice industry this year, Good Returns has canvassed the experts for their predictions.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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