Pulling the pin on pay
Friday 9 April 2004
A guaranteed way to make waves in the financial planning business is to discuss how advisers get paid for the work they do.
By The LandlordLast month Gareth Morgan - who made his name as an economist but now runs an investment management service - lobbed a grenade at his peers over the issue. Unsurprisingly, he provoked a number of secondary explosions.
His grenade took the form of a series of allegations, including the claim that financial planning in New Zealand is real "wild west" stuff and that advisers are no more than "commission salesmen" for fund management firms.
One of his main points relates to the names used by people in the business to describe what they do.
Morgan reckons the term "adviser" is being totally misused in New Zealand. No one should call themselves an adviser, he says, if they are being paid commissions from a product provider such as a fund manager.
"If I hire someone to give me advice then I don't expect them to be getting paid by somebody else. I expect to pay them.
"The whole use of the word 'adviser' is totally misleading."
So what about the people who buy and sell shares being called "brokers"? No problem there with the name, nor with these people taking commissions, because they "broker" a deal between two parties and can be paid by both.
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