Money in telling people how to invest best

Press, 28 December 1988, Page 23

Money in telling people how to invest best

By

NEILL BIRSS

A Christchurch company is lifting its sizeable stake of the financial planning business with software it has developed itself. This field continues to grow, undeterred by the sharemarket collapse or by failures of large companies that had taken millions of dollars from investors.

Unit trusts, scores of debenture investments; property, and sharemarkets in a dozen countries give a choice unprecedented in New Zealand. Two-income families, fewer children, and the acceptance that national superannuation cannot last in its present form pump up the supply of savings for investment. The Financial Planning Group, of Christchurch, is in the wholesale side of advice to investors. It supplies information, software, and other services to firms such as accountants and lawyers which advise investors. To the public it is probably better known by the Money Concepts Centres, which it services. Graham Rich, the managing director and chief shareholder, runs an organisation with a staff of 30 that supplies advice to clients from Dargaville Financial Services, owned by the town’s largest law firm, south. An Aucklander with a B.Sc. in psychology from the University of Otago, Graham Rich came to Christchurch as regional manager for Norwich Insurance. Eight years ago he set up the Financial Planning Group. About that time he entered a start-your-own business competition sponsored by the DFC and the Bank of New Zealand. The judges told him his planning venture had virtually no chance of success. Now it has a capital of more than $2 million. The biggest customer is National Mutual, which is also a 20 per cent shareholder. Financial Planning Group services National Mutual’s chain of planning centres, as well as the independent clients, who include half a dozen accounting practices and two law firms.

The group supplies investment research to its clients, drawing on its own work and information from such sources as ASSIRT and Norths in Australia; Wyatts, the superannuation fund analyst in New Zealand; and Jones Lang Wooton, the local and international property firm. IDAPS, based in Australia, supplies investment information to clients in New Zealand in a similar way, but the Financial Planning Group believes itself unique in also supplying training, such as seminars, and specialist and management software for its client firms.

The group has a subsidiary, Interactive Financial Planning, a trust company set up to handle client money and investment applications for individuals. Software is definitely the edge of the Financial Planning Group. It bought from an American company the source code for planning software used in the United States. The code is the original programming instructions before they are compiled into the programs that are provided for use. Companies guard their source code, and buyers obtain it only when they want to build on the original program. Through its software subsidiary, Financial Profile Consultants, the Christchurch group has developed a software system. The firm describes this as a fourthgeneration language (a 4GL), which can mean a wide range of products, but in this case is a program for quickly adapting the software. The American company is now interested in buying the 4GL to use itself. The Christchurch company is offering its clients two types of software, running on IBM PC compatible computers: • Administration programs, which heln in the dav-

to-day running of the retail advisory centre, keeping note of client details and fees paid. © An expert system for use in drawing up financial plans for individual clients. An expert system is software that allows facts to be fed in and then makes deductions from these. American Express in the United States uses an expert system successfully to help it assess applicants for its credit cards. Other expert systems have been used to help geologists assess strata for oil potential and to help doctors . identify sets of symptoms. The Financial Planning Group expert system helps local advisers draw up choices for those with money to invest. The group has spent half a million dollars over the last 18 months on its software development and plans a public launching in February. A beta (test) version of the software is being tested by a handful of clients, and the University of Canterbury has been helping with the assessment. Beside its personal planning products, the group

has a subsidiary called Meikle Hinton Business Planning, whose role is to wholesale small-business 1 planning to advice centres. But individual investment is the boom area, and Graham Rich says the wholesale-level advisory business is being spurred along by changes to the handling of trust funds. Instead of the old system of trustee investments, the responsibility will be on advisers to act like an abstract “prudent man.” They, therefore, will be looking for plenty of information on investment choices. Mr Rich would like to see something similar to the prudent man rule imposed for investment advisers as a whole. There is regulation of investment advisers in most Western countries. Meanwhile the recently deregulated New Zealand is still working its way through the Wild West phase, with the inept and the dishonest mingling with honest advisers In the market. Mr Rich runs the Financial Planning Group and the Money Concepts Centres it services on the basis that controls will come, and better late than never.