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QUOTE FOR THE DAY
"
I take nothing for granted.
I
now have only good days, or great days."
Lance Armstrong
WHILE RELAXING….
Just
to clear the air, last weeks comments on fees were not directed
at anyone in particular. I just felt it appropriate as we do get
the odd query (such as one client who wanted an investment that
charged nothing).
However,
we do often get calls regarding specific investment products, or
our expectations on the Rand etc. As we have mentioned before,
under FAIS we are a little hamstrung when giving advice, but it
actually goes further than that – we cannot (and do not) make
weekly calls on exchange rates etc., but rather tend to look
forward up to 12 months at a time and base our investment
process on that.
But this highlights
another potential grey area that has not raised it’s ugly head
YET, and that is FAIS compliant media
Is it not time for the media to take responsibility for giving global
advice, and to actively check their facts when writing stories
about investment products; pensions and provident funds, and
just general advice, because we know that readers follow their
advice avidly? It is a known fact that 99%
of readers feel that if it is in print, it must be true !
What prompted this was when a reader recently read an article in the
Huisgenoot magazine about the tax-free nature of provident
funds, and challenged the author. The scary thing is that this
particular publication has one of the highest circulations in
the country, as many of the articles in this magazine also
generally appear in YOU and Drum, so the combined readership
could be anything up to 600 000+ people.
Generally journalists would do the research (they often contact us), find
the industry sources and write the article. In most cases they
would verify the facts with the source and then the editor or
sub-editor would take his or her delete button to the story. Sometimes,
however there is no time to verify the facts due to deadline
pressure.
Too date no one has reported a journalist to the FSB for providing advice
that they followed and suffered as a result of. There was a case
several years ago where a journalist was providing generic
advice, which investors followed and subsequently lost money,
but that was pre-FAIS, and the journalist was taken off air.
That was then.
However, the journalist has a responsibility to ensure that the facts are
correct, and a financial journalist should understand that they
are not in a position to offer financial advice of any shade or
colour. Unfortunately it doesn’t stop the industry
commentators on reporting on trends in the markets and asset
classes.
The time will come (not a matter of “if”, but rather “when”) when
an investor will act on this advice, lose money, and then look
for a scapegoat. The obvious first stop will be their financial
advisors’ door, and if they have done all the necessary
research and profile building, they could turn their attention
elsewhere - the media. It will only take one civil court case
where an investor sues a journalist for damages on perceived
advice given before the flood gates open.
I, in my capacity as the idiot that writes these
missives every week, could well fall into this category, hence
my reticence when it comes to being too specific on any topic.
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