'Mystery Shopper' Review of Advisers
30th June 2010 10:51AM
Following Consumer magazine's review of New Zealand Financial Advisers, an independent report by Michael Mintrom, an expert in research methods and public policy analysis, finds serious flaws.
According to Mintrom the Consumer study was motivated by good intentions but the quality of the study was poor, in fact he states that if it had been done through the University of Auckland, the design of the study would not have even made it through an ethics board.
One of his main concerns is the naming and shaming approach. Mintrom says this strategy should be avoided unless there is high quality and robust evidence, which is hard to obtain. The sample size of the Consumer study was one of the problems. The Institute of Financial Advisers has 1,400 members, yet it was decided to include only 33 firms in the study. He also says that the mismatch between the shoppers and advisers is clear evidence that people who managed the project had no understanding of how their own incompetence could bias the results they obtained.
Mintrom believes the report is detrimental to the investment climate in New Zealand, especially when the government is trying to get people to diversify with their investments. He believes that while Consumer magazine had good intentions to start with, the way they went about it could end up having legal implications if companies decide to go down that route.
You can read a copy of the full report here.