time is telling

IN TERMS OF FINE WHISKY OR WINE, 37 YEARS CAN CREATE A GOOD VINTAGE. STEWART FINANCIAL GROUP CEO, NICK STEWART, REFLECTS ON 37 YEARS OF GOOD BUSINESS.\

One morning in 1987, a new business opened their doors at Karamu Road, Hastings. D L Stewart & Associates started as a small local insurance and financial advisory firm led by Don Stewart (my father).

A question recently posed to me:
“What’s changed in the financial world since then [1987]?”

The short answer—a lot.

Fee-only financial advice, a cornerstone of our practice, wasn’t a thing in 1987. Fiduciaries didn’t exist, and the entire ecosystem of financial services was different.
Retail custodial platforms were not around yet, meaning firms or advisers were managing client funds directly rather than having it go through an intermediary who could flag any suspicious behaviour.

The Financial Services Provider Register (FSPR) was not even a twinkle on the horizon.

The Government oversight and regulation was next to nil. Only standard business legislation applied, such as the Fair Trading Act 1986. You were about as protected with financial products as you were buying an appliance. ‘Goods and services’ covered the gamut, including financial services.

You either had a broker to acquire direct stocks, or you went into funds provided by banks or insurers. The plethora of boutique funds options and funds managers of today would have been unthinkable back then. Most advice came via agents tied to insurers, bank staff, accountants, and lawyers:

Unbiased advice was hard for investors to come by in a structure where commissions for selling financial products was the norm.

Buying stocks or bonds was expensive. There was a flat fee of $25 plus 1.5% on transactions. A 2% transaction cost to buy a security was the norm, so you would lose about 4% just from buying and selling. Fund management was astronomical too, with costs as high as 2-3% plus hefty buy / sell fees.

In comparison to today’s whole market funds at 0.3%, and buy / sell spreads of below 0.1%, that is horrendously expensive to face every time you (or more likely your broker) wanted to change something in your portfolio.

That’s not to mention the multitude of off-market investments designed to trap the unwary or the hopeful. Dubious lending practices and ‘investment’ opportunities created more of a risk for
misconduct claims for some, which then led to a huge rise in professional indemnity insurance for advisers.

Though these predatory practices still exist elsewhere in the world (and domestic firms still get caught out from time to time trying to pull the wool over clients’ eyes), I think we can safely say that the ever-increasing regulatory oversight in the financial services industry is to the benefit of any would-be investors.

INDUSTRY CHANGES
ESG Funds
For myself, one of the most exciting changes between 1987 and now are the options available for investors.

Whether it’s your KiwiSaver fund or a traditional investment portfolio, the adoption of ESG (Environmental, Sustainability and Governance) filters has created demand for better options across the board in NZ.

Greater oversight and regulation
It may seem crazy to think of these days, given the highly regulated environment of today, but we didn’t even have a dedicated regulator until the Financial Markets Authority was officially established in 2011.

OUR CHANGES
Things look a little different these days. As you may have realised, D L Stewart & Associates became Stewart Financial Group. And we’ve been busy.

We moved down the street (though still on Karamu Road), saw a few friendly faces come and go. We were early adopters of KiwiSaver funds, adding them to our services as soon as we could alongside our core financial advisory services and insurance. We also grew to serve clients across New Zealand from our premises in Hastings and Wellington.

We kept adding feathers to our cap like CEFEX accreditation to show our voluntary commitment to the highest fiduciary standards, and DIMS licensing to meet global best practice of investment capital.

In 2021 we became one of the Hawke’s Bay’s first B Corporations as part of our wider commitment to sustainable practice and ESG considerations. We also started our own private solar network (Te Rehe Solar), and you likely wouldn’t have found anything resembling our electric fleet if you peeked at the carpark in 1987.

OUR CONSTANTS

One thing that has always stayed the same is our values. We’re committed to providing our clients with financial solutions directly aligned to their needs.

From the start, we have been client first. That developed into our fees only structure, which means we do not sell commission based products or benefit from any transaction fees.

We can’t promise the exact same service as we did in 1987… because we’re always working to do better by our clients.

What we can promise is the opportunity to sit down face to face with a trusted local financial adviser for a free, noobligation chat about your unique situation and goals.

Any opinions expressed in this article are of a general nature only, not to be construed or relied upon as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions.