SMELLIE SNIFFS THE BREEZE: Be careful, Gareth
Sept. 22 (BusinessDesk) – They were streaming in droves into the Christchurch Convention Centre on Wednesday night this
So much so, that it put me in mind of a political rally in the good old days – when people actually still went out to
things instead of watching them on the telly, the Internet or, according to unsubstantiated rumour, their iPhones.
It seemed too much to hope that this throng of middle-aged husbands and wives were all registrants for the Water New
Zealand annual conference, occurring at the same venue.
Rather, they were heading into a fundraising talk for a Christchurch private hospital, which was to be addressed by one
of the new Gurus du Jour, economist Gareth Morgan.
To be fair, it might just be that the charity fundraisers had done a particularly good job at mustering a crowd. And no
two ways about it, Gareth Morgan is a singular Kiwi of particular quality. In a country where everyone knows everyone
else and is therefore generally too scared to speak up, Gareth Morgan’s instinct is to grab the megaphone and tell it
like it is wherever and whenever he disagrees on the big, hard, public issues that matter most.
He’s not always right, but he’s often on the money. He’s particularly strong on the tendency for New Zealanders to think
the world owes them a living, and on the tricks the wealthy and powerful get up to in convincing the pecunious and
ignorant to part with their hard-earned savings.
As a member of the Tax Working Group, which paved the way politically for the Oct. 1 tax cuts, he had no qualms about
dissing its conclusions as – and I’m paraphrasing here – a half-hearted compromise on the kind of game-changing
prescription that Prime Minister John Key talks up but won’t act on.
And he rides motorbikes, pays people out of his own pocket to do iconoclastic research into the unsustainability of the
public health system and the proof of climate change. Since becoming a beneficiary of his son Sam’s sale of TradeMe to
the Fairfax Media group, he’s also become something of a philanthropist on a scale that most New Zealanders barely
So, ringed about the entrance to the Christchurch Town Hall were lovely pictures of Gareth with various Africans who
could probably do with a quid from a well-intentioned Kiwi charity, flanked by the grizzled guru himself. And I’m pretty
sure I spotted a trail bike in there somewhere too.
Perhaps it wouldn’t have struck me as noteworthy if it hadn’t been for the similarly glossy stands that caught my eye a
day earlier in the main walkway to the Air New Zealand boarding gates at Wellington airport – an area normally reserved
for flat screen TV displays, late model cars and vague attempts by Meridian Energy and Telecom to be loved by the
never-ending stream of politicians who walk that route.
But this week, the signs were all about Gareth Morgan, his trustworthiness, and also his KiwiSaver products.
Now, it may well be that Gareth Morgan Investments is the bee’s knees. He’s certainly played a welcome role in exposing
the weaknesses of others’ marketing ploys, particularly the MorningStar group’s assessment of which KiwiSaver funds have
performed best. At one stage, they were praising Huljich Wealth Management, which was clearly a serious error.
But at a time when it seems everyone’s feet are made of clay – right down to old Pottery-Foot himself, the previously
unassailably saintly Allan Hubbard – it’s jarring to see an investment proposition so completely bound up with the name
of an individual.
Surely, the lessons of the last half dozen years would urge caution: think newsreader Richard Long’s ill-fated shill-act
for Hanover Finance, think proposed securities law reforms that contemplate making “celebrities” liable if they promote
investments that turn out to be dogs.
Of course, Gareth Morgan may be a special breed. Perhaps he will turn out always to have been right, and produce returns
for those who invest in his KiwiSaver products that dwarf the competition. At the very least, it’s credible to suggest
that even if he goes down in a heap, he won’t bullshit his way through it when it all comes crashing down.
But the fact remains: this is investment marketing by personality cult.
If the past is a guide, not only should investors beware of it, but so should anyone who puts so much freight on their
own name. Again, as Allan Hubbard has shown, the line between integrity and hubris can be very fine indeed.