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To the Finance Department, with love ...

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To the Finance Department, with love ....

It was great meeting so many Fisher Funds clients around the country at the recent investment roadshows. As your new Chief Executive, it's been an excellent introduction to the business; and everyone I have met so far has been very supportive and welcoming. Less welcome, however, were the scammers that kicked into gear within my first two weeks in the role! Realistic looking, but fictitious, emails and invoices were supposedly sent by me, as Chief Executive, to the Fisher Funds Finance team authorising all kinds of payments for all kinds of services. Fortunately, our team were onto the scammers quickly and both our reputation and bank accounts remain intact.

In 2016, the US Federal Bureau of Investigation (FBI) warned about a dramatic increase in these so-called "CEO fraud" email scams — in which the attacker spoofs a message from the boss and tricks someone at the organisation into wiring funds to the fraudsters. At the time, the FBI estimated these scams had cost US organisations more than $2.3 billion in the previous three years.

Typically in the US, after a company discovers that the wire fraud was not a legitimate request from the real CEO, the finance employee who wired the funds is often dismissed and the financial losses are reported internally. Investigations to identify the attackers are conducted, officials contacted, and boards informed. Many companies are required to publicly disclose their losses, and the revelations lead to damage in brand reputation.

This serves as a reminder that there are whole industries employed to try and convince us all to part with our hard-earned cash, by legitimate means or foul, but most often not with our own best interests at heart. Unfortunately, the investment world is also littered with such people and industries.

The Financial Markets Authority (FMA) provides an excellent investor service by publishing warning notices, international regulator alerts, businesses to be wary of and also a list of unregistered businesses. You can find these prominently displayed on the fma.govt.nz website under WARNINGS! These are obvious businesses to avoid.

But not all opportunities to avoid are either illegal or scams. Of as much concern is the legitimate, but risky, "investment opportunities" that always appear in certain market circumstances. Currently, the world is in a sustained historically low interest rate environment and that has driven many investors on fixed incomes to chase yield. These so-called opportunities are everywhere and are typically accompanied by words like Guaranteed or Secured. Having worked through quite a number of disastrous periods in the past of investors getting burnt, it always amazes me that the basic fundamentals of investing (like understanding risk) are quickly forgotten in the search for apparent higher returns.

In this context I am very proud to be leading a reputable, responsible and successful funds management company that genuinely has the best interests of clients at the heart of everything we do. It is very important to me that we are active fund managers that make well-researched investment decisions not only based on the inherent quality of companies, but also screening via a thorough environmental, social and corporate governance lens. The Fisher Funds model established by Carmel, that will live on into the future, doesn't blindly and passively follow a notional index, but rather backs investing your money into investments with strong inherent value. And we are particularly careful at checking the validity of emails from the Chief Executive. You cannot be too careful these days!

 

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