A group of first-year university students say they would be suspicious if a company they were considering investing in recommended a lawyer or accountant for advice.
The fifth episode of The Fall of the House of Du Val explores whether New Zealanders’ love affair with property dooms them to keep repeating the same investment mistakes, or whether a new generation is seeing the light.
The students have never heard of the $268 million Du Val collapse and aren’t told what the podcast is about, but are asked to react to various features of an investment scheme.
‘Holding your own’
In earlier episodes, the podcast heard that Du Val was accused of getting docile professionals to sign eligibility certificates for investors, and that in the 2010s, the failed Blue Chip property scheme used tame lawyers.
The students reckon they can handle an unregulated investment, but the idea of being steered towards a certain accountant or lawyer is a bridge too far.
“I’d want to, like, proffer the idea of using my own lawyer and see how they'd react,” law and finance student Luca Armitage said.
“I absolutely agree, just not being peer-pressured into anything, and just holding your own, like standing for yourself … definitely,” marketing student Cleo Yee said.
The students are also wary of self-promoting founders who flash their wealth.
“I think having the need to flaunt their wealth that hard could be a red flag, because it shows that maybe all the good things aren’t in their work,” engineering student Harry Smart said.
‘Oh, this seems legit’
Auckland University Business School lecturer Shohil Kishore tells the podcast that social media has a unique effect on people because it mixes friendship and family with advertising.
The trust it creates allows promoters of high-risk investment schemes to hide behind a veil of suitability.
“You could be scrolling through Instagram, say, and you would see something like an ad, which, your friend has liked this page, they follow this page. And that immediately gives you a little bit of, ‘Oh, this seems legit’.”
In the episode, Retirement Commissioner Jane Wrightson outlines her Five Golden Rules for Mum and Dad property investors, which she said those who fancy themselves as property tycoons fundamentally and perennially fail to understand.
While Du Val founder Kenyon Clarke continues to insist that the regulator, the Financial Markets Authority (FMA), is to blame for the collapse of the property group, the outlook for investors owed $64m is bleak.
Russell McVeagh partner Matt Kersey, an expert in the Government-appointed statutory management regime, said it’s only used in extreme circumstances.
In theory, it can protect people, such as in the case of a failed airline or bank.
“[However], I wouldn’t say it’s a good sign that a company you’ve invested in is subject to statutory management,” Kersey said.
The Fall of the House of Du Val was made with the support of the Milford Foundation’s Brian Gaynor Business Journalism Initiative and MoneyHub.
Listen to the full podcast on iHeartRadio, Spotify, or Apple.
