A complaint that an advertisement by fund manager Spicers Portfolio Management was misleading has been upheld by the Advertising Standards Complaints Board.
The advertisement, published in Time magazine in February, quotes "investor" Mike Ward at some length, but Mike Ward is not an actual person.
The headline above the double page spread
showing a young man on a racing bike reads: "IT consultant protects himself against uncertain economic cycles".
The board said the requirements to strictly observe the basic tenets of truth and clarity had not been complied with and the message was "likely to mislead".
"The technique of quoting a 'fictitious' investor had the potential to, in effect, factualise fiction through the use of dramatisation and emotion and therefore should not be presented, particularly in financial advertising, as being factual," the board said.
The small print of the advertisement did tell people that names, events and some circumstances had been changed to protect privacy.
Time magazine said the practice was common and was in no way fraudulent or misleading.
Complainant Peter Caldeira said the advertisement purported to quote Ward at some length.
Despite the small print explanation, he suspected most people would view the text, given the degree to which the investor was quoted, as a genuine case history.
Caldeira said the return, where an initial $126,363 investment made in February 1997 supplemented by $3000 a month to reach $323,024 by February last year, was "dismal", representing only about 2 per cent per annum.
Spicers said Caldeira's calculation of the investor's return was incorrect. Using the Dietz method, the standard, time-weighted return calculation, the annual returns were just over 4 per cent, tax-paid.
"Given the volatility of investment markets over the period shown, we believe the returns are quite acceptable."
- NZPA
