[Weekly wrap] Currency, cheap advice and SOEs

This week saw advisers scratching their heads over how to deal with the volatile currency and how to provide KiwiSaver advice for $10 a year, while questioning the benefits of the upcoming SOE float.

Friday, May 4th 2012, 10:22AM

by Niko Kloeten

The currency conundrum is not a new one for advisers or anyone else in the business of investing money overseas, and opinion is split over whether the New Zealand dollar will continue at its high level against the greenback. Some advisers don't do any hedging, although this itself can be a risky option.

Meanwhile, advisers are trying to work out how to provide KiwiSaver advice for as little as $10 a year. With trail commissions very low for KiwiSaver and average balances still small, the only option appears to be charging fees for KiwiSaver advice. But it seems many KiwiSaver members aren't (yet) prepared to pay for that advice.

The partial sell-down of State Owned Enterprises is getting plenty of press and creating a political storm, but will these companies provide a genuine, long-term boost to New Zealand's stock exchange? Financial advisers aren't convinced. It also looks like "Mum and dad investors" might be looking to make a quick buck from their shares.

Remember the ads about "cowboy" financial advisers? Well, it looks like either they've been weeded out or there weren't that many to begin with, because the Financial Markets Authority has only rejected three AFA applications, 0.15% of the total number of adviser who have successfully become authorised.

Where's Riley? The mortgage market is abuzz with rumours Mike Pero Mortgages chief executive Shaun Riley has resigned. Riley isn't answering calls and NZF Group, which owns a 50% stake in Mike Pero, hasn't made an announcement to the stock exchange.

Speaking of NZF, its assets remain frozen after the receivers of its former finance company convinced the High Court they have an arguable case against NZF and there is a serious risk of NZF's assets being dissipated.

In other mortgage news, credit growth growth ticked up marginally in March and people continued to flock to floating rate mortgages, the latest Reserve Bank figures show.

Meanwhile, Westpac says its New Zealand mortgage portfolio grew 1% to $35.4 billion in the six months ended March compared to the 0.7% growth in mortgages held by New Zealand banks overall.

While the mortgage market continues to creep up, the news is grim in the health insurance industry. The number of New Zealanders with health insurance fell 2% in the year to March and is now back to the same level as in 2005, according to figures from the Health Funds Association (HFANZ).

Finally, in KiwiSaver news, Prime Minister John Key has announced there will be no changes to the scheme's tax credits at this year's Budget. This has been welcomed by Workplace Savings NZ, which said it made a nice change to the constant tinkering in previous Budgets.

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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