Financial advisers can help boost confidence: FMA

Financial advisers are “in the sweet spot” to help boost investor confidence, Financial Markets Authority chief executive Rob Everett says.

Thursday, July 12th 2018, 12:00PM

by Susan Edmunds

The FMA has released it latest survey on the public’s attitude to financial markets. It found 66% of investors were confident in markets, down from 69% last year but up on 2013-2016.

The main reason given for being confident in New Zealand financial markets was the stability of the markets and/or the economy.

Everett said: “Investor sentiment and market performance have typically driven some of the scores in this survey. It is heartening to see that confidence, while dipping slightly, has been broadly stable in the event of significant issues both offshore and in local financial services.”

People most likely to be more confident in the markets and in its regulation were those in managed funds or shares, who were older, more experienced investors and male. They were also more likely to be aware of the FMA and its role in supporting market integrity.

Overall, those who lacked confidence in the regulation of the markets were more likely to cite corruption, legal failures, not trusting banks or advisers and having had a bad experience in the past as reasons for their concern.

Everett said it was likely that, after a long period of strong share market returns, a downturn was coming for New Zealand investors.

Financial advisers would have an important part to play to help them stick it out through the rough times and not crystallise their losses by shifting their money.

“Financial advice tends to be a long-term relationship and they could be worth their weight in gold. Most will have seen their way through a couple of cycles and be far more objective and better at encouraging clients not to act emotionally.”

He said more generally investors seemed to be wary of the markets because of a lack of knowledge and fear they would make bad decisions. “Even if they have only a relatively small amount to invest, financial advisers should be bridging that gap,” he said.

He said Australian regulatory action, such as the Royal Commission of Inquiry into misconduct in the financial sector could be expected to have an impact on confidence.

“It does put some people off, people who are a little bit predisposed to always being a bit distrusting. It contributes to their fears that keep them out of the market.”

One respondent told the survey: “I don’t believe most New Zealanders are financially savvy. I don’t trust most financial advisers to look after my interests.”

Tags: financial advisers investment