Investors shake off bad publicity

Financial Markets Authority (FMA) says negative banking and financial services publicity isn’t affecting investor confidence.

Wednesday, July 31st 2019, 6:00AM

It has released its most recent survey of investor confidence, which shows 65% of investors said they were confident in New Zealand's financial markets, only slightly down from 66% last year but up from 58% in 2013.

That's despite the Australian Royal Commission raising questions about bank and fund manager behaviour in the country, and the Reserve Bank and FMA voicing concerns about insurer and bank conduct here.

The FMA report showed the biggest reasons for confidence were an improving economy, low unemployment and better understanding of financial markets.

Chief executive Rob Everett said investor confidence seemed “pretty stable, despite a lot going on in New Zealand and Australia that you might have thought would make it track down a bit”.

He said more general questions might have brought up concerns about conduct of institutions but, with a targeted investment lens, there was no clear impact.

Everett said it was concerning that a significant proportion of respondents still answered "don't know", and felt they did not know much about investment.

Even in a stable market environment – the most benign 10 years that many people could remember – there were still potential investors who were too scared to dip a toe in the water.

Everett said a market correction could be expected to shake investor confidence.

He said the FMA had to focus on what it could control, such as whether investors were getting the right information about their investments, and that it was useful to them.

Overall, 86% of New Zealanders aged 18 years or over have some form of investment. The most common forms of investments are KiwiSaver (66%), term deposits (34%), shares (17%), managed funds (14%) and residential property (14%).
For one-third of New Zealanders (32%), KiwiSaver is their only investment and their confidence level lags investors in other products.

Just 64% of KiwiSaver investors said they were confident in financial markets, compared with 85% of investors in managed funds or investors who had bought their own shares.

Everett said this underlined the importance of continuing to improve the information provided to KiwiSaver members by their providers, as well as efforts to encourage KiwiSaver members to take a greater interest in their investment.

“Over the past few years, the FMA has worked with KiwiSaver providers to include more information on fees in KiwiSaver statements and next year the industry will begin including a forecast retirement balance for every KiwiSaver member."

Tags: conduct FMA investment KiwiSaver Rob Everett