Low rates prompting shift: FMA
Low interest rates may be prompting people to switch from term deposits to investing with an adviser, research suggests.
Wednesday, October 2nd 2019, 6:00AM 
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The Financial Markets Authority has released a survey of 195 term deposit holders which showed 43% said they were likely to invest less money in term deposits because of low interest rates.
Rates are still at historic lows and look likely to remain that way for some time.
A quarter were considering shifting savings to managed funds or exchange-traded funds, in search of better returns.
FMA spokesman Andrew Park said a smaller proportion were considering providing a lump sum to an adviser to invest on their behalf.
“We think it’s important for people to seek advice to help them make decisions, particularly where they are concerned about the risks involved with considering alternative options.”
It follows the investor confidence survey released in May that showed 56% of respondents were considering making changes to their investments in the coming year.
The FMA has also produced a guide to managed funds to help those who are considering making the switch.
FMA investor capability manager Gillian Boyes said: “When interest rates fall, it’s natural that people start to look for alternatives to term deposits. With more people expressing interest in managed funds, we’ve developed a guide to these types of investment to help people make more informed decisions.”
The guide explains what a manged fund is; the types of funds and who they suit; and how to invest.
“We hope advisers will find these guides useful as an independent resource to support the conversations they have with their clients,” Park said.
“Many of these types of guides are often developed by providers and the FMA guides offer an independent source of information to help investors make informed decisions.”
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