It was a bit of coincidence yesterday that we were finishing an article on what the government’s utterings about tax and property investment really meant when it put out the response to the Capital Markets Taskforce.

The story, for the NZ Property Investor Magazine asked, amongst other things, whether changes to tax rules would end the Kiwi love affair with residential property.

It will come as little surprise that the answer was no.

Kiwis will continue to place their faith in bricks and mortar.

There are many reasons for this but one which came up a number of times was that there is little faith in other assets like shares.

Also distrust came through of corporate, big business and managers. The coincidence here was that the government’s response to the Capital Markets Taskforce addressed this very subject.

In looking through the responses it seemed there was little there which would change Kiwis attitudes.

Sure they the government supported a few ideas like putting investment statements into plain English, adding warnings when products were “particularly risky or complex” and a few other things provide a bit better quality of information to investors.

However, some of the things which are key to improving New Zealanders investment outcomes is better financial education and literacy.

The taskforce recommended that initiatives are employed to raise investment literacy including a targeted campaign promoting key investment messages.

To this the government said “further consideration required”. Then there was this one: Include investment literacy concepts in the school curriculum and resolve the issues preventing approval of the Personal Financial Management unit standards.

The government says it doesn’t need to as schools are self managing and they can include financial literacy if they consider it appropriate. Surely the government can be more proactive than this?

If it wants economic growth and a step change in the economy then having a financially literate population is a must have.

Finance companies is the theme I was am going to start the year with. Originally I toyed with the idea that maybe we should rename the survivors in this sector. Instead of calling them finance companies – such a tainted name now – that we could call them something like non-bank deposit takers.

Not a particularly eloquent name, I must admit. Then I thought about it a little more and figured that’s the role of a PR guru, rather than me.

Instead I have warmly welcomed the moves by some finance companies of offering non-guaranteed product to the market.

So far only Marac and PGG Wrightson have done so, but others, I hear, will follow soon.

It’s good for a number of reasons.

Firstly it shows you how much the guarantee really costs. This is something like 100 basis points. To my way of thinking it is far better the investor gets this rather than the government.

It also makes investors and advisers return to basics and think about the risk reward equation. It’s been too easy just to say take the company with the highest guaranteed rate.

Who needs an adviser to do that?

Advisers and investors should be researching any company they plan to invest in before giving them their money. It doesn’t matter if it is a finance company, a managed fund or a listed share. Do the research.

The challenge for advisers though is they have to start doing some work rather than take the easy option of saying to clients, take the guaranteed product.

At some stage the guarantee will go. The sooner the better as it just distorts the market, and encourages laziness.