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.
On 26 February 2010 at 3:48 pm Frustrated Operator said:
Until we have a regulator that actually regulates, and some accountability within the industry, we're kidding ourselves - particularly with this talk of an international financial hub. Law reform and investor education isn't going to cure the lack of trust created by self proclaimed "light-handed" regulators and those "light-fingered" players that take advantage of the lack of enforcement.
The emphasis on investor education is, in my view, just another example of the regulators/government refusing to accept any responsibility. Financial instruments are inherently complex and hard to understand - particularly those that are deliberately crafted to deceive. As an industry we should be providing better service to the investor market by developing an accountable, qualified body of independent advisors (not sales/commissioned agents) who can properly advise/protect the investing public. Government is actually moving away from this with Powers saying he's not convinced financial advisors should have fiduciary obligations - reversing 300yrs of common law!
Final bleat.....can someone explain to me why Petricevic is being prosecuted and not Huljich - because I can't see a difference?
On 27 February 2010 at 11:26 pm Tied Agent said:
It is a silly notion to think trust can be built and maintained by regulation. What NZ investors need is for the toothless bureaucrats' to use the current legislative tools they have at their disposal to deal with the deceiving conniving product suppliers.
It would also be wise to stop putting the boot into Sales / Commissioned agents, who after all built our profession. These often denigrated folk have sold more life insurance which has allowed the insured's survivors to have much better lives than they would have had without the intervention of the Sales / Commissioned agents. All power to those accountable, qualified by way of degree independent advisers but don't forget where you came from. It is also pure narcissism to suggest having fiduciary obligations will engender trust within the investing public.
It is understandable investors have little faith in shares and don't trust big business and managers. Bricks and mortar is not a complex investment for most investors. Investors can see it, feel it, it has substance and above all the investor feels they have complete control of it.
It is just plain common sense to have financial literacy as a core education subject. Even if you fail miserably at the 3r's you have to deal with money in your life. Most children from 10 years old have a rudimentary understanding of how an Eftpos card interacts with a bank account or how a prepaid cell phone needs topping up from time to time, or 500 texts costs $10.
As a profession we have a responsibility to make sure the public is better educated in financial literacy. I am constantly surprised at the number of professional salaried staff you haven't yet grasped the concept of free money available from their employer and the government with KiwiSaver.
On observation on the difference between Petricevic and Hulijich maybe one put extra money in the till without telling anyone and one took money from the till without telling anyone.
2 Comments
The emphasis on investor education is, in my view, just another example of the regulators/government refusing to accept any responsibility. Financial instruments are inherently complex and hard to understand - particularly those that are deliberately crafted to deceive. As an industry we should be providing better service to the investor market by developing an accountable, qualified body of independent advisors (not sales/commissioned agents) who can properly advise/protect the investing public. Government is actually moving away from this with Powers saying he's not convinced financial advisors should have fiduciary obligations - reversing 300yrs of common law!
Final bleat.....can someone explain to me why Petricevic is being prosecuted and not Huljich - because I can't see a difference?