FMA 'keen to back financial advisers'

The Financial Markets Authority wants to improve consumer access to independent financial advice.

Wednesday, October 15th 2014, 6:00AM

by Susan Edmunds

It yesterday released a survey that showed while New Zealanders have a good understanding of conservative investments, they underestimate the riskiness of investments such as equities and KiwiSaver growth funds.

More than half thought term deposits were guaranteed.

The survey showed that a third intended to seek professional financial advice in the next year.

Respondents said they got most of their financial advice from banks (48%), followed by family and friends (47%). A third said they would usually go to an authorised financial adviser for advice.

FMA head of primary markets and investor resources Simone Robbers said that indicated there was work to be done. “[At banks] consumers only really get their suite of banking products. AFAs are looking at a more holistic financial plan. There are a range of options in that plan that you won’t get talking to banking advisers. There is a gap there.”

Men were more likely than women to seek advice from an AFA. Those more likely to seek financial advice were earning over $100,000. The most unlikely to seek advice were aged 50 to 64, which Robbers said was surprising. ”You might think that group has more assets to invest.”

She said AFAs needed to find their value proposition and start building trust among consumers. High-profile failures had eroded confidence in using financial advisers, she said. That confidence needed to be rebuilt.

“Four years in, I think we’re doing pretty well with that,” she said.

Affordability of independent advice was an issue, she said. “Improving access to financial advice is something we’re keen to support the sector with. It’s an ongoing challenge, finding the value proposition and the sweet spot where the business model works and the consumer outcome is optimal, that’s a challenge. We recognise that and are keen to work with the sector to help with working on solutions for that challenge.”

Tomorrow, the FMA is hosting a panel discussion about whether New Zealanders are good at understanding risk.

Robbers said there would likely be discussion of the role of advisers in helping people’s decisions.

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