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Make sure clients are correctly invested

Advisers should explain to their clients why market conditions are as they are – and what might cause them to change, one economist says.

Monday, July 31st 2017, 6:00AM

by Susan Edmunds

ASB has releasedx its latest investor confidence survey, which shows a decline in sentiment over recent months.

Investor confidence is now +23%. A reading of 0 would indicate as many were confident as were not.

It is down from +25% last quarter.

Senior wealth economist Chris Tennent-Brown said it could reflect a degree of caution ahead of the election.

"It’s understandable to see some caution in the market as people ponder policies that will impact them, such as changes in the retirement age and tax rates, as well as the various policies that could impact the housing market,” he said.

Another cause for caution was the valuations in some asset markets, he said.

“We all know how expensive houses have become over recent years, and now we are seeing the market flatten in many areas, including Auckland."

“Developments in share markets may be viewed in the same light by investors. Many share markets, including  New Zealand’s, have hit record highs in recent months and perhaps investors are thinking that recent gains can’t continue unless we start to see stronger earnings growth.”

Investors expected to get the best returns out of their rental properties and own homes in the quarter. Term deposits were seen as the bank product providing the best returns.

Tennent-Brown said that showed a preference for safer investments.

He said advisers needed to talk to clients about why they were experiencing such low returns in income assets and high returns in growth assets.

“Talking about the environment we are in and making sure clients understand it, making sure they are in the right investment. Make sure you have the right balance is really important.”

He said it would be hard for advisers to encourage clients out of term deposits if they were there for safety. “It reflects their risk tolerance. But if you are trying to live off it or grow your money it was certainly a lot easier prior to the GFC."

Tags: ASB financial advisers investment Markets risk term deposits

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 ▲4.05 4.49
ANZ Special - 3.55 ▲3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide ▼5.65 ▼4.75 ▼4.75 -
Credit Union North 6.45 - - -
Credit Union South ▼5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.14 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.39 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.39 3.45 3.89
Sovereign 5.30 4.15 4.29 4.55
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The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
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Last updated: 4 December 2019 9:11am

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