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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 1 Comment

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.”

Tags: ETFs financial advisers FMA interest rates managed funds term deposits

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Comments from our readers

On 2 October 2019 at 12:44 pm LNF said:
As soon as I read "FMA spokesman Andrew Park said a smaller proportion were considering providing a lump sum to an adviser to invest on their behalf" I know there is trouble and grief coming

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 ▼3.89 ▲4.05 4.39
ASB Bank Special - ▼3.39 ▲3.55 3.89
BNZ - Classic - 3.55 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 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
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 3.35 3.35 3.35
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 - 3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
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 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.02 4.09 4.39

Last updated: 21 November 2019 9:39am

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