KEY POINTS:
New Zealanders must become more savvy investors, or expect to get 'burned', according to Commerce Minister Lianne Dalziel.
The minister believes education in financial literacy is the key.
"Whilst we may have made some progress in the realm of financial education, both the ANZ-Retirement Commission Financial Knowledge Survey in 2006, and the Reserve Bank's survey on the understanding of financial information in 2007 found that the level of financial literacy in New Zealand still falls short of where it should be", she said.
"In a world where managing one's finances effectively is essential for well-being, it is imperative that we all take part in this drive towards a more financially capable country."
The government has launched a financial literacy campaign spearheaded by the Retirement Commission and a Draft National Strategy for Financial Literacy has been developed.
Ms Dalziel stressed the role that capable and professional financial advisers play in assisting their investor clients to make informed choices about which products and providers best suit their needs and tolerance for risk.
"In that regard, financial advisers are on the frontline when it comes to addressing the financial literacy of investors.
"Though we are regulating to improve the quality of financial advice in the market we all know that ultimately the responsibility for financial decisions and risks lie with the individual decision maker", she said.
"I confess that I do not understand why people who have spent their lives working hard to save their money can invest in products without doing the same level of hard work and taking independent professional advice."
The minister went on to say that the government cannot be expected to play the role of the 'ambulance at the bottom of the cliff' after a financial institution goes under, in many of the high profile collapses in the industry over the last 18 months.
"Because these investors have been described as unsophisticated or naive does not mean that anyone is less empathetic towards the loss they have experienced, but they cannot expect the government to step in and retrospectively put in place checks and balances that they didn't take advantage of at the time", Ms Dalziel emphasised.
"There are those who say these investors have been too trusting and I believe that is true. But why would you trust your life savings with someone with no professional qualifications or membership of a supervisory body? Why would you rely on a former All Black touting a product on TV? This has been a wake-up call, but then again, so was the 1987 crash. People's memories are so short-lived.
"There is no such thing as a 'sure fire bet' or a 'safe as houses' investment and I am struggling to see why the government would even be asked to provide a legislative backstop to risk."
* Lianne Dalziel was speaking to the Institute of Financial Advisers and the Financial Planning Standards Board in Christchurch.
- NZHERALD STAFF
