RaboPlus Financial Confidence Index

1

The RaboPlus Financial Confidence Index

Public Confidence in the Financial System

September 2009

2

While few people have investments that have increased in value in the past six month period, there is

a feeling of optimism looking forward. Housing is still viewed with more confidence as an investment

option than the financial system.

Consumer confidence with investing in the

financial sector has a net negative 56 score.

Investing in housing is not viewed as

negatively.

A net 10% expect their financial circumstances

to improve over the coming six month period.

People who have fared better financially in the

past 6 months rate the various institutions

included in the study more positively than

others.

A higher percentage of men are more

optimistic about their circumstances in the next

6 months.

Investing in New Zealand

42%

12%

-46%

44%32%

20%

6%

-36%

-62%

50%

30%

-20%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

How financial

investments have

fared

Personal f inancial

circumstances in

next 6 months

Confidence w ith

investing in

housing

Confidence w ith

investing in

financial sector

Investment: worth more worth the same worth less

Circumstances: will improve will stay the same will get worse

Confidence: more about the same less

3

Clearly the institutions consumers have the least confidence in are finance companies. It also seems

that relative to insurance companies and banks, advisors have borne the brunt of the blame for

financial crisis with share brokers relatively poorly perceived

Confidence in New Zealand Financial System(1)

Note: (1) Index score calculated as shown on p. 11

39

-20

23

28

42

24

13

2

14

-30

-20

-10

0

10

20

30

40

50

Ba

nks

Fin

an

ce

Co

mp

an

ies

Cre

dit

Un

ion

s/B

uild

ing

So

cie

tie

s

Life

In

su

ran

ce

Ho

use

/Co

nte

nts

/Ca

r

Insu

ran

ce

He

alth

In

su

ran

ce

Fu

nd

Ma

na

ge

rs

Sh

are

Bro

ke

rs

Fin

an

cia

l A

dvis

ors

Ind

ex

Sc

ore

Deposit Takers Insurers Investment Managers and Advisors

4

When we compare current to non-customers of the various institutions there are significant gaps in

perceptions. Without exception, non-customers have less confidence that current customers.

Confidence in New Zealand Financial System: Comparing Customers to Non-Customers(1)

BASE: Customers/Non-customers Banks: 999/1; Finance Companies 403/597; Credit Unions 205/795; Fund Managers 449/551; Share Broker 149/851;

Financial Advisor 246/754; Life Insurance 607/393; General Insurance 878/122; Health Insurance 399/601

Note: (1) Index score calculated as shown on p.11

39

-6

4035

4541

22 22

35

-30

18

12 118

2

-3

4

-40

-30

-20

-10

0

10

20

30

40

50

Banks

Fin

ance C

om

panie

s

Cre

dit

Unio

ns/B

uild

ing

Socie

ties

Life I

nsura

nce

House/C

onte

nts

/Car

Insura

nce

Health I

nsura

nce

Funds M

anagers

Share

Bro

kers

Fin

ancia

l A

dvis

ors

Ind

ex

Sc

ore

CustomersNon-Customers


5

A strong correlation is evident between perceptions people have of their various financial service

providers and the likelihood of recommending their provider.

Perceptions of Current Relationship and Likelihood of Recommending

BASE: Customers: Banks: 999; Finance Companies 403; Credit Unions 205; Fund Managers 449; Share Broker 149; Financial Advisor 246; Life Insurance 607; General Insurance

878; Health Insurance 399

59

30

60

44

59

50

31

4448

81

47

7469

81

75

5762 62

0

10

20

30

40

50

60

70

80

90

Ba

nks

Fin

an

ce

Co

mp

an

ies

Cre

dit

Un

ion

s/B

uild

ing

So

cie

tie

s

Life

In

su

ran

ce

Ho

use

/Co

nte

nts

/Ca

r

Insu

ran

ce

He

alth

In

su

ran

ce

Fu

nd

s M

an

ag

ers

Sh

are

Bro

ke

rs

Fin

an

cia

l A

dvis

ors

Relationship (% Good) Recommend (% Yes)


6

People with more confidence in their own expertise appear to have done better with their

investments, are more likely to use various financial advisors, and be more positive about the future.

Self Rated Financial Expertise

BASE: N=1,000. People were asked to rate their own expertise with respect to choosing financial products and investments into one of „Expert‟, „Competent‟, „Some Knowledge‟ and

„Novice‟ categories

Self Rated Expertise and Sources of Advice

8%

29%

15%11%

17%

15%

6%7%

14%

14%

13%

8%

13%

9%

2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Expert Competent Some know ledge Novice

Share broker

Financial advisor

Insurance broker

Accountant/Law yer

Expertise and Confidence

57%

30% 19% 10%

25%

10%5%

2%0%

20%

40%

60%

80%

100%


More confident investing housing More confident investing financial sector

Expertise and Investment Performance

35%16% 12% 5%

60%

43%27%

18%

0%

20%

40%

60%

80%

100%


Financial circumstances w ill improve next 6 months

Investments w orth more now than 6 months ago

7

And we can see most people have an opinion about what they will invest in going forward

3%

5%

6%

5%

5%

6%

6%

8%

52%

42%

29%

44%

37%

41%

10%

32%

33%

23%

30%

31%

30%

27%

7%

11%

16%

11%

16%

16%

24%

3%

5%

10%

5%

6%

4%

27%

1%

3%

16%

4%

3%

3%

Deposit with a bank

Deposit with a finance

company

Deposit with a credit union or

building society

Managed fund (including

Kiwisaver)

Shares

Fixed interest bonds

Investment property

Don't know Definitely not Probably not Maybe Probably will Definitely will

Likelihood of Investing in the Next Six Months

BASE: 1,000

8

Deposit-Taking Institutions

9

Banks

10

New Zealander on the whole feel confident in their banks and feel that they have financial strength.

Banks are also well rated on providing good products and services although there are clearly feelings

of negativity towards their fairness and integrity .

1%

2%

2%

1%

1%

2%

2%

7%

4%

2%

9%

5%

18%

12%

5%

20%

13%

22%

23%

11%

48%

39%

41%

43%

40%

20%

38%

12%

17%

41%

They provide good products

and services

They have financial strength

They act fairly and with

integrity

They provide you with good

information to help make your

financial decisions

You feel confident your money

is, or would be, safe there

Don't know Strongly disagree Somewhat disagree Neither agree nor disagree Somewhat agree Strongly agree

BASE: 1,000

Perceptions of Banks – Amongst all New Zealanders

11

Finance Companies

12

New Zealanders lack confidence in finance companies currently with over half not confident their

money would be safe. There is clearly a lack of trust too, with over half disagreeing that finance

companies act with integrity.

8%

8%

7%

8%

8%

11%

17%

19%

15%

25%

20%

27%

32%

26%

29%

33%

25%

24%

27%

22%

23%

17%

14%

18%

13%

5%

6%

4%

5%

3%


and services



integrity



financial decisions




Perceptions of Finance Companies – Amongst All New Zealanders

BASE: 1,000

13

Credit Unions and Building Societies

14

Credit Unions and Building Societies are not as well known as banks or finance companies with

around 20% not able to comment. However, those that can are generally more positive than negative

in attitude.

21%

21%

20%

21%

19%

2%

3%

2%

3%

3%

6%

8%

7%

7%

9%

29%

31%

31%

31%

30%

33%

29%

29%

28%

29%

9%

8%

11%

9%

10%


and services



integrity



financial decisions




Perceptions of Credit Unions & Building Societies – Amongst All New Zealanders

BASE: 1,000

15

There is high confidence in Banks amongst New Zealanders with moderate levels for Credit Unions

and Building Societies. However, confidence is generally low for Finance Companies.

Perceptions Amongst All New Zealanders

Banks Finance Companies

Credit Unions /

Building Societies

% who ‘Strongly Agree’

They provide good products and services 20% 5% 9%

They have financial strength 38% 6% 8%

They act fairly and with integrity 12% 4% 11%

They provide you with the information you need to make your

decisions17% 5% 9%

You feel confident your money would be safe there 41% 3% 10%

% who ‘Strongly Agree’ or ‘Somewhat Agree’


They have financial strength 77% 23% 37%



decisions60% 23% 37%

You feel confident your money would be safe there 81% 16% 39%

BASE 1,000 1,000 1,000

BASE: Includes “Don‟t Know” ratings

16

Investment Managers and

Advisors

17

Fund Managers

18

Feelings are somewhat mixed towards Fund Managers although in the main more positive than

negative. The worst aspect is confidence in the advice they provide.

14%

14%

13%

13%

4%

5%

5%

7%

12%

12%

14%

17%

30%

33%

24%

27%

33%

28%

33%

29%

7%

7%

10%

7%


and services


integrity



investment decisions

You feel confident your

investments would be well

managed by them


Perceptions of Fund Managers – Amongst All New Zealanders

BASE: 1,000

19

Share Brokers

20

Many New Zealanders are not able to comment on Share Brokers, probably reflecting the relatively

small proportion of New Zealanders who participate in the share market. However, amongst those

who can attitudes are polarised.

30%

29%

30%

30%

4%

6%

5%

6%

9%

11%

9%

11%

35%

36%

34%

34%

19%

13%

18%

15%

4%

4%

4%

3%


and services


integrity




You have confidence in the

advice and broking services

they provide


Perceptions of Share Brokers – Amongst All New Zealanders

BASE: 1,000

21

Financial Advisors

22

Attitudes towards Financial Advisors are more positive than negative although there is a significant

portion who have no opinion.

22%

21%

21%

21%

5%

5%

5%

7%

9%

12%

9%

12%

31%

30%

24%

26%

26%

25%

30%

26%

8%

7%

10%

7%


and services


integrity




You feel confident in the

advice they provide


Perceptions of Finance Advisors – Amongst All New Zealanders

BASE: 1,000

23

Amongst all New Zealanders confidence is higher for Financial Advisors and Fund Managers than for

Share Brokers. Given the poor performance of Finance Companies this is an interesting finding.


Fund Managers Share Brokers Financial Advisors





decisions10% 4% 10%

You feel confident in their advice / management 7% 3% 7%





decisions43% 22% 40%

You feel confident in their advice / management 36% 18% 33%

BASE 1,000 1,000 1,000


24

Insurance

25

Life Insurance Providers

26

New Zealanders are relatively confident that Life Insurance providers will honour valid claims and that

they have the financial strength to do so

10%

13%

11%

10%

10%

3%

2%

5%

3%

4%

8%

5%

14%

10%

13%

23%

26%

28%

23%

21%

40%

37%

33%

39%

36%

15%

17%

9%

15%

16%


and services



integrity



life insurance decisions

You feel confident valid claims

will be honoured


Perceptions of Life Insurance Providers – Amongst All New Zealanders

BASE: 1,000

House, Contents and Car Insurers

62

General insurance companies are well rated by New Zealanders with two thirds confident that valid

claims will be honoured.

4%

8%

5%

4%

5%

2%

1%

3%

2%

4%

5%

3%

10%

6%

8%

19%

20%

24%

19%

15%

43%

42%

39%

44%

40%

28%

26%

19%

25%

28%


and services



integrity



insurance decisions


will be honoured


Perceptions of House, Contents and Car Insurers – Amongst All New Zealanders

BASE: 1,000

63

Health Insurance Providers

68

New Zealanders are fairly confident in their Health Insurance providers although many are unable to

provide an opinion.

21%

24%

21%

21%

21%

3%

2%

4%

3%

5%

7%

4%

11%

7%

10%

27%

28%

29%

28%

25%

27%

28%

24%

27%

26%

15%

14%

10%

13%

13%


and services



integrity



health insurance decisions


will be honoured


Perceptions of Health Insurance Providers – Amongst All New Zealanders

BASE: 1,000

69

Confidence is highest that claims will be honoured for General Insurance companies followed by Life

Insurance providers. Results at a total New Zealand level for Health Insurance providers reflect that

many New Zealanders are unable to rate them.


Life Insurance Providers

House, Contents and Car

Insurers Health Insurer Providers



The have financial strength 17% 26% 14%



insurance decisions15% 25% 13%

You feel confident valid claims will be honoured 16% 28% 13%



The have financial strength 54% 68% 42%



insurance decisions54% 69% 40%

You feel confident valid claims will be honoured 52% 68% 39%

BASE 1,000 1,000 1,000


75

Appendix 1: Regional Charts

98

Compared with 6 months ago, how have your financial investments fared?

BASE: xxxx

38% 36%45% 42% 48%

58%

34% 39% 40% 42%

13% 10%

12% 13% 7%

12%

9%12% 7%

12%

49% 54%43% 45% 44%

30%

57% 49% 53% 46%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Auckland Hamilton Wellington Other North

Island city

Other North

Island rural

Christchurch Dunedin Other South

Island city

Other South

Island rural

Total

Worth the same as 6 months agoWorth more now Worth less now

119

Compared to 6 months ago, how confident do you feel about investing in housing?

BASE: xxxx

42% 35%44% 41%

50% 45% 51% 52% 53%44%

21%16%

24%21%

17% 26% 10% 14% 17%20%

37%49%

32% 38% 32% 30%39% 34% 30% 36%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%


Island city

Other North

Island rural


Island city

Other South

Island rural

Total

About the sameMore Confident Less Confident

120

Compared to 6 months ago, how confident do you feel about investing in the financial sector?

BASE: xxxx

35%27% 31% 31% 33% 30% 36%

21% 28% 32%

7%5%

5% 6% 3% 9%9%

5%6%

58%68% 63% 63% 64% 61% 64% 70% 67% 62%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%


Island city

Other North

Island rural


Island city

Other South

Island rural

Total

About the sameMore Confident Less Confident

121

Overall, how do you think your own financial circumstances will fare in the next 6 months?

BASE: xxxx

48%

67%56% 49% 50%

40%58% 51% 46% 50%

32%

21%30%

32% 23% 41%20%

25%22%

30%

20%11% 14% 19% 27% 20% 22% 24% 32%

20%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%


Island city

Other North

Island rural


Island city

Other South

Island rural

Total

Will stay about the sameWill improve Will get worse

122

Likelihood of Investing in Next 6 Months

Auckland Hamilton Wellington

Other North

Island city

Other North

Island rural Christchurch Dunedin

Other South

Island city

Other South

Island rural TOTAL

Bank deposit 50% 51% 53% 56% 45% 49% 64% 46% 46% 51%

Finance Company deposit 4% 3% 5% 4% 4% 2% 3% 3% 4% 4%

Credit Union/Bldg Soc deposit 7% 12% 9% 8% 7% 1% 8% 21% 28% 9%

Managed Fund

(including Kiwisaver) 29% 27% 24% 29% 16% 23% 36% 25% 14% 26%

Shares 16% 6% 2% 7% 2% 13% 6% 7% 12% 10%

Fixed interest bonds 12% 7% 4% 11% 12% 7% 4% 3% 2% 9%

Investment property 8% 6% 4% 9% 7% 6% 3% 6% 10% 7%

100

RaboPlus Financial Confidence Index

Economy & Finance

Transcript of RaboPlus Financial Confidence Index