Attitudes towards New Zealand?s financial markets FMA Colmar m. 1:1: Brunton H'tl? In?~ I-DIUI- A Millm comm Methodology This is the fourth year that FMA has carried out investor research measuring attitudes towards, and investment in New Zealand’s financial markets. The research was carried out online using Colmar Brunton’s omnibus. Fieldwork was conducted between 30 March and 6 April 2016. A total of 1,000 New Zealanders took part in the research in 2016. Results are weighted by age, gender, and region to ensure the results are representative of the New Zealand population. The margin of error for overall results n=1,000 is +/-3.1%. $ Of the 1,000 people surveyed this year, 885 had an investment in New Zealand’s financial markets. This is a significant increase from 763 in 2015 and is primarily due to a change in the question wording. In 2016 we asked people specifically which investments they have from a pre-coded list. Prior to this people were asked a yes/no question about whether or not they have any investments. Colmar Brunton SLIDE 2 Key outtakes Confidence in New Zealand’s financial markets has declined from 2015 to 2016, and the number of people who say their confidence has increased has also declined. As for previous years investor confidence is higher than non-investor. Investors with managed funds/unit trusts are the most positive, they have the most confidence in both the markets and regulation, are most likely to say their confidence has increased, and to say their investment statements were helpful. $ Inverse to this investors with KiwiSaver are most likely to have less confidence, or say they don’t know how confident they are. Awareness of FMA has a positive impact on confidence, people who are aware of FMA have more confidence in the market and regulation. They are also more likely to have investments and to say their investment statements were helpful. Colmar Brunton SLIDE 3 Confidence in New Zealancl?s financial markets FMA olmar FINANCIAL MARKETS 1 van um. Imun 4x. ?.Lw an?: A Milli!? Hm" Damn! Confidence in New Zealand’s financial markets has dropped slightly this year and is on par with results from 2013 and 2014. Total confident 2016 3% 53% 25% 2015 3% 57% 22% 2014 53% 26% 5% 2013 3% Very confident 51% Fairly confident 29% Not very confident Qa. How much confidence do you have in New Zealand’s financial markets? Are you… Base: All respondents (2013 n=1,021, 2014 n=1,015, 2015 n=1,000, 2016 n=1,000). Not at all confident 4% 14% 56% 5% 13% 60% 5% 6% 10% 58% 11% 54% Don't know Colmar Brunton SLIDE 5 The group of people who are confident in New Zealand’s financial market… 2016 3% 53% 25% 2015 3% 57% 22% 2014 53% 26% 5% 2013 3% Very confident 51% Fairly confident 29% Not very confident Not at all confident 4% 14% 5% 13% 5% 6% 10% 11% Don't know The group of people who say they are confident in New Zealand’s financial market is more likely to be married or living with their partner, with a double income and no kids. They are most likely to have a high personal and household income ($100k+). People who are less likely to say they are confident are younger (18-29 years old), female, single, and with a lower household income (up to $50k). This group are most likely to say that they don’t know whether or not they have confidence, not that they are not confident. There are no significant demographic differences in the group of people who are not confident. Qa. How much confidence do you have in New Zealand’s financial markets? Are you… Base: All respondents (2013 n=1,021, 2014 n=1,015, 2015 n=1,000, 2016 n=1,000). Colmar Brunton SLIDE 6 Investor confidence is higher than non-investor… Total confident All respondents 3% (n=1,000) 53% Investors (n=885) 4% Non-investors 2% (n=115) Very confident 25% 55% 25% 41% Fairly confident 23% Not very confident Qa. How much confidence do you have in New Zealand’s financial markets? Are you… Base: All respondents 6% Not at all confident 4% 14% 4% 12% 24% 56% 59% 43% Don't know Colmar Brunton SLIDE 7 …and among investors people with managed funds/unit trusts are most likely to express confidence while those in KiwiSaver are the least likely. People with term deposits and other superannuation schemes are most likely to say they are not confident. Managed funds/unit trusts (n=111) 5% Shares you bought yourself (n=214) 6% Residential property investments (n=145) Term deposits (n=298) 75% 69% 8% 19% 63% 6% 18% 59% Bonds you bought 4% yourself (n=110) Other superannuation scheme (n=154) 15% 6% Confident Qa. How much confidence do you have in New Zealand’s financial markets? Are you… Base: Investors in each scheme 4% 28% 54% Very confident 4% 7% 4% 5% 24% 57% KiwiSaver (n=650) 3% 1%4% 27% 60% 24% Not very confident 9% 2% 6% 4% Not at all confident 2% 2% 14% Don't know Colmar Brunton SLIDE 8 Confidence has increased among people with high personal incomes in comparison to 2015, but decreased among those with personal incomes under $100k 54% 59% 60% 56% Total 45% 45% 42% 41% $20,000 or less 52% 49% $20,000 to $49,999 58% 57% 56% $50,000 to $99,999 69% 66% 59% 63% $100,000 to $149,999 70% 71% 75% 80% $150,000 or more 78% 81% Preferred not to specify income 48% 2013 2014 2015 93% 55% 57% 53% 2016 Q: Into which one of the following groups does your own gross personal income from all sources before tax fall into? Base: All respondents (2013 n=1,021, 2014 n=1,015, 2015 n=1,000, 2016 n=1,000). Colmar Brunton SLIDE 9 Just less than one in ten people in 2016 say their confidence has increased, down from the results of preceding years. Nearly one quarter say their confidence has decreased. 2016 2015 2014 2013 9% 60% 14% 23% 60% 22% 16% 57% 17% 15% 51% Increased Males with a household income over $100k+ are more likely to say their confidence in the market has increased. Stayed the same 9% 25% Decreased 9% 6% 6% Don't know People aged 60 years or older are more likely to say their confidence has decreased Qb. And has your level of confidence in New Zealand’s financial markets increased, decreased or stayed the same over the last year? Colmar Brunton SLIDE Base: All respondents (2013 n=1,021, 2014 n=1,015, 2015 n=1,000, 2016 n=1,000). 10 People with managed funds/unit trusts, residential property investments, and shares they have bought themselves are more likely to say their confidence has increased. People with term deposits, other superannuation schemes and bonds they’ve bought themselves are most likely to say their confidence has decreased. Managed funds/unit trusts (n=111) 16% 60% Residential property investments (n=145) 16% 58% Shares you bought yourself (n=214) 15% 24% 59% KiwiSaver (n=650) 11% Bonds you bought yourself (n=110) 11% Other superannuation scheme (n=154) 10% 57% Term deposits (n=298) 9% 58% 59% Increased Stayed the same 22% 3% 23% 3% 21% 56% 9% 27% 6% 28% 6% 29% Decreased 1% 3% Don't know Qb. And has your level of confidence in New Zealand’s financial markets increased, decreased or stayed the same over the last year? Colmar Brunton SLIDE Base: Investors in each scheme 11 FMA Colman- FINANCIAL MARKETS -. vurv Imun uw A Milli!? Emu Damn! Awareness of FMA is similar to last year, four in ten people have heard of the FMA. 2016 39% 2015 39% 55% 52% 2014 35% 58% 2013 34% 61% Yes Awareness of FMA is highest among males, aged 50-59 years old, who live in Wellington and have personal and household incomes over $100k. Qc. Have you heard of the Financial Markets Authority (FMA)? Base: All respondents (2013 n=1,021, 2014 n=1,015, 2015 n=1,000, 2016 n=1,000). No 6% 10% 7% 5% Don't know Awareness of FMA is lowest among females, aged 18-29 years old, who live in the North Island outside of Wellington or Auckland, and have lower personal incomes – up to $50k. Colmar Brunton SLIDE 13 People who have heard of FMA are more confident about the market and market regulation… Heard of FMA (n=389) 6% Confidence in New Zealand’s financial Not heard of FMA 2% markets (n=546) Very confident 62% 47% Fairly confident Heard of FMA (n=389) 10% Confidence in effective regulation Not heard of FMA 2% (n=546) Very confident Base: All respondents 23% 27% Not very confident 5% Not at all confident 61% 51% Fairly confident 19% Don't know 20% 22% Not very confident 4% 6% 2% Not at all confident 3% 6% 23% Don't know Colmar Brunton SLIDE 14 …and they are more likely to have investments and find the investment materials helpful. Have an investment Heard of FMA (n=389) 92% Not heard of FMA (n=546) 8% 86% 14% Yes Heard of FMA (n=358) No 58% Found investment materials Not heard helpful of FMA (n=468) 32% 45% Yes 35% No Base: Have an investment - All respondents; Found investment materials helpful - Investors 10% 20% Don't know Colmar Brunton SLIDE 15 FMA Colman- FINANCIAL MARKETS -. vurv Imun uw A Milli!? Emu Damn! Nearly nine out of ten people have an investment, the most popular of which is KiwiSaver with two-thirds of people invested 66% of people don’t have any investments 12% 29% 21% 88% of people have an investment People who are most likely to have investments live in Wellington and have personal income $50k+ and a household income $100k+. People who are least likely to have investments are older (60 years or older) with lower incomes – less than $50k personal and household income. Qd. Which of the following investments, if any, do you have in New Zealand’s financial markets? Base: All respondents 2016 n=1,000 KiwiSaver Term deposits Shares you bought yourself 16% Other superannuation scheme 14% Residential property investments (other than your own home) 11% Managed funds / Unit trusts 11% Bonds you bought yourself (not through KiwiSaver or other managed funds) 3% Commercial property investments 2% Peer to peer lending 1% Property syndicates 1% Capital notes or hybrid bonds Colmar Brunton SLIDE 17 Half of those with investments found the materials they received about their most recent investment helpful. This number has decreased slightly from previous years and there is an increase in the number of people who ‘don’t know’ 2016 2015 50% 33% 56% 2014 53% 2013 52% 17% 33% 36% 36% Yes No 11% 11% 12% Don't know Note: The way investors are identified changed in 2016. Previously people were asked if they had any investments (Yes/No/Don’t know). In 2016 people were asked to identify which investments they have from a pre-coded list. Qe. Thinking about your most recent investment, did the investment materials you received (e.g. prospectuses, investment statements, product disclosure statements or adviser disclosure statements etc) help you make an informed decision about whether or not to invest? Colmar Brunton SLIDE Base: All investors (2013 n=742, 2014 n=749, 2015 n=763, 2016 n=885) 18 People who have managed funds/unit trusts are more likely to say their statements helped them make an informed decision, and those with residential property investments or bonds they bought themselves are more like to disagree their statements helped. Managed funds/unit trusts (n=111) 60% 28% 12% Shares you bought yourself (n=214) 58% 32% 10% Term deposits (n=298) 57% 33% 10% Other superannuation scheme (n=154) 56% Residential property investments (n=145) 54% Bonds you bought yourself (n=110) 51% KiwiSaver (n=650) 50% 28% 38% 38% 33% Yes No 16% 7% 11% 17% Don't know Qe. Thinking about your most recent investment, did the investment materials you received (e.g. prospectuses, investment statements, product disclosure statements or adviser disclosure statements etc) help you make an informed decision about whether or not to invest? Colmar Brunton SLIDE Base: Investors in each scheme 19 Three out of five people are confident that New Zealand’s financial markets are effectively regulated. This differs for those who have investments compared to those who don’t, people with investments are more confident that those without. Total confident All respondents (n=1,000) 5% Investors (n=885) 5% Non-investors 3% (n=115) Very confident 55% 21% 58% 36% Fairly confident 2% 20% 26% Not very confident 4% Not at all confident 2% 16% 60% 15% 63% 30% 39% Don't know Confidence in regulation increases with income – those with personal and household income $100K are more likely to be confident. Qf. The responsibility for ensuring effective regulation and oversight of New Zealand’s financial services and markets is shared by the FMA and front line regulators, including the NZX, and supervisors (or trustees) of both managed funds and KiwiSaver providers. How confident are you that New Zealand’s financial markets are effectively regulated? Base: All respondents Colmar Brunton SLIDE 20 Confidence in the regulation of the markets is highest amongst people with managed funds/unit trusts, four out of five people are confident. Confidence is lowest among people with bonds they bought themselves or term deposits. Managed funds/unit trusts (n=111) 7% Shares you bought yourself (n=214) 9% Residential property investments (n=145) 8% Other superannuation scheme (n=154) 9% 73% 66% 17% 65% 20% 61% Bonds you bought 4% yourself (n=110) 6% Very confident 21% 57% 20% Confident Not very confident 3% 10% 5% 1% Not at all confident Qf. The responsibility for ensuring effective regulation and oversight of New Zealand’s financial services and markets is shared by the FMA and front line regulators, including the NZX, and supervisors (or trustees) of both managed funds and KiwiSaver providers. How confident are you that New Zealand’s financial markets are effectively regulated? Base: Investors in each scheme 3% 5% 3% 9% 22% 60% 2% 2% 2%5% 19% 59% Term deposits (n=298) 4% KiwiSaver (n=650) 16% 11% 17% Don't know Colmar Brunton SLIDE 21 Appendix: Investor views of New Zealand?s financial markets I FMA Colmar PIN Ihhn A Mi" Investor versus non-investor confidence in New Zealand’s financial markets over time Investors 2016 3% 2015 3% 2014 5% 2013 3% 2016 2015 2014 2013 Non-investors All Confident 2016 2% 1% 2015 2014 4% 2013 1% 53% 57% 25% 61% 6% 4% 41% 23% 48% 41% Fairly confident 4% 12% 27% 26% 46% 11% 25% 54% 36% Not very confident 4% 10% 4% 10% 5% 10% 6% 24% 6% 24% 29% 10% 6% 21% 55% 13% 5% 29% 55% 14% 5% 26% 51% 4% 4% 22% 53% 4% Very confident 25% 8% 7% Not at all confident 56% 60% 59% 54% 59% 65% 61% 58% 43% 47% 12% 16% 52% 42% Don't know Note: The way investors are identified changed in 2016. Previously people were asked if they had any investments (Yes/No/Don’t know). In 2016 people were asked to identify which investments they have from a pre-coded list. Qa. How much confidence do you have in New Zealand’s financial markets? Are you… Base: All respondents (2013 n=1,021, 2014 n=1,015, 2015 n=1,000, 2016 n=1,000); Investors (2013 n=742, 2014 n=749, 2015 n=763, 2016 n=885) Non-investors (2013 n=274, 2014 n=253, 2015 n=237, 2016 n=115) Colmar Brunton SLIDE 23 9% Investors 2016 2015 2014 2013 10% 2016 3% 2015 7% 15% 2014 12% 2013 All 2016 2015 2014 2013 Non-investors Increases and decreases in investor versus non-investor confidence over time 60% 23% 14% 60% 22% 16% 57% 17% 51% 17% 6% 25% 6% 23% 62% 24% 8% 14% 57% 20% 9% 15% 60% 53% 5% 23% 19% 55% 59% 4% 16% 22% 16% 18% 46% Stayed the same 7% 15% 62% Increased 9% 30% Decreased 8% 12% Don't know Note: The way investors are identified changed in 2016. Previously people were asked if they had any investments (Yes/No/Don’t know). In 2016 people were asked to identify which investments they have from a pre-coded list. Qb. Has your level of confidence in New Zealand’s financial markets increased, decreased or stayed the same over the last year? Base: All respondents (2013 n=1,021, 2014 n=1,015, 2015 n=1,000, 2016 n=1,000); Investors (2013 n=742, 2014 n=749, 2015 n=763, 2016 n=885) Non-investors (2013 n=274, 2014 n=253, 2015 n=237, 2016 n=115) Colmar Brunton SLIDE 24 Non-investors Investors All Awareness of FMA among investors and non-investors over time 2016 2015 2014 2013 39% 39% 2016 2015 2014 2013 2016 2015 2014 2013 55% 52% 35% 58% 34% 61% 41% 53% 43% 48% 38% 38% 27% 6% 10% 7% 5% 6% 9% 55% 6% 57% 5% 68% 25% 5% 62% 25% 65% 22% 72% Yes No 12% 10% 6% Don't know Note: The way investors are identified changed in 2016. Previously people were asked if they had any investments (Yes/No/Don’t know). In 2016 people were asked to identify which investments they have from a pre-coded list. Qc. Have you heard of the Financial Markets Authority (FMA)? Base: All respondents (2013 n=1,021, 2014 n=1,015, 2015 n=1,000, 2016 n=1,000); Investors (2013 n=742, 2014 n=749, 2015 n=763, 2016 n=885) Non-investors (2013 n=274, 2014 n=253, 2015 n=237, 2016 n=115) Colmar Brunton SLIDE 25 For further information please contact: Kate Brazier Colmar Brunton, a Millward Brown Company Level 9, Legal House 101 Lambton Quay PO Box 3622 Wellington 6011 Phone (04) 913 3000 Fax (04) 913 3001 www.colmarbrunton.co.nz