Rob Everett, FMA chief executive
(Notes may differ slightly from speech as delivered)
We’ve taken a close look at the attitudes and behaviours of the people using online investing platforms, to this to help inform where we should focus our attention on helping investors – and on guiding those who serve them.
There’s no question that these retail platforms have been a game-changer, making investing accessible to thousands of New Zealanders.
Our research shows that 80 per cent of investors now have a more favourable view of investing since using these platforms.
Furthermore, we’re encouraged to see that most investors have good intentions around how they should invest, with around 80 per cent taking a “buy and hold” approach.
“Day trading” is in the minority with just two per cent of investors buying and selling multiple times a week.
But, while they have good intentions, FOMO is still a driver. Don’t we all know it!? Almost one-third of investors said they’d jumped into an investment in the last two years because they didn’t want to miss out. And here’s the guy who spent his first bonus on internet stocks – about 3 weeks before the top of the internet boom.
We’re dealing with a different world than perhaps the regulations were written for - investing has become “social”. These new investors are more likely to be influenced by online forums, commentary from people they have never met and an emotional connection with a company’s brand than financial reports and disclosures.
In our workshops, people were clearly buzzed to meet other newbie investors and to talk with them about where and how to invest……more than a chance to engage with the Financial Markets Authority. Who would have thought??
It’s easy however for the establishment to demonise these new investors – we hear about – and worry about – gamification and gateways to gambling - but we are somewhat reassured to find that most investors have a plan and intend to stick with it over the next 12 months.
That said, on top of those already in crypto-assets, a further six per cent of investors have said they intend to invest there in the next 12 months – that would mean 34 per cent of all investors have some exposure to crypto. That’s a sizeable proportion.
A further four per cent of investors are considering investing in derivatives. While small in numbers, the risk in derivatives is considerable so we’ll be keeping an eye on this.
There’s a lot more in this report so I encourage you to pick up a copy on your way out.
From the FMA’s viewpoint, we will use the findings to help us prioritise activities and messages to reach this cohort of new investors.
I’m heartened to see such enthusiasm from new investors. Many of them have had a great run and seen their investments grow on the back of a big market rally. They’re off to a flying start.
The big challenge for us – and them – will be to ensure they are well equipped to make good decisions when markets head the other way.
We talk about “staying the course” in investing. But actually, what we really want, is for these new investors to stay the course with investing in general.
That’s something we can all work on together.
This article is based on a speech given by Rob Everett to The Great FMA Debate held in Auckland on August 4, 2021.
Recording of the event:
Read more about the Retail investor platforms research.