25 August 2008

I certainly ain’t feeling blue

From Phil's Blog
Call me pink, I certainly ain’t feeling blueSeptember 24th, 2008

Many of you will be surprised (or have some other emotion) that the Financial Advisers Bill has been passed before the election. Commerce Minister Lianne Dalziel made it clear that was her intention and many doubted her.

I didn’t. I reckon there will be plenty of other political surprises in the next month and a half – the biggest one of course will be a Labour victory. I haven’t written them off and, yes I’m a bit of a lone wolf in this industry of ours, suggesting that Helen Clark could well be leading the next government.

One of the contrary things is that the finance industry tends to be reasonably conservative (no social concscience I hear in the background!) Quite a few people are highly active within National, others were unlikely enough to have their names included in Nicky Hagar’s book The Hollow Men. But the reality the Clark-led governments have been great for us. Why would you get rid of them?

I have no idea what National stands for or what it would do to help savings (other than its panacea for everything – tax cuts) and absolutely not a clue what it thinks of KiwiSaver.
Labour on the other hand has a long list of achievements starting with the NZ Super Fund, moving through to providing certainty around the state pension (for the record it is NZ Super NOT National Super), KiwiSaver, tax changes including the PIE regime (which is massive for us) and now more regulation around the advisory sector.

You could argue few industries have had more support and encouragement over the past nine year than savings.

I would have thought with these sorts of achievements the savings industry should be cheering on Labour.It’s hard to get excited about what National has to offer, as we just don’t know. There is talk that it would cut back the employer contribution for KiwiSaver. That wouldn’t win it too many friends and from my perspective as an employer I’m happy helping my team.

Feel free to comment!

18 August 2008

Fiscal Crisis

You have probably heard about the world’s financial crisis which has unveiled over the last 24 hours - but investment news can be confusing to understand at the best of times. Do you know what is going on?

The Situation

The New York Stock Market saw the worst sell-off day in years yesterday, as Lehman Brothers, the fourth largest Wall Street investment bank, went under - filing for bankruptcy. Another financial management company, Merrill Lynch, then agreed to a takeover by the Bank of America, which sparked a global sell-off the stock market.

The firms plunged because of their enormous exposure to the US subprime mortgage market. This collapse is the cause for the global credit crunch, which will have worldwide effects. Economists are predicting more firms to fall into the same situation (insurance giant AIG has just been rescued by the US Government with an $85 billion emergency loan), particularly for companies with debt linked to mortgages.

How does this affect you?

While The Reserve Bank says NZ does not have much direct exposure to Lehman Brothers, AIG has 45,000 NZ customers, including some of our biggest companies. New Zealand banks are also largely owned by Australian parents, many of whom have reported direct exposure to the affected US firms.

The impact of the world financial crisis may mean New Zealand’s expected economy recovery may slow down or even not happen at all over the next year. The fall of the US firms will flow through to NZ shares and the NZ dollar, and may have significant effects on New Zealand savings schemes such as pensions, Kiwisaver and the New Zealand Superannuation Fund. Savings rates may also plunge, and mortgage rates could stay higher for longer.

Keep up to date with the financial crisis by keeping tabs on the business news headlines on