The global financial crisis was the catalyst for significant change in the regulation and supervision of financial markets.
Just like an earthquake, the crisis shook the very foundations of financial systems and any weaknesses resulted in damage and destruction.
Unfortunately, many investors suffered losses and to reduce the risk of this happening again, the foundations of our financial system have had to be strengthened.
The Financial Markets Authority (FMA) was established last year with the objective of promoting the development of fair, efficient and transparent financial markets in New Zealand.
One of the ways it achieves this objective is by educating and informing New Zealanders on investing. Over the past year the FMA has been building an inventory of resources to help all market participants, including investors. It now offers a comprehensive section on www.fma.govt.nz called Help Me Invest.
It is well worth listening to Sue Brown's video clip, which covers how to be an informed investor. Brown is head of primary regulatory operations at the FMA. Her top three tips for investors are:
1.Understand what you are investing in. How does it work, what are the costs, fees and limitations? Does it match your goals and risk tolerance? What are the risks? Don't invest in something you don't understand.
2.Do some research. You don't need to become an expert, but you do need to know enough to judge whether the investment will meet your needs. Read the product investment statement as it contains the basic information you need to know.
3.Use a financial adviser, and be aware there are different types. An authorised financial adviser (AFA) can advise on most investment products, and a qualifying financial entity adviser (QFE) can advise you on the investment products provided by their company.
Liz Koh is an authorised financial adviser. The advice given here is general and does not constitute specific advice to any person. A free disclosure statement can be obtained by calling 0800 273 847.