Golf buddies win out over advisers

New Zealanders have an unfortunate habit of getting financial advice from within their networks, regardless of how competent the adviser is.

Financial advisory practices have sprung up in provincial towns around "popular" locals with high profiles.

That person is often able to deliver a nice sales pitch for the latest savings product they have been encouraged or incentivized to sell by their parent group or the most aggressive finance company.

The best ones will have declared or rebated the commissions they received. Others may not, instead pushing their clients into a collection of finance companies such as Bridgecorp, Hanover, Capital and Merchant, MFS Pacific, Dominion Finance or Blue Chip because of their high commissions.

Many incompetent ones made a packet but, surprisingly, are still operating. Some may no longer be working, but clients still blame themselves rather than their advisers. Local connections and relationships are hard to break.

A new survey from RaboPlus on public confidence in the financial system shows customers of financial advisers still trust them almost as much as banks, despite the events of the past two years.

Confidence in finance companies from their customers was minus 6 per cent, but that was still better than the minus 30 per cent confidence levels of non-customers.

Even though customers have lost at least $2 billion and have another $4 billion frozen in zombie institutions, they remain more loyal than people who haven't been burned.

Thirty per cent of finance company customers said they had a good relationship with their company, and 47 per cent of those said they would recommend it to friends or family.

Forty-eight per cent said they had a good relationship with their financial advisers and, of those, 62 per cent said they would recommend them. This survey followed the worst two years of investment performance by finance companies and funds in living memory.

New Zealanders don't trust our financial institutions and financial markets as much as we trust people we know and investments we can see, touch, paint and add a deck to.

The survey showed how wide the gap is between trust in housing and trust in the sharemarket. Overall, 64 per cent were either more confident or as confident as they were six months ago about investing in housing.

Sixty-two per cent were less confident about investing in financial institutions and markets.

New Zealand's regulators and policymakers have a challenge to convince investors to trust financial institutions more than they trust their golf buddies.