Banks and general insurers have the highest public confidence rating, while the reputation of finance companies and share brokers has taken a king hit; finance companies were the only ones to be rated below zero on the Index.
The RaboPlus Financial Confidence Index is a nationwide survey that aims to measure public confidence in - and attitudes toward - deposit-taking institutions, financial advisors and insurance providers. The survey findings were presented to representatives of the finance sector including the Reserve Bank, the Ministry of Economic Development, the Securities Commission and the Retirement Commissioner at a launch event in Wellington today.
Mike Heath, General Manager for RaboPlus, says public financial confidence is critical to the recovery and stability of the financial system.
"There are no existing surveys that monitor financial confidence. Yet, for the financial system, public confidence is not just important - it is the bedrock. The RaboPlus Financial Confidence Index provides a basis for tracking shifts in the level of public confidence in the financial sector."
Results show more than 60 per cent of New Zealanders are less confident investing in the financial sector now than six months ago, and 46 per cent say their investments are worth less now than in February.
"New Zealanders are wary and trust and confidence in the financial sector has taken a battering. The survey results show people are more likely to keep their money with the bank in the short term, or invest in managed funds - a result that is likely to have been influenced by the uptake of KiwiSaver," says Mike Heath.
However, the survey also seems to confirm the Reserve Bank Governor's concerns that Kiwis are returning to investing more in the housing market than via other financial channels. While more than a third of New Zealanders say they are less confident investing in housing now than six months ago, one in 10 still plans to purchase property in the short term.
While public confidence in the financial sector is low, 30 per cent of New Zealanders expect their financial circumstances will improve in the coming six months and 50 per cent expect their circumstances will stay the same. Most optimistic about their financial circumstances are people from Christchurch , with 41 per cent expecting an improvement.
Confidence levels for investing in the financial sector are lowest in South Island cities (outside of Christchurch and Dunedin ) and Hamilton , with 70 per cent and 68 per cent respectively feeling less confident now than six months ago.
The findings show that those least financially competent also take the least advice ; those wh o consider themselves more financially competent both take advice and have greater financial confidence. Evidence also shows that financial confidence declines with age, but increases with income and wealth.