CEO Provides Commentary on Finance Sector
6 July 2006:
CEO of Dorchester Pacific Group, Mr. Andrew Walker, provides commentary on the current state and future direction of the finance sector.
As one of only three listed financial solutions businesses in New Zealand, Dorchester Pacific Group is proud of its reputation for consistency, stability and its long standing track record of success.
Andrew Walker, the recently appointed Chief Executive Officer of Dorchester, has today provided commentary on the current state of the finance sector, and its future direction.
“Many of the investors currently being hurt by the recent downfall of businesses within the finance sector are ‘moms and pops’ - a generation of investors which is seeking to supplement its retirement with investment income. As our population continues to age and this investor group grows, we are reminded of our responsibility to ensure that the money loaned to us is well invested, delivers an appropriate return and is jealously guarded. We take the stewardship of these funds very seriously.
“Three key initiatives which we, at Dorchester, believe are of fundamental importance to the ongoing credibility and financial stability of businesses operating in the financial sector are as follows:
1. Remove the smoke and mirrors
We believe transparency is a key ingredient in ensuring investors and shareholders have all the information available to them, to inform themselves of the risks involved in any investment, as well as the financial soundness of the business in which they are investing their funds. As a listed company, Dorchester follows the continuous disclosure requirements of the NZX, providing regular, financially transparent accounts and reports for shareholders and investors.
To further aid in transparency in the marketplace, we are firm believers in a mandatory rating or disclosure-based system to aid investors in judging the financial health of a company and the desirability of an investment. In our opinion, given the lack of traction rating agencies have had in the sector, there may be an opportunity for a company such as NZX to supply services in this area.
2. Investors – be cautious and diligent
The lack of information, and thus transparency, provided by financial institutions is one critical issue the industry faces right now; however, investors also need to ensure that they are confident in the advice provided to them by their financial advisor.
Although most professional financial advisors spend time analysing and considering financial investment opportunities, some are offering less than acceptable analysis and advice, or worse, are recommending investments that provide more financial benefit to the advisor than the investor.
The lack of barriers to the advisory market and limited regulation are also issues that need to be addressed if we are to get serious about the industry.
Not only do investors need to take the time to review investment recommendations themselves, they should also be looking hard at the person providing the advice and the value they are adding to the investment process.
3. Look beyond the rates
Debenture interest rates are an important but inefficient reflection of risk in the New Zealand marketplace. The assessment of acceptable risk offset against return lies in the eyes of the investor but they must look beyond rates and consider other key factors such as track record, transparency, governance, asset class mix and management expertise."