By Amanda Morrall
There will undoubtedly be a few hiccups and hurdles for the Government to overcome before the initial public offering of Mighty River Power finally gets underway in spring or early summer, despite the law allowing the sale to go ahead being passed yesterday. For potential investors, the lead up time provides a good opportunity to explore the offering and determine whether getting a piece of SOE pie makes good financial sense.
In place of my usual Take Five, here's a five point plan to help.
1) Register your interest
This is step one for anyone interested in acquiring some Mighty River Power shares while the Government irons out the details. The process of registering won't compel you to go ahead with buying shares, it will simply get you a place in the queue. In the case of the Trade Me IPO, many investors were left on the sidelines because they waited too late. You can register your interest through a broker or through other as yet to be announced venues and parties. To be kept abreast of that and any other information related to the offer, sign up for newsletters and bulletins on the Government's official share offer website. You'll need an IRD number and a dollar figure amount of how many shares you'll want to buy.
2) Get informed
Use this time now to understand whether it makes sense for you personally, within the context of a wider financial plan, to get in on the offer. The official share offer website offers some basic information explaining the process and is a great place to start your research. Many share brokers are issuing reports on the SOE sale offer as well, so you can use them as another source of information. See also interest.co.nz's interview with fund manager Bryan Gaynor which gives an overview.
3) Get advice
Once you understand the issues, how the process works, and what risks are involved, it would pay to get some financial advice to help flesh out the details in terms of whether it meets your financial objectives. As investors will be able to get involved in the share offer process through multiple channels, make sure you are getting quality advice from an expert.
Under the Financial Advisors Act, only Authorised Financial Advisors are able to give you personalised advice. Registered Advisors, for example a bank teller, can only offer "class advice" which is general information relevant to a particular product. As tempting as it might be to rush in, first time investors will likely benefit from overarching financial advice offered through an authorised financial advisor. The initial meeting with an AFA is free and will not compel you to use their services either. For more on who is authorised to give what advice under the new regulatory regime in New Zealand, check out the Financial Markets Authority website here.
For more information on how to find an AFA, and what to look for in that individual, you can visit the Institute of Financial Advisors website.
4) Grow your knowledge
If you're bound and determined to go the DIY route because you're scared of incurring extra costs through using a financial advisor long-term, then make sure you're well equipped to go it alone. In his regard, Craigs Investment Partners is relaunching its women's wealth seminar (free to the public) next month. I doubt they'll turn away the blokes but this one is geared mainly to women who are interested in stepping out beyond managing the household finances to learn more about investment. This is a great way to up your game and also get connected with like minded folks who want to discuss money at a more sophisticated level.
5) Check in with your KiwiSaver
It could be that you'll be getting in on the share offer through your KiwiSaver provider. It will depend on the fund manager and also what fund you are invested in. If you are one of the 250,000 invested in default funds, you could be disappointed. I am continually surprised by the number of people who don't know who their provider is, let alone what kind of fund they are invested in. If you don't know, get registered on the IRD website as your provider will be listed there, along with a break down of your contributions.
If you do know who your provider is, talk to them about their investment philosophy on this one and what you can or can't expect in the way of the SOE sales. It's early days yet so you might not get much out of them but the call won't be wasted if you find out what fund you're in and what it's invested in. You can also get most of that information from our website through our Find your Fund feature.