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RaboPlus: How New Zealanders’ financial preferences differ by region
October 17th, 2009
By Mike Heath
In late September we launched the new RaboPlus Financial Confidence Index. The index is designed to primarily capture two things:
· the level of confidence or trust Kiwi’s have in the financial system, and in particular the various industry groups that fit under this classification (banks, finance companies, share brokers etc)
· how people feel about their financial positions looking back to six months ago, and looking forward to six months in the future
We will conduct this research every six months so we can track the changes and see if we can determine what is driving any changes in trust and confidence. You can have a look at the full results from my blog post of 22nd September, and the comments that Interest.co.nz also made.
In this post I wanted to look at the regional differences in terms of what Kiwi’s plan to invest in over the next six months, including investment properties and where there any significant differences.
If you take a look at the chart below you’ll see, by region, the percentage of people who definitely will or probably will invest in Investment property, Fixed Interest Bonds, Shares, Managed Funds (including KiwiSaver), Credit Union or Building Society, Finance Company or in a Bank.
Given that Banks scored the highest (51%) across the whole country, there is no surprise to see them score consistently high in each region. However after that, things are not that consistent.
Here are a few of the key differences:
· Credit Unions or Building Societies are the second most popular option for the South Island Rural region (28%), yet the North Island rural region (7%) mirrors the results of the major cities. Are there more Credit Unions and Building Societies in the South Island? I would definitely expect them to have a lower profile, and therefore customer base, in the larger cities where the banks are dominant, but I’m not sure why they score so much lower in the rural North Island region. Hamilton is an exception (12%) – perhaps this reflects the dominance of the rural sector in their economy.
· Aucklanders, when compared to Wellingtonians, appear to have a more balanced approach to their investment priorities. Proportionately they are planning to invest more right across the board, except for Finance Companies (Auckland 4% and Wellington 5%).
· Perhaps the South Island property market has not suffered the same highs and lows as the likes of the larger cities because 1 in 10 rural South Islanders still see this as an attractive investment option. Interesting though to see that people in Dunedin don’t feel the same with only 3% looking at investment properties in the next six months.
· People from Dunedin, of which I must confess am one, are often characterised as astute and conservative investors. After banks, Managed Funds (including KiwiSaver) is by far their next preference (36%) and Finance Companies (3%) are their least favoured – perhaps the perceptions are true and that they have the balance right … cash for the short term needs and managed funds for retirement?
· And finally Wellingtonian’s are not planning to invest in shares (2%) and in fact it’s their 2nd from bottom preferred choice. Yet Managed Funds is their 2nd most preferred option (23%). Not sure what can be concluded from that.
What’s your view on these regional differences?
Note. Mike Heath is the General Manager of RaboPlus in New Zealand and commissioned the research into Financial Confidence, which has been widely welcomed by the Securities Commission, Commerce Commission and the Retirement Commission. RaboPlus sponsors the Ratesblog. More RaboPlus blog posts from Mike and Diana Clement can be found here.
Tags: Mike Heath, Raboplus, RaboPlus Financial Confidence Index
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October 17th, 2009 at 9:12 am
Why is your PIE account return the same as your normal oncall account? Bit of a waste of time really. Both are 3.6%
I moved my money to TSB on call PIE at 5.2%.
By fixed interest bonds do you mean all bonds (govt and corp)?
What about Gold in your table? (or precious metals). I think you would be surprised how high that would be.
October 17th, 2009 at 10:56 am
It would be interesting to see graphs weighted by intended dollar amounts too, I am assuming these are basically unweighted head counts.
October 17th, 2009 at 1:37 pm
I’m in the process of moving all my money from Raboplus, because their rates are now no better than other banks, I can get better returns from TSB, and new cusomters are treated better than existing customers. I don’t like how Raboplus has these offers for new customers, such as getting $50-$500 of free cash, for setting up a new account but existing customers miss out. Raboplus instead should increase the interest rates, so existing customers also get a good deal.
October 17th, 2009 at 2:04 pm
Hi Rob – agree Raboplus have put a p#ss poor performance in recently in terms of the interest rates they offer, at one time we had substantial deposits with them but not anymore. I complained about their rates and their attitudes to new customers versus old on one of their on-line surveys – needless to say recieved no reply. Their sub 1 year rates have been cr*p for a long time now.
I am afraid in the era of the government guarantee they have slipped back to being just another bank……and not a particularly good one at that.
October 17th, 2009 at 2:12 pm
AGreed Rob & Andy….Poor treatment for being a GOOD customer…strange but true.
An insult really to ones common sense.
Might as well go elsewhere to be wanted…. and get a better deal as well too.
October 17th, 2009 at 2:18 pm
Actually just checked – their 1 year rate is a joke as well, and the longer term rates (2 years plus) are hardly earth shattering. I am not quite sure why anyone would opt for a 2 year rate of 4.45% considering its bleedin obvious the OCR has to go up (probably steeply) next year.
One can only surmise they dont need depositors money………(and I am happy to accommodate them).
October 17th, 2009 at 7:27 pm
Same here. Now less than $1000 at Rabobank. The rest at TSB.
I see in todays Dompost that Kevin Rimmington is retiring. 21 years as CEO and 21 consecutive years of record profit. Pity that claim is not in some of more prominent agricultural companies.
TSB is an absolutley fantastic bank, it is no wonder to me that they keep winning customer service awards. I shifted from BNZ to TSB about 8-9 years ago on recommendation from a friend.
October 17th, 2009 at 8:27 pm
Some of the many great things about TSB – the profits go back into the community, and if your Premier Cheque Account balance is over $5k and you load your TSB visa card up with your own money, you can use that visa card in any ATM overseas to withdraw cash with NO fees! That is brilliant – I use it every time I’m overseas and it has saved me a bundle of cash.
October 17th, 2009 at 9:52 pm
VeeDub, agree about TSB. I have been with them for over 10 years. The only issue I have with them, is their online banking, which is way behind compared to other banks, but then again, that is minor, compared to their great service. I suspect that many people recently have moved across to them.
October 17th, 2009 at 10:06 pm
Hi Andy. I think they take their existing customers for granted, running those types of promotions, and not rewarding their long term customers. I had been with them since they started. They will probably end up losing half a million worth of deposits from me and my extended family, as I recommend them moving to TSB, and TSBs on call pie.
I may resign up to Rabo, if they run another one of those promotions where they give you free cash, but they may make it only apply to new customers that have never been with Rabo before.
October 17th, 2009 at 10:25 pm
Good on you Rob – I hate such gimmicks. Pay a decent rate and treat your existing customers well – its not rocket science. I think I was amongst their first thousand customers when they set up and at various times had substantial monies with them. However they seem to have lost the plot, so good luck to the competition – take the short term offer of 5% (6 months) offered by the likes of ASB and TSB I reckon. They seem to be oblivious to the fact that with the government guarantee in place all banks/depost takers that are covered are equal, so the ’safest bank’ routine is meaningless. The rate offered is what counts – till Oct 2010 – and till end 2011 for those that get the cover extended.
October 18th, 2009 at 9:41 am
Anyway back to ‘RaboPlus Financial Confidence Index’…
I would like to know the $$$ amounts and not just the ‘number of people’. Might help explain the difference with shares and investments properties. This is where I suspect the ‘real’ money is going considering most New Zealanders are broke, and the few left (who are not the financially naive) will be using this ‘window of opportunity’ to reposition themselves. This survey give no indication.
October 18th, 2009 at 9:46 am
Back to what most of the comments are about….
We have withdrawn over $1,000,000 from Rabo over the last 18 months because of poor returns. Will have a look at TSB but ASB has been great with excellent online banking and returns
October 18th, 2009 at 9:54 am
We have withdrawn over $1,000,000 from Rabo over the last 18 months because of poor returns.
chrumsack jon mukabi victry – WOW !
October 18th, 2009 at 10:18 am
I had over a million at Rabo and now only have a couple of bucks sitting in the master account. Will keep it open in case they change their minds and increase their rates to a more market competitive level. At present their rates are crap, their customer (existing) service is rubbish and even their products are stupid.
Why have a PIE account when the rate is exactly the same (for a 38% taxpayer) as it is in their non PIE oncall account? Dam stupid.
I have commented on their blog at raboplus a few times but only get “politician type” non answers from them. The submit comment screen on their blog is ridiculous. The font is about 1/3 the size of the font at interest.co.
They do not offer PIE term deposits.
By the way Kiwibank now have a PIE term dep at 5.76% for 12 months.
I don’t think Rabo are long for NZ.
Anyone have a good word to say about them?
I bet they wished they didn’t post here. Lots of good negative publicity (which they dam well deserve). Happy to support Kiwibank and TSB but only while their rates are the best.
October 18th, 2009 at 10:30 am
I have a Rabo account for the farm. They are very tough on farmers who miss a few interest payments etc. If you are a farmer having a tough time then any of the Aust banks are better. Many friends have been forced to sell by Rabo, way too early ,they pride themselves on prudent lending and then go and lend 75 mil to Crafars. I am looking at shifting my deposits away from Rabo too,the rates are low and I think they will exit NZ in the medium term.
October 18th, 2009 at 10:30 am
LIKEWISE…..Here here……Seems we are not alone.. collectively……in our thinking.
Never shaft a good customer.
Likewise MR KEY…. NEVER SHAFT those who you OWE and PAY your PIG-FOOD.
October 18th, 2009 at 10:36 am
I see PSIS are offering 5% now for 5 months (govt backed). Useful.
By the middle of 2010 its likely we will be being offered 5.5% on such shorter terms I reckon – and no doubt Rabo will still be lagging.
Rabo’s plan seems to have been – lure in customers in the year or so after start up with good rates and then once they had established a sizeable base screw them with cr*p rates and rely on inertia not to lose customers. Oh of course use a pretty girl for advertising, that was crucial. And the safest bank routine (rendered irrelevant by the govt. protection scheme).
Even my local credit union (govt backed) kicks the Rabo on call into touch – Credit Union South gives 4% on call………
October 18th, 2009 at 11:20 am
“I see PSIS are offering 5% now for 5 months (govt backed). Useful.”
TSB PIE on call at 5.21% no brainer. Money not tied in and a better rate and bank.
Rabo were stupid. They marketed themselves as “your significant other bank”. At the time they had good rates so they became my “other bank”. They only got my “other money”. Now their rates are hopeless my other money goes to “another” better bank.
They should have at least tried to become their customers main bank. They marketed to be your “other” bank purely on safety and rate. Now that they lose on both they will lose their customers.
October 18th, 2009 at 11:24 am
Hey Mike Heath. I bet you regret posting here! Not like your Rabo blog where you ignor the complaints and criticisms.
Harden up and answer some of these critics here!
There are a lot of people watching this site so here is your chance….
October 18th, 2009 at 11:50 am
And a lot have a lot of MONEY…it seems.
I think we should start a REVERSE site…see who wants to BORROW …all… OUR MONEY at rates preferential to all of US….not the BANKS…
Maybe MR KEYS will give us a good RATE …..
MAYBE ….MR BOLLARDS will take NOTE….
MAYBE I SHOULD HOLD MY BREATH.
My money is going off shore shortly….I have had enough of these idiots.
The risk here is way too great.
October 18th, 2009 at 1:31 pm
the risk everywhere is too great:)
Good idea re pooling our money to lend out. But wouldn’t that just make us another finance company!!!!
October 18th, 2009 at 1:47 pm
No not really – say 10 folk pool $300,000 each that gives $3m – offer that in $1m chunks to the govt protected banks etc at whatever agreed timescale. I bet you’d get at least 25 basis points above what was being offered for smaller amounts.
October 18th, 2009 at 4:00 pm
Sounds good to me. Are you interested Andy?
I have $300k on call at the moment to start the pool. Do we have nine other people here that want to do the same thing?
Then we can go to the banks….
October 18th, 2009 at 4:15 pm
LOL, hang on – but yes always interested in such things.
Tax would be an issue. If the cash was pooled – the bank would need a single IRD number per pooled account presumably? Difficult then for individuals tax purposes.
Or could it work along the lines of – you go to a bank and say we can bring you 10 investors each with $300,000 (and they all keep their seperate accounts) if you offer them 25 points above your standard rate on a given term (for example)? Sort of a loose co-operative.
I recall Wally mentioning extracting a better rate with a substantially bigger sum – are you around Wally?
October 18th, 2009 at 9:45 pm
Perhaps Rabo will listen to the feedback on here and improve the rates. The thing is, is that they are relying their existing customers not changing, because it is too much hassle. However it does sound like they are losing quite a lot in deposits, based on feedback here. I wonder what they would do if everyone decided to move to another bank, they would probably have to call in a lot of those loans they have given to our rural sector.
To the topic of the blog, I think these ‘confidence’ surveys, are a waste of time, espeically these ones that are done by banks. Surely there is a conflict of interest, in a bank performing such a survey? In case I am missing something, it doesn’t even say how many people have been surveyed, and across what social demographics. Perhaps it is a survey done by Rabobak customers, which wouldn’t be a balanced survey. Too me, it appears more of an advert for the bank.
October 19th, 2009 at 8:35 am
Rabo is just online so it is easy to change. Push of a button.
I would say that one person would neg the rate (ie 6 percent for 12months int quarterly) and then we would all deposit together but separately.
October 19th, 2009 at 1:26 pm
I agree about everything you all are saying about their rates..they aren’t the best in the market like they used to be. Their TD’s and PIE are cr*p but their on-call is the best..that is where I have my money.
I have to back Raboplus on their blog though. They post all product ratings (positive and negative..though it is mostly about the rates atm and therefore negative right now) and they post all blog comments and answer to those that ask questions directly to them.
As for the gov gaurantee..I’d much rather be in a place that isn’t going to fall over than go to a place that could and have to cue up with thousands to get my money from the goverment!
October 19th, 2009 at 1:27 pm
Hey Mike,
give Mary a pay rise and a pat on the back…..or is that you in drag?
And they do not have the best on call rates. Far from it. TSb pay over 4% to a taxpayer on lowest tax rate and over 5% equivalent to taxpayer on 38% rate
October 19th, 2009 at 3:37 pm
Hey Mary, Government guarantee is a guarantee. I don’t believe Rabo is any safer, than any other proper bank. In the event a bank does fail, there is no ‘queuing’ up to get your money back, it will be paid back. I am only going to put my money in an institution that continues with the guarrantee. It will be interesting to see if all the banks continue to use it. I personally think it should be permanent, like it is in other countries.
Ditto, TSB have better on call rates, than Rabo. However Rabos rates should be higher, based on the fact that they don’t have the high overheads of TSB, which actually has real branches and real people answering the phone.
October 19th, 2009 at 4:27 pm
Hi
I can assure you that I review all comments posted on our site – blog http://www.raboplus.co.nz/blog/default.aspx or ratings http://www.raboplus.co.nz/term-deposits/rating_overview.aspx.
The only comments we don’t post are the ones that contain personal/sensitive information or offensive language (we take these offline and communicate directly with the authors).
However I don’t always respond to all comments about our rates being lower than elsewhere, after all they are statements of fact and so as to avoid simply cutting and pasting and repeating earlier comments I’m not sure what else you’d like to hear/see.
If you take a look at my blog post last year http://www.raboplus.co.nz/blog/post/credit-crunch-retail-deposits-150508.aspx?type=tcm36-54225 I gave you my read on what was happening in the term deposit market. Whilst the cost of wholesale funds has come back, banks are still focussed on NZ retail deposits, in part in response to comments from the RBNZ.
Many people, for quite some time, have commented that our rates are not competitive – whilst our On Call rate has been consistently the highest in the market since Feb 2006 when we launched RaboPlus and our 3-5 year TDs have also been very competitive of late, I have never denied that you can get better rates elsewhere for the 3m-2y TDs.
For those of you who have suggested enhancements to the RaboPlus Financial Confidence Index, thank you – I’ll take them on board for when we run the survey again early 2010 (FYI the survey was conducted by TNSConversa with a sample of 1,000 people – not RaboPlus customers).
I very much value and enjoy the open dialogue that blogs/ratings/reviews offer, so please feel free to have that conversation either here on the Interest.co.nz blog or on our site.
Regards
Mike Heath
GENERAL MANAGER, RABOPLUS
October 19th, 2009 at 4:37 pm
@Mike Heath:
“…RaboPlus and our 3-5 year TDs have also been very competitive of late,…”
Really? I don’t check every day, but seems like yours are the WORST on the comparison chart today? eg: 5yrs you @ 6.15% pa and most everyone else 6.5% pa.
October 19th, 2009 at 5:01 pm
@Harriet, you’ve just reminded me of a point I had also meant to make earlier.
We have nothing to hide when it comes to the rates we offer. In fact we actively show our rates alongside those of our competitors on our site.
Each week, as supplied by Interest.co.nz, we publish tables and charts which show our rates and the corresponding rates from our competitors (you can go back to early 2006 to see how our rates have compared to those of the other big banks).
Take a look here – http://www.raboplus.co.nz/term-deposits/term-deposit-interest-rates/default.aspx
Regards
Mike Heath
GENERAL MANAGER, RABOPLUS
October 19th, 2009 at 5:08 pm
And having waded through your website ,Mike, I find that, YES!, your 5 year rate IS lower than anyone elses. So the point you are making is …?
October 19th, 2009 at 7:06 pm
Harriet,
this is what Mike does;)
Mike says he answers all questions on his blog but really he just waffles on like a politician/salesman and you are left no better off.
Rabo “were” a good bank to invest with. It was a hassle to set up the accounts and you have to use smart password machines to get at your money, but when they started they did offer better rates.
Rate and security of your principal is all an investor really cares about. The rest is just nice twaffle.
At the moment Rabo has plenty of twaffle but nothing else.
Unless they change their interest rates to something more competitive they will lose the real money hand over fist. The little ladies with a thousand or so may stay (I doubt that they ever invested there though being an online bank) but Rabo should stop using security as a reason to invest with them until the Govt guarantee period ends.
When Rabo did offer competitive rates I tried to talk friends and family in to using them. Funny thing was no one I spoke to had ever heard of Rabo (yes I know Rabo is second to safest bank in world etc ) and older family members said they would never bank with them as there was no branch! I told them that the Aussie banks don’t own their buildings and it costs more to have a branch etc but still there was resistance. My younger brother even told me “They are in a building with computers and a some phones and that is all! No branch! They could just leave tomorrow!” That was the feedback I got when they had a good rate. They must be pushing it up hill now!
By the way I invested in the PIE bond. Not a bad rate and I can sell at a profit on the secondary market now if I wanted to. Works out over 10% pa returns.
October 24th, 2009 at 7:33 pm
I am a bit late to this conversation, but I think you are all missing a big piece of the story. Rabo is a global bank and raises retail funds globally. Global interest rates are MUCH lower than here. e.g right now TD Canada Trust’s best term deposit rate up to a year for $100K and up is 0.65%; in the UK Lloyds TSB offers 2-3%; Citibank offers 0.65%-1.3%. I don’t suppose Rabo wants Mike to pay 4% to NZ depositors when others will lend to them for 1-2%. Kiwibank and TSB have no choice about paying NZ rates, and the Australian banks get much of their money from the wholesale markets, which are still expensive.
So: Rabo can get term deposits more cheaply overseas, and you and I can get better rates from institutions that are trapped in Australasia. So we’re all happy, right? – and I don’t understand the nasty tone of the complaints. The only guy who is really suffering is Mike Heath, who can’t offer the rates he needs to in order to keep us happy. For the next year or so, he just has to smile and suck it up. I expect the local chief of HSBC and other global players are finding life equally uncomfortable in NZ at present. (On the other hand, their global parents must be smiling at the loan rates their NZ subsidiaries can still charge. Now if only there were more credit-worthy borrowers….)
October 27th, 2009 at 12:41 pm
Good comments Paul, I am amazed at how much time people have on their hands. Must be hard for you Mike.