The rise of the digital investor

Pessimism over rising house prices is helping drive young people towards higher-risk ‘‘microinvesting’’, according to a report from the Financial Services Council (FSC).

‘‘Over the past 18 months we’ve seen the incredible rise of the digital investor, and our research has revealed that 38.2 per cent of adult New Zealanders currently use, or plan to use, micro-investing platforms,’’ said Richard Klipin, chief executive of the Financial Services Council, a lobbying group for insurers and KiwiSaver fund managers. ‘‘That is about 1.5 million Kiwis and reflects a transformational shift in how we are choosing to invest our money.’’

While micro-investing platforms like Sharesies and Hatch allow investors to invest in managed funds, some of them provided by FSC members, they have also made it easy for DIY investors to bypass the local funds industry and invest money into overseas shares from the likes of Tesla and Amazon, as well as overseas managed funds.

But in FSC’sThe Rise of the Digital Investor report, Ryan Bessemer, chief executive officer from Trustees Executors, warned that micro-investing platforms needed regulating to protect the public.

‘‘We should apply the same rigour and protection to these emerging products as we do for KiwiSaver and managed funds. There are gaps in our current regulation of micro-investing platforms and these gaps are a risk consumers should be cognisant of,’’ Bessemer said.

‘‘No-one wants to be a handbrake on improving end user experiences, but I do want to make sure there are appropriate warnings and mechanisms in place.’’

Gus Watson, head of investments at Sharesies, which had over 355,000 account-holders, felt the FSC report was ‘‘trying to put us in the corner of investing for beginners’’.

‘‘Everything that’s on Sharesies is a regulated product, the vast majority are listed products,’’ he said.

Those regulated products included the shares of companies like Tesla, and also managed funds from New Zealand and overseas.

Watson said the average ‘‘wallet size’’ of its account holders was $4000.

The FSC report, which is based on a survey of just over 2000 people, also corralled online cryptocurrency speculation platforms alongside of the likes of Sharesies and Hatch.

‘‘Investing in New Zealand shares, international shares and cryptocurrency is rising in popularity, with a 6 to 7 per cent increase in reported use since March 2020,’’ the report said.

Just under one in 10 people who answered the survey said they had money invested in cryptocurrencies.