It has released its investor capability strategy for 2015 to 2018, in which it says investor capability is a key part of well-functioning financial markets but there are problems in this country.

New Zealanders do not have a good understanding of concepts such as risk versus return and diversification, and while KiwiSaver is exposing a lot more people to financial markets, relatively few of them are seeking professional advice on their investments.

The FMA says it will provide leadership in this area, along with the Commission for Financial Capability and the financial services industry.

Its strategy document says there is poor use of financial advice in New Zealand and low trust in advisers. Advisers might not have the skills needed to address investors’ cultural needs.

It has a range of desired outcomes in mind, including investors accessing information more easily, being better able to understand that information, interacting with the FMA about risks in the market and seeking advice so they can be confidence about investing.

It will aim to achieve its goals this through partnerships designed to share investor messages more widely, more targeted use of relevant resources, developing new tools to address the areas of greatest risk, and ensuring investor outcomes are considered in any regulatory intervention.

The strategy supports the principles behind the Government Statement on Building Financial Capability in New Zealand, which was also released by the Commerce Minister last week.

The FMA’s director of primary markets and investor resources, Simone Robbers, said: “While the FMA is focused at the investment end of the spectrum of financial capability, we will be part of a more co-ordinated approach from all the agencies involved in financial capability.”

The FMA strategy focuses on two key groups of people –  identified through research as "limited" and "moderate" investors – who make up approximately 60-80% of New Zealand’s adult population.

Robbers said those people were likely to have KiwiSaver investments but probably had not sought professional financial advice.

“We aim to develop resources and create effective partnerships with the CFFC, industry and other stakeholders to help these people make more informed judgments and effective decisions about their investments,” she said.