This week’s freeze on Hanover Finance funds has indicated two things to me, New Zealanders don’t understand financial risk, and we put way too much faith in celebrity brands.
Members of my family along with thousands of other investors have found themselves caught out by the massive volatility of New Zealand’s financial services sector. Whether they get their money back down the line is entirely unknown and the feeling of helplessness is difficult for many to deal with.
With our 20/20 hindsight we’re now reflecting on how this could be happening. Despite the Retirement Commission’s tireless work in raising New Zealander’s financial literacy, it appears evident that many people don’t understand the financial risks they’re taking when they get guaranteed 9.95% annual returns.
What “Mum and Dad” investors also missed was the risk behind the face of the company. Richard Long was a newsreader on TV One for decades. After his early retirement he was bought back to the screen as the front man for Hanover Finance. For the last few years he’s leveraged his trusted, worldly, fatherly image to position the Hanover brand with New Zealanders.
It’s probably a moot point, but can you imagine what this situation with Hanover’s done to Richard Long’s personal brand? You’d have to be mad to have your brand associated with him now.
I wonder if Richard understood the risk he was taking there.