Cut out the middle man for better returns on your investments

7 July 2008

"We are often asked how we are able to offer investors such attractive rates of interest on deposits compared to those being offered by other finance companies", says Clive George, Managing Director of Asset Finance Ltd. "Is it because we take greater risks with our investors' money in the hope of generating bigger and better returns?" The answer is no. "Does it imply we are unable to offer the same levels of protection for their money as other finance companies?" Again, the answer to this question is no.

"We are currently offering our investors an attractive rate of 12.25% p.a. for a 15-month term deposit and we are able to achieve this through investments that make sense, without taking undue risks". While this may sound too good to be true, Clive believes that it is mainly thanks to his company’s small size that they can provide investors with such good deals as these. "You see, unlike some of the larger finance companies, we get all of our funds directly from investors, so we don’t have to pay unnecessary brokerage or commission fees. It is likely that these hidden fees are otherwise 'subtracted' from the actual returns that other companies are generating, resulting in lower advertised interest rates for prospective investors".

"Why should investors allow someone else to benefit from the returns that they so rightly deserve on their hard earned savings?" asks Clive. Because Asset Finance chooses to deal directly with its investors, it is able to pass the savings it generates from not having to pay commission onto its investors via better-than-average interest rates.

Clive observes that the rapid growth of the finance company sector over the last ten years has led to a scramble for funds and this has resulted in some finance companies paying advisers and brokers quite generously for funds that are being placed through them. "Some are reportedly paying brokerage of up to 4%, and it is no secret that many of the finance companies that have recently fallen into receivership were similarly offering brokerage rates well above industry averages, even late on, when their businesses were already in trouble," says Clive.

"This tells us a lot. Clearly, there is an unhealthy tension on the issue of commission rates for placing funds with finance companies. While some finance companies have chosen to be a part of that, Asset Finance has chosen to avoid this area altogether".

It also puts into perspective the extent of the gains that investors have been losing out on to the advisers and brokers who are putting them into their investments, while begging the question of whether these investments are actually being chosen because advisers are putting their interests ahead of those of their investors.

As well as being able to pass on higher rates of interest, Clive believes that dealing with a small company like Asset Finance affords its investors with many additional benefits and security on their investments, which some larger finance companies are unable to offer. "We have a unique relationship with a very dedicated investor base and this itself gives us a distinct advantage over others".

"Simply put, it is easier for us to deal directly with our investors, rather than to go through a broker. Our small scale means that we can achieve this in a highly selective and risk considered manner"

Often, the people taking out loans with Asset Finance are repeat customers and management has learned a lot during previous experiences with them. "Because we choose to work with individuals and smaller companies, we get to know a lot about them and their businesses. Have they paid on time and have they delivered on their promises to us?"

Clive says that more often than not, they are happy to deal with them again. "We know their credit histories and we know that they can be trusted. It helps us to profile our borrowers a lot better – thereby reducing the overall risk in lending to them and ensuring that we can comfortably achieve the interest rates that we have advertised."

It is Clive’s belief that investors with Asset Finance are rewarded with above-average rates of interest because they are choosing to deal with a company of its nature, while its small size and its dedicated customer base allows it to generate its returns through investments that make sense. "Our investors can be sure that their investments with us are a true reflection of the risk/reward that they face and that there is no middle-man taking a cut of the rewards which they so rightly deserve".

Clive George is Managing Director of Asset Finance Limited, which has been lending to New Zealanders for over ten years. During this time, Asset Finance has grown steadily and today has assets over $24m and a 15-strong branch network. Asset Finance strives to fulfil clients' financial needs and goals in a way that recognises individual circumstances by offering simple and flexible services, with speed and excellence.

For more information contact:

Clive George 021 351 341