Powerful insight into Kiwis’ financial mindsets
To me, it has confirmed once again that what we’re doing is important. Quality advice makes a difference to Kiwis’ lives: we just need more people to experience it. And we can only do so by understanding what consumers are looking for, where, when, and why.
In this spirit, we welcomed the FMA’s recently published Consumer Experience with the Financial Sector survey, which offers powerful insights into the mindset and motivations of New Zealand consumers as they manage money and deal with financial services. What’s also remarkable to me, is how the FMA’s findings reinforce our own independent research reports, Trust in Advice (2020) and Better Behaviours (2022) – both of which can be found at financialadvice.nz.
Here are some key takeaways we can draw from all these surveys combined.
Advisers are highly trusted but barriers remain
In 2020, our Trust in Advice independent survey revealed that 94% of respondents who had worked with a financial adviser rated them as ‘good’ or ‘very good’ with regard to trustworthiness. And even among those who hadn’t received advice, 74% of respondents deemed advisers as trustworthy.
Fast forward to this year, the FMA consumer survey confirms our findings: financial advisers are a highly trusted source of financial advice for most Kiwis, second only to banks and product providers. What’s more, advisers rated highly also on the quality of their service and fair outcomes.
On the flipside, however, only 18% of Kiwis surveyed said they had sought the help of a financial adviser (across all types of advice) in the previous 12 months, compared to 52% who had looked for financial information online, and 32% that had relied on advertising or word-of-mouth from family and friends.
Why is that? A possible answer comes from our 2020 Trust in Advice report: as we found, the barrier to seeking advice is not lack of trust, but rather perceived unaffordability (29.1%), the feeling that personal circumstances don’t justify advice (37.5%), and an overestimation of own abilities (37%). The FMA survey backs this up: according to the report, households with an income of $100k and over were far more likely (65%) to use an insurance adviser than those earning $50k-$99k (18%) or $20k-$49 (11%).
What this tells us is that there’s a disconnect between how advisers and advice itself are perceived. Can we fix it? Yes, by continuing to spell out the benefits as clearly and tangibly as possible. It’s not a change that can happen overnight, but it’s worth all our efforts.
From better behaviours to better futures
One of the key findings in the FMA’s consumer survey is that most Kiwis surveyed (65%) were confident in their ability to make financial decisions. And yet, only one-fifth of respondents said they felt in a secure financial position.
New Zealanders have financial goals (on average, they actively work towards nearly three goals at once), but despite their efforts, most Kiwis are not satisfied with their financial life. Just one in five people surveyed felt they were ‘flying ahead’ or ‘swimming happily’, whereas the remainder said they were either going backwards or just staying afloat.
What many need is strong ‘financial muscles’ to manage their money proactively, and as our 2022 Better Behaviour survey found, that’s exactly what quality advice can provide. There are some very interesting snippets throughout the report, but if I had to summarise it, I’d say it proves unequivocally that Kiwis who received advice tend to perform better across all facets of their financial life. And as a result, they have a better understanding of how to achieve financial goals, more financial confidence and control, and an improved sense of financial well-being.
Quality advice is about the client
As part of the FMA’s consumer survey, New Zealand consumers were asked to describe what they would consider ‘fair treatment’ when dealing with a financial services provider. And their responses align perfectly with the fundamentals of quality advice.
To consumers, fairness means:
Explaining clearly both benefits and risks;
Being transparent and simplifying the small print;
Treating people as valued customers.
Rather than just being transactional, financial advice is a relationship that often spans years, or even decades. From the very first meeting, clients can rest assured that their adviser will always disclose any important information, including any conflicts of interest that they might have, as per their duty of disclosure. What’s more, it’s an adviser’s job to ensure that clients understand the advice being provided, down to the tiniest detail.
The bottom line is this: no matter their walk of life, their income levels, or the vulnerabilities that many of them may be experiencing in this post-COVID reality, Kiwis have a trusted ally to turn to. Our role, as an industry, is to help them see the opportunities getting advice would bring.
Always in your corner
At Financial Advice NZ, we’re here to provide financial advisers with the tools they need to do their job at the highest level possible and build a better financial future for New Zealand.
Visit financialadvice.nz to learn more about our adviser support and resources.
