Fidelity Life report digs into the role of financial advice in New Zealand
Fidelity Life’s ‘Advice for good: Rethinking New Zealand’s relationship with financial advice’ report highlights some worrying findings in New Zealander’s feelings towards their financial situation. The report found that:
28% of kiwis feel their financial situation is out of their control.
47% of kiwis often or always worry about money, and 53% of under-35s saying they always worry about money.
The majority of New Zealanders don’t feel confident making financial decisions until after age 55 – once this age is reached 63% feel confident in their money decisions.
Only 28% of women feel confident about their financial outlook, compared to 44% of men.
While 88% of kiwis agree financial advisers are the most trustworthy source of financial information, only 22% have consulted one – though 36% have sought help from family.
Many New Zealanders don’t know where to get trusted financial advice, with 41% of those under-35 unable to say where to find good advice.
There are different emotions towards money depending on ethnicity, with 30% of Māori and 38% of Middle Eastern, Latin American and African (MELAA) respondents said their financial situation made them feel overwhelmed. Meanwhile, 27% of Pacific Islanders were ashamed, and 58% viewed their financial situation negatively overall. 74% of Pacific Islanders, 59% of Asians and 56% of Māori respondents feel unconfident or unsure making financial decisions.
There was some good news about New Zealanders’ finances too.
88% of New Zealanders feel like they typically have enough to pay the bills.
34% feel financially comfortable, especially older New Zealanders – with 81% of those aged 65+ feeling positive about their financial situation.
Attitudes towards the future seem to be optimistic, with 41% feeling their financial situation will improve in the next 12 months, compared to 28% expecting things to worsen.
Kiwis are generally focusing on short-term horizons, with 89% of people prioritising day to day spending, 65% focusing on saving and 57% concentrating on paying off debt. Only 13% put growing their wealth and 4% put protecting their finances as their highest priority. 34% of those surveyed didn’t have any form of insurance and only 11% had consulted an insurance adviser.
This short-term focus is highlighted again with only 3% of those under 35 mentioning setting themselves up for a comfortable retirement as an aspiration, with home ownership being the number one goal in this age bracket. While retirement seems a long way away when young, only 23% of those in the 55+ age group mentioned a comfortable retirement as one of their aspirations, despite being less than a decade away from receiving the pension. 79% of those surveyed had KiwiSaver, 30% have stocks and shares and 17% have managed funds.
There seems to be a lack of understanding of the benefits financial advice can bring to people at all ages and stages of life. 31% of respondents said they don’t see the relevance of professional advice, and 10% listed being embarrassed or scared or consider their financial position to be private as a barrier to seeking advice. Only 5% of people stated they don’t know how to/who to talk to as a reason. Part of the lack of understanding on the benefits on advice might be due to a lack of familiarity on the role advisers perform, with only 13% being able to describe it with any confidence. Borrowing money was the most common catalyst for seeking out advice (48%) compared to 36% looking to invest to grow wealth. Just 28% have sought advice on products like income protection insurance or mortgage insurance. For those who consulted a professional financial adviser, 81% said getting financial advice provided peace of mind and 70% said it helped them achieve their goals.
Campbell Mitchell, Chief Executive of Fidelity Life said
“…the evidence shows most New Zealanders aren’t seeking financial help, either through regular financial health checks or at key life stages, until they’re nearing retirement – when it may be too late,”
“As a result of seeking amateur advice, we get stuck in the same old ways of doing things and can’t see a way forward – especially when the people we most often turn to for advice, our parents, have experienced different conditions. Baby Boomers who have achieved financial success via the traditional route of buying a home and an investment property may consider themselves financially savvy without taking into account the fact they’ve lived through one of the greatest property booms in our history, and that as the world changes, a different approach might work better today”.
The report was commissioned to explore attitudes towards financial advice and how to overcome the barriers to seeking professional guidance. The report surveyed more than 1,100 New Zealander’s aged 18 – 69, representative across age, gender, ethnicity and income level and consisted of a mix of quantitative and qualitative interviews.
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