Why Kiwis Don’t Receive Financial Advice

Like going to the dentist or getting a will, many New Zealanders know that they should probably get some financial advice.

But research by the Financial Services Council has revealed that only 18 percent of kiwis get it, and there are two main barriers.

Richard Klipin, FSC Executive Director, said that 65.2 percent of respondents thought they did not have enough wealth to justify receiving advice and 62.5 percent believed it was too expensive.

Klipin said it was not true that the advice was only for the rich.

“It’s a doorway to better control your finances. The sooner you start, the better.”

Klipin said people could get advice without having a lot of money, pointing to the phenomenon of stocks, in which thousands of kiwis have jumped to invest in stocks this year.

While platforms like Sharesies, Hatch, and Investnow didn’t offer advice, Klipin said that before people made a decision, they were getting some kind of information.

“I don’t think the only answer is to get financial advice from a financial advisor, there is an absolute purpose for that.”

He said his research was based on the fact that New Zealanders needed to improve with the money, but said the information could come from places like the government-backed website Sorted or the Financial Markets Authority regulator.

Klipin said getting advice from a real person had clear benefits, but it wasn’t the only answer.

He said that in the KiwiSaver space people were informed and educated every time they received their statement from KiwiSaver.

“So it’s sparking interest in driving behavior so people say I’m going to find out more and that’s ongoing.”

But Klipin said that any professional service came at a cost.

“You have to weigh the cost against the benefit and the benefits are not just the financial benefit, but the link between well-being.”

Their research found that those who sought advice saw an average 4 percent increase in return on investment, had approximately 52 percent more in their KiwiSaver account, and saved 3.7 percent more for retirement than those without advice. .

Of those who received advice, nearly 47 percent rated their well-being as high or very high, and their relationships, physical and mental health improved significantly.

Klipin said that collectively the industry had to get a lot smarter.

“Covid in that sense has been almost an opportunity to collaborate with our efforts, at the level of regulator, government, sector on the one hand, but there is also a piece of innovation.”

He said people were designing products and services that different generations of New Zealanders wanted access to.

“There’s a whole fintech industry focused on this, but I can see it in the behaviors that are already changing and the way people are accessing the industry. I think that’s one of the solutions.”

Klipin said the other was the sector needed to ensure it designed products and services and communicated effectively and provided access to people regardless of how much money they had and those with different life cycles.

He said that was the other part of the information that came out of the research – that it was life events that prompted people to seek advice and buying a property was the highest trigger for that, with nearly 24 percent for advice.

“Kiwis are taking on increasing levels of debt, so that 75 percent of respondents indicate that buying a property would not trigger the need for outside advice is a real cause for concern.

Klipin said that in 2019, early home buyers borrowed an average of about $ 400,000.

“These levels of debt, along with the introduction of KiwiSaver and the increasing levels of savings required for retirement, create increasingly complex financial conditions.

“Under these conditions, receiving advice is not just an abstract concept. It can make a real difference to your future financial well-being.”