AIA: Insider information
As difficult as the aftermath of the global financial crisis is, it presents an opportunity for New Zealand's financial services providers to help young generations of New Zealanders, as AIA New Zealand's CEO Wayne Besant explains.
Wednesday, June 1st 2011, 9:00AM
by Wayne Besant
New Zealand is at a crossroads. We're grappling with the question of how we can prepare today's children to fare better than the many New Zealanders who have been hurt badly by collapses in their financial investments.
There are numerous challenges, all urgent - but there's one area in particular in which I think the financial services industry can make a useful contribution, and that's the promotion of financial literacy.
I don't believe there's any doubt that insufficient knowledge about many basic principles of finance, investment, risk and debt has cost thousands of New Zealand consumers a great deal of money. Some were unfortunate victims of fraud or incompetence, but others, through unwise decisions or inadequate action, ultimately lost money.
This is a catalyst for change. Through investing in education about personal finance, the whole industry can have a positive influence on the futures of New Zealanders.
Why should insurers not lead the charge? Doing the right thing through corporate or social responsibility does not have to preclude commercial viability. After all, if we get it right, there are manifold benefits for the industry. More New Zealanders will seek out more of our services, there will be a revival in the financial advisory industry, thus creating jobs, and the bottom lines of businesses (SMEs and large companies alike) will be boosted. It can lead to a deepening of the pool of personal wealth and better protection of what people already have, now and in the future.
There are also larger potential economic benefits if more households are safeguarded with income protection and other risk measures - when people have the right policies for their needs, they are less likely to require support from the state when the unexpected occurs.
To my mind, what has happened in Christchurch has highlighted the need for more knowledge. With insurance, cost is just one consideration, and as with many things, cheapest is not always best. New Zealanders should be knowledgeable enough to assess critically what is on offer and recognise good policy when they see it - and also to know exactly what is required to protect what they have.
However, to focus only on a large-scale event is to miss the bigger picture. All over New Zealand, every day, there are smaller catastrophes that, while not news-making, are just as seismic: a small business owner having a major heart attack and having to leave his staff for six months; a sole tradesman, whose family depends on his income, being unable to work while a leg broken in a car accident heals.
While there are protective services such as ACC, the state is not in a position to keep SMEs afloat when the unexpected happens. And with changing demographics - our population is growing, aging and becoming ever more diverse - comes changing education needs.
There is much to be done. We at AIA have begun working with an exceptional not-for-profit organisation, Quantum Sport, which for five years has been running its Crackerjack Kids programme in primary schools - more than 30 in Auckland and now branching into the South Island. More schools are coming on board all the time and we have chosen to sponsor Crackerjack Kids to help fund its expansion and add a new financial literacy component.
With financial advisers and other experts, we will develop a programme for Crackerjack Kids to use with their parents to learn about the basic principles of money - how it is earned, saved, managed and protected. They will learn about credit and debt, the function of interest, what it means to have a budget. It will all be part of the current Crackerjack Kids programme, which involves using physical education to build character in children and equip them with the skills to lead healthy, happy and productive lives.
I would note that many organisations are doing great work in this arena already - the Retirement Commission's website Sorted is one example. To help change lives for the better, and for good, a team effort is called for. Having spent my career in financial services, I know our industry is filled with people who have the intelligence and compassion to make a difference. I believe we can.
AIA sign on as sponsors. Standing: Quantum's Sue Morris (middle) with Ken Youngson and Bruce Pilbrow. Seated: AIA CEO Wayne Besant and Darrin Franks
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