Kiwis doubt their financial knowledge

New Zealanders feel less knowledgeable about financial matters than consumers in other countries and are less likely to understand the way financial planners are paid, a new survey by the Financial Planning Standards Board (FPSB) shows.

Friday, December 11th 2015, 6:00AM

by Susan Edmunds

The survey involved interviews with 20,000 adults around the world.

It showed just one in five New Zealanders were confident of reaching their financial life goals, which placed them about half-way in the rankings of 19 countries.

Kiwi respondents were less confident than those in Brazil, South Africa, Indonesia and the US but more confident than people in Australia and Britain.

But they ranked near the bottom when it came to how knowledgeable they felt about financial matters – only Singapore, South Korea and China ranked themselves more poorly. Just 13% strongly agreed they were knowledgeable about finances.

New Zealanders said the top reasons they would work with an adviser were to save money, because an adviser was a trusted source of advice and because they would offer a long-term plan to follow.

Trustworthiness was the most important consideration for consumers looking for an adviser across all the countries surveyed.

In New Zealand, 75% said it was an important consideration but 71% said they did not know who to trust.

About two-thirds said they could not afford a financial planner and about the same said they wondered if it was worth it.

New Zealanders were less likely than respondents in other countries to understand the financial planning fee structure.

More than half said they did not know whether they would prefer to pay fees or commission.

But few thought they had the know-how or would be able to stick to a financial strategy themselves.

FPSB said there was broad interest among New Zealanders in financial planning services. Help with budgeting and debt management was the most sought-after service, favoured by 48% of respondents, followed by retirement planning at 44%.

The board said advisers could overcome the barriers by demonstrating how they could save consumers money, tailoring long-term financial plans for their clients, explaining financial matters, and making it clear they adhered to a rigorous code of ethics.

“Relevant messaging should focus on both retirement planning and debt management/budgeting, underscoring how help in these areas can set consumers up for success in meeting many of their goals. At the same time, messaging should attack the notion that financial planning is costly, with unreasonable fees. And, building trust starts with reinforcing the code of ethics. Lastly, increase PR/visibility, driving home the notion that those working with a financial professional have better outcomes.”

It found more than a quarter of those working with an adviser strongly felt they were confident of meeting their financial goals, compared to 15% of those who were not.

New Zealanders’ top considerations when making an investment or choosing insurance were performance and return (56%) and past performance (49%). Adviser remuneration was important for 30%.

Tags: financial advisers