Financial advice makes NZers better off
New data shows that New Zealanders with financial advisers are better off and more confident in their financial lives.
Tuesday, August 11th 2020, 5:00AM 1 Comment
Richard Klipin
The Financial Services Council has released Money and You, a survey of 2,000 New Zealanders conducted in March, as part of its work on New Zealanders' relationship with money.
It found that people who had advice received an average 4% better investment returns, and had 3.7% more in their savings.
“To put this 4% into real terms; if a 25-year-old were to take financial advice and saved $2,500 per year, they would be $1.5 million better off at 55 than if they didn’t take advice. That’s a remarkable difference, and a benefit that many more New Zealanders should be receiving,” said FSC chief executive Richard Klipin.
“Money and You also found that New Zealanders who get financial advice on average have KiwiSaver balances over 50% bigger than those who don’t; are more likely to have insurance cover; and have greater peace of mind and confidence in making financial decisions.
“Our current economic climate, and the impact of Covid-19 on the economy and jobs, only underscores the critical need for all of us to seek professional financial advice.”
But over 60% of respondents who said they did not have an adviser did not think they had enough assets or wealth to seek professional advice or thought it was unaffordable.
More than half felt the time was not right to seek professional advice.
“Despite this, Money and You confirms that far too many Kiwis are not taking the steps to get good advice. The research found that under 20% of New Zealanders get financial advice, while 40% don’t see any benefit to getting professional financial advice, and 75% don’t recognise the positive impact that financial stability has on their mental wellbeing,” Klipin said.
“This shows that as an industry we need to do better in addressing the perceptions and barriers that are stopping New Zealanders from getting financial advice and enjoying the significant benefits to their financial and mental wellbeing.
“There’s a common perception that only wealthy people with large investment portfolios need or can afford financial advice. This research shows that’s not the case and the value and benefits of getting advice can be significant for all New Zealanders, no matter the scale of their wealth.
“There’s also a range of financial advice products and services to suit everyone’s financial position and stage in life.”
People with an adviser had life insurance of $189,708 on average, compared to $167,770 for those without. They had more than $51,000 in income protection versus $35,000 for those with no adviser.
The research found that inheriting money, going through a period of financial distress, property transactions or nearing retirement were triggers for seeking advice.
Ryan Bessemer, chief executive of Trustees Executors, which sponsored the research, said that it was an important step in building New Zealanders’ understanding of the importance of getting financial advice.
“Money and You starkly sets out the significant financial benefits for all Kiwis from getting good advice.
“We know from the first part of the Money and You series that many New Zealanders are in a precarious financial situation, so it’s imperative [for] us as an industry to do everything we can to ensure that more Kiwis are benefiting from receiving high quality financial advice.
“We hope that Money and You, in conjunction with other industry initiatives, will help drive increased debate and discussion about the need for financial advice and ensure that more New Zealanders are asking themselves the $1.5 million question.”
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