Cost of living crunch an opportunity for advisers

New Zealand’s cost of living crunch is changing the conversations advisers have with clients, but also opening up new opportunities, nib national manager of group partnerships and strategy, Ian Sargeant, says.

Wednesday, September 20th 2023, 10:50PM

The insurer recently conducted research that found that 95% of households were facing financial stressors. Almost half the parents surveyed said financial uncertainty was the main source of their household’s stress. More than half of families were eating less or differently due to the cost of living. Just under 20% were skipping meals to make ends meet.

Chief executive Rob Hennin said the pressure was coming from all angles and it was becoming harder to prioritise the health and wellbeing of the whole family.

“Times are tough and many Kiwi households are making changes to their lifestyle and the way they raise their families just to get by,” he said.

“For some this has meant making sacrifices so that their kids' health and wellbeing comes before everything else. One thing that comes through loud and clear is that Kiwi parents want the best for their kids and their families, and they are doing the best they can under difficult circumstances.”

Sargeant said a lot of households were having to make difficult decisions about what they prioritised, and that was altering some advisers’ work.

“The role of an adviser is less of a sales and service function and more about helping those families to establish or retain control of their finances,” he said.

“Some advisers will view insurance of various sorts as a means of providing that safety net. It might be an alternative to the larger personal savings or other means that people might have adopted in better times.”

He said conversations about the need for insurance could be harder to have in the current environment.

“That will play out over time with less people being able to afford, having to make those choices. That’s one lens.

“But the other is that when people are faced with that pressure it’s arguably a catalyst to do something about it. Insurance is a bit of a grudge purchase and you could take a lens to this that it’s making it easier for advisers to connect with their clients, to review their current circumstances to make sure the cover they have is still fit for purpose.”

He said he had recently been to a series of seminars run by an adviser group and cost-of-living pressure was a consistent topic of conversation.

“They’re having to think differently around the nature of that engagement. That’s partly where I see this research helping, in some respects it’s nice to have a reference point to reassure clients they are not alone. The challenges they are facing are shared by a large number of other Kiwi households, or parents.”

He said advisers should ask insurers for help for their clients before cutting down their insurance cover due to budget pressure. There were tools to make it more affordable, he said, and insurers would be willing to discuss those.

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