Beyond wealth – financial planning works
New Zealanders who work with a financial planning professional are better off, a new study shows.
Wednesday, October 11th 2023, 8:05AM 
2 Comments
by Sally Lindsay
Launched for world financial planning day, the study of 1,001 advised and unadvised people shows close to 60% of people who use financial planners are highly satisfied with their wealth, whereas just 30% of those who don’t use financial planners feel the same way.
The study by the financial planning standards board, using an independent research company, examined the financial and non-financial impact of financial planning across quality of life, financial confidence, financial satisfaction and experienced value, while debunking myths surrounding financial planning.
It found about 90% of clients of certified financial planners (CFP) feel financially secure and a similar proportion – 80% – feel tangibly better off. Close to 90% of CFP clients said the value of financial planning outweighs the cost, while 99% said they trust their financial planner to act in their best interests.
Financial advice NZ chief executive Katrina Shanks says her organisation supported the global research as it knows financial planning makes a difference to New Zealanders’ lives and, “we wanted independent research to support this position.”
The research shows New Zealanders have less financial confidence than the global community unless advised by a CFP, in which case their confidence is higher than global results.
The Financial Planning Index in the report scored unadvised New Zealanders’ financial confidence at 57 vs 60 from global participants. In contrast, those who worked with a CFP outperformed the global CFP score: 76 v 71.
Financial planning standards board chief executive officer Dante De Gori says in the existing volatile climate, where unexpected events can send shockwaves through the global economy, the role of financial planning in general, and of CFP professionals in particular, has become even more critical in helping people make financial decisions and achieve long-term goals, while enjoying a better quality of life.
The survey included people aged 25 and over, earning more than $90,000 a year or holding more than $50,000 in investable assets.
“Financial advice unlocks benefits beyond money by improving overall mental health,” the study says. More than 44% of people who work with a CFP professional have reported financial advice positively impacted their mental health and family life. Plus, 77% generally feel they can cope well with any health issues.
Gen Y (aka millennials) is more hands-on, having greater experience with direct investing. One in five of gen Y-ers have traded directly online since 2020, with one in 10 trading before the pandemic and continuing afterwards.
Gen Y-ers have more interest in investing in novel, non-traditional asset classes, the study says. One in 5 gen Y-ers claim to currently have at least some crypto assets and one in three would consider it.
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Comments from our readers
‘Base level’ qualifications require ongoing, deliberate and diligent CPD, hence the Code Standard 9 CPD requirements. This is true for life and health insurance advice too, which is actually relatively complex.
My concerns for FAPs and advisers is that achieving ‘base level’ qualifications can contribute to advisers (and FAPs) developing unjustified levels of confidence in their competence. This is probably consistent with the Dunning Kruger Effect and acts as a handbrake on effective CPD and increases liability risk.
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However, we have come a long way as an industry, with transparency and client goals at the forefront. But, since the introduction of level 5, we appear to be evolving into an industry of average. Advisers levelling off once they have achieved the dizzy heights of level 5 - you know the one, entry level.
Massey had to drop the CLU courses because of a lack of participation and CFP levels aren’t keeping up with international growth levels from what I can see.
My association could probably do more too. I couldn’t tell you the last time we celebrated a new CFP at a meeting. But then again, we no longer have those now sadly.
Enough of my rant. Time for our industry to start walking the talk if we want to be considered as professionals and start acting like professionals.