The Financial Services Council (FSC) recently announced the results of its latest research project, Unlocking the Potential of Financial Advice, in which it asked advisers about the impact of the COVID-19 pandemic and the new regulatory regime on their business, as well as their outlook for the future.
CEO Richard Klipin noted that the research came out of a similar study conducted by the FSC on consumers, and looked at the resilience of the financial adviser sector, along with its outlook for the next few years.
“At the end of last year, we had a really rich conversation with New Zealander consumers,” Klipin commented.
“We asked people about their jobs, their security and their outlook on where they were with money. We then went into the field to ask advisers three questions - how they felt about getting ready for the regime change, how COVID changed their business and how they responded, and their plans for the future.”
“The scene here of course is that we’re moving from a sales-led sector into an advice-led sector,” he explained.
“When regulatory change happens, business models change too - and I’m sure advisers have all thought about what kind of model they want to run. The other piece is that there is this massive latent demand for advice, with only 18% of people getting it. The research looks at whether we’d be able to cope with demand, if suddenly we had twice the number of clients coming to us.”
Klipin said another key finding was around the resilience of the economy in general, which seemed to ‘bounce’ rather than take a cliff dive when the borders closed and lockdown was announced last year. With this in mind, he said the outlook for the adviser sector has remained positive - albeit there is still room for it to have a much more significant presence in the lives of consumers.
“This time last year, the economy was flying and spending was high,” Klipin said.
“As we responded to the health crisis, we of course expected resilience to drop - but it didn’t fall of the edge of the cliff. I think that combination of health leadership, political leadership and economic leadership meant that all the concerns we had have not manifested themselves.”
“In terms of the future, the outlook remains positive,” he concluded.
“We ought to be seeing a serious uptick in health and life insurance, and I think the point of taking out more debt and taking on more risk is where the advice conversation becomes really important. But the net message is that the outlook is good, and we as a sector have to put ourselves out there at the right point in time to respond to these issues on a much more regular basis.”