Insurers and advisers are being encouraged to form a “collective response” to declining financial confidence and literacy, as recent figures revealed that financial confidence has dropped by almost 7% since April of last year.
The Financial Services Council (FSC)’s Financial Resilience Index also showed an 8% drop in literacy compared to April 2020, with only 48% of respondents being classed as financially literate.
The study also showed a “worrying trend” of financial issues impacting physical and mental wellbeing, with 56% of respondents reporting issues with mental health, relationships and overall wellbeing as a result of financial pressure.
“There is such a strong link between financial wellbeing and its impact on life, health and wealth, and we’ve seen that very clearly in the data that we’ve gathered over the last year,” FSC CEO Richard Klipin said.
“While key economic indicators suggest that we as a country are moving in the right direction, our research shows that there is more to be done to support the public in building financial knowledge and confidence.”
“A collective response is required to support long term literacy outcomes, and to help us develop financial resilience against future economic events,” he explained.
“We need to turn the language of money into a call to action that improves financial preparedness for New Zealand.”
Klipin said that advisers are particularly well placed to address some of these issues, as many have already made significant efforts to make their conversations with clients ‘more holistic’, and to focus on a broader picture of wellbeing beyond securing an insurance policy, or re-fixing a mortgage.
“All of the research and data that we put out is very well used by our members for things like background briefings, and when thinking about what the big issues are,” Klipin said.
“Certainly, for the advice community, the key message here is that helping people with their financial wellbeing is so important, because it impacts their overall wellbeing.”
“So, when people are coming to see advisers, they may just be wanting to fix their financial lives up, but it’s never just about the money,” he explained.
“It’s always about everything else too - their physical health, their mental health, their relationships and their goals, and I think we’re starting to see advisers very much tap into that. It’s become a much more holistic and complete conversation, and that’s a really good thing.”
