Fidelity Life sheds light on financial uncertainty among New Zealanders

Industry leaders highlight need for professional advice

Fidelity Life sheds light on financial uncertainty among New Zealanders

Life & Health

By Roxanne Libatique

A study by Fidelity Life has revealed that a significant number of New Zealanders are grappling with financial insecurity, with 28% feeling they have little control over their financial lives.

This issue is more acute among the younger demographic, with over 50% of individuals under the age of 35 expressing frequent concerns about their financial situation.

Titled “Advice for good: Rethinking New Zealand's relationship with financial advice,” the report further indicated a delay in financial confidence, noting that the majority of New Zealanders do not achieve a sense of financial surety until they reach 55 years of age.

A comparison of financial confidence between genders showed a disparity, with only 28% of women confident in their financial future versus 44% of men.

New Zealanders' attitudes towards financial advice

The research aimed to delve into the nation's attitudes towards financial guidance and the obstacles preventing the pursuit of professional advice.

Fidelity Life chief executive Campbell Mitchell (pictured) highlighted the negative impact of depending on non-professional financial advice from family members, underlining a pervasive financial and emotional distress among New Zealanders, particularly the youth.

“As New Zealand's largest locally-owned life insurer, our mission is to be here for the good of New Zealand, but the evidence shows most New Zealanders aren't seeking financial help, either through regular financial health checks or at key life stages, until they're nearing retirement – when it may be too late,” he said. “We embarked on our own research to understand the role of financial advice in New Zealand, who we're getting our advice from, and how advisers could better support consumers to understand the value of advice to their financial and emotional wellbeing.”

The report uncovered a paradox in the perception of financial advice; while 88% acknowledge financial advisers as a trustworthy source of financial information, only 22% have actually engaged with one.

By contrast, a larger percentage have sought advice from family members. A notable portion of the population, 31%, admitted to not seeking professional advice due to a perceived lack of relevance, and 29% expressed a preference for self-managing their finances.

This self-reliant approach to financial management is questioned by the report, as it contrasts starkly with the reported levels of financial confidence.

Gender gap in financial approach

According to the findings, there exists a noticeable gender gap in financial optimism, and a general sentiment among New Zealanders of not being in control of their financial destiny.

Mitchell criticised the reliance on traditional financial strategies passed down from the Baby Boomer generation, suggesting that the changing global landscape requires a revised approach to financial success.

“As a result of seeking amateur advice, we get stuck in the same old ways of doing things and can't see a way forward – especially when the people we most often turn to for advice, our parents, have experienced different conditions,” he said. “Baby Boomers who have achieved financial success via the traditional route of buying a home and an investment property may consider themselves financially savvy without taking into account the fact they've lived through one of the greatest property booms in our history, and that as the world changes, a different approach might work better today.”

Calls for transforming the perception of financial advice

A Fidelity Life-organised roundtable on Feb. 22 gathered finance industry leaders to discuss the report's findings and implications.

The consensus underscored the potential for developing lasting client relationships by transforming the perception of financial advice, especially among the younger population.

Nick Hakes, chief executive of Financial Advice New Zealand, advocated for an evolution in the advisory process.

“There is an opportunity for financial advisers to evolve their advice process towards an ongoing, coaching-style relationship with clients. From a consumer perspective, often the trigger for seeking out a professional financial adviser is a single life event, such as getting married, buying a house, or having kids. Great advice businesses spend time with their clients constantly clarifying and refining life goals that serve New Zealanders throughout their lives,” he said.

Fidelity Life, which recently bolstered is executive team, intends to initiate collaborations with advisers, consumer advocacy groups, the wider industry, and government bodies to bolster the financial and emotional wellbeing of the New Zealand populace.

The firm is urging the financial advice community to leverage the insights from the report, aiming to foster a cooperative approach to enhancing financial literacy, minimising financial missteps, and alleviating economic anxieties among New Zealanders.

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