FANZ CEO talks about the importance of getting quality financial advice
Financial advisers are the second most trusted source of financial advice for most Kiwis, beaten only by the bank or provider of a particular product, according to the latest research by the Financial Markets Authority (FMA).
The FMA survey found that 52% of New Zealanders trust financial advisers. This backs up a 2020 study commissioned by Financial Advice NZ, which showed that 94% of Kiwis who had used an adviser found them trustworthy while 72% of those who hadn’t used an adviser agreed financial advisers were trustworthy.
Katrina Shanks, Financial Advice NZ chief executive, said both surveys showed consumers across all demographics rate professional advisers very highly for their trustworthiness, good consumer outcomes, service, and results.
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The FMA survey also found social media to be the least trusted of all the advice sources people accessed.
“The good news is social media is highlighted as the least trusted source of financial advice – appropriately so, because little of the social media commentary is backed by research, fact or the competency, knowledge, or skill of a professional financial adviser,” Shanks said. “It is a concern, however, that younger people trust social media ‘advice’ more than older people. That is something the industry needs to focus on as young people have less financial literacy.”
Findings also showed that only a third of people would feel confident in knowing what steps to take if they experienced unfair treatment from a financial services provider. Meanwhile, only 21% of those surveyed feel they are in a secure financial position, and more than half feel they are going backwards or just staying afloat. Data also showed that over one third are not investing or receiving financial advice, and 25% feel nervous about speaking to financial service providers.
“These are concerning statistics, and again it’s all a matter of educating people about getting the right advice,” Shanks said.
The FANZ CEO said its independent research released earlier this year, titled Better Behaviours, showed that “people who obtain good financial advice will do better when it comes to savings and investments.”
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“Regardless of income level, advised Kiwis are more prepared for retirement, feel better about their financial position and are more comfortable making big financial decisions,” Shanks said. “For example, more than two thirds (77%) of advised Kiwis say that advice has led to outcomes such as a better understanding of the risks of their financial plan, a better understanding of how to achieve financial goals (74%), and 70% believe they are better equipped to actually stick to these financial plans. Basically, they perform better across all facets of financial planning. They are better budgeters (94% vs 83% say they are confident making big financial decisions), they have a higher use of KiwiSaver contribution (82% vs 72%), they understand the value of reviewing and making changes to their mortgage (86% vs 68% reviewed in the past year), they have a much higher uptake of all types of insurance, and they are more likely to have investments other than KiwiSaver or property (61% vs 35%).”
Across the board, people who seek quality financial advice have more tools to proactively think about their finances, are more confident, and are more in control, all leading to a significant positive effect on their sense of financial wellbeing, Shanks said.
