Kiwis have spoken: Financial advice improves quality of life

Working closely with New Zealanders every day, listening to their dreams, aspirations and challenges, New Zealand financial advisers see first-hand the difference that quality financial advice can make to New Zealanders’ quality of life. And so do their clients.

That’s something we’ve always believed in, but it’s been hard to quantify or prove – until now. Our newly released Trust in Advice research is the independent, consumer-focused evidence our sector needed to raise above the headline-grabbing rhetoric that, more often than not, dominates the conversation.

I’m personally excited about what this consumer survey represents — there’s a lot in it for advisers to be proud of. It wouldn’t have been possible without the financial support of our business partners and the generous grant we received from the PAA Legacy Trust, which allowed us to secure the level of integrity and independence we required with this research. And most importantly, it enabled us to create a comprehensive benchmark index to understand and monitor the impact of financial advice on key wellbeing areas in the years to come.

But without further ado, let me delve deeper into why this research matters for consumers, advisers and the future of New Zealanders’ financial wellbeing.

How we measured confidence in financial advice
Conducted by global market research consultancy CoreData in July 2020, Trust in Advice surveyed 2,000 New Zealanders (1,400 advised consumers and 600 unadvised consumers), with questions covering the four main advice areas of: mortgage, insurance, investment and financial planning.

Respondents were asked about their financial outlook, their personal experience with or perception of financial advice, as well as their financial needs, outcomes and benefits (achieved or unmet). We wanted it to be comprehensive and to deliver a comparison of the tangible and intangible benefits financial advice provides. Here’s what we found.

The vast majority of New Zealanders trust financial advisers
Trust in Advice is a deep dive into the attitudes and perceptions of New Zealand consumers around the financial services ecosystem and its future potential. And consumers’ response has been unequivocal:

• 93.7% of clients rate their adviser as good or very good with regard to trustworthiness.
• 72.2% of people who haven’t used an adviser agree financial advisers are trustworthy.
• 88.3% of advice clients are satisfied or very satisfied with the help they receive.

This sentiment was consistent across the financial landscape, be it mortgage, insurance, investment or financial planning advice.

Advised Kiwis feel better prepared for the future
The timing of the research was also significant. July 2020 was a crucial month for our country, with many Kiwis being faced with unprecedented challenges and uncertainties.

What we found is a testament to the great work financial advisers are doing in such critical times. Based on our survey:

• 50.1% of advised New Zealanders feel at least reasonably prepared for retirement, compared to 26.4% of unadvised New Zealanders.
• 55.3% of advised New Zealanders feel extremely secure for their future, compared to 38.9% of unadvised New Zealanders.
• 69.9% of advised New Zealanders say they have enough money put away for an emergency, compared to 52.4% of unadvised New Zealanders.
• 66.1% of advised New Zealanders are happy with their financial situation, compared to 47.7% of unadvised New Zealanders.

Trust – the foundation of good client outcomes
There’s a key reason why we decided to focus our first-ever independent research on consumer trust in advice. Trust is the foundation of financial advice relationships – it’s the emotional cornerstone that allows quality advice to deliver results.

Clients must trust an adviser with their most personal details, share their goals and aspirations at a deep, personal level. And it’s with this depth of information, made possible by trust, that advisers are able to understand a client’s requirements, goals, dreams and aspirations, and put a plan in place for them to meet these.

And the positive impact of this trust-based relationship extends well beyond financial goals. What surprised me the most about our findings is the wealth of soft benefits financial advice brings. Our research proves that financial wellbeing has a ripple effect throughout consumers’ overall quality of life. It has holistic benefits for Kiwis’ mental health, family life, and confidence in the future.

Introducing the Financial Advice NZ Wellbeing Index©
Being able to increase public confidence in financial advice is another pillar of our work at Financial Advice NZ, alongside the advocacy activities we carry out within legislation and regulation.

The more we boost consumer confidence and trust, the more Kiwis will seek financial advice, and the better their financial health and overall wellbeing will be. But to improve these outcomes, we need to know where we’re at, identify any areas of improvement, and monitor our progress over time.

Our Trust in Advice research allowed us to create a comprehensive benchmark index, the Financial Advice NZ Wellbeing Index©, which ‘quantifies the unquantifiable’. It’s based on a Wellbeing Score of 0 to 100 in four key areas: (1) Control, confidence and capability, (2) Freedom from stress and anxiety, (3) Adaptability for the Future, and (4) Meeting day-to-day requirements.

We’ll be using this index in the years to come, checking in with consumers on a regular basis to see how we’re tracking and how financial advice can stay relevant to the challenges that consumers face.

Click here to download our report. I can’t stress enough how important this work is and will be, and I invite every adviser to have a read of our findings and make use of them. They’re reflective of the outstanding work being done by a sector that often doesn’t get the acknowledgement it deserves.