Advised Kiwis exhibit better financial behaviours – new research on the value of financial advice

Kiwis who seek out and receive professional financial advice exhibit good financial behaviours more often than unadvised Kiwis. According to Financial Advice New Zealand’s new report, Better Behaviours – research on the value of financial advice, 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.

Building on the research report from 2020, Trust in Advice, which clearly showed that financial advice and advisers are trusted and highly valued, the Better Behaviours report measures the extent of positive financial behaviours demonstrated by advised Kiwis compared to those who are unadvised.

The results are clear: advised Kiwis exhibit better financial behaviours:

More than two thirds of advised New Zealanders say that advice has led to outcomes such as a better understanding of the risks of their financial plan (77%), a better understanding of how to achieve financial goals (74%), and they are better equipped to actually stick to these financial plans (70%).

The vast majority of advised consumers say that their advice relationship is meeting their needs. When asked whether the service provided by their adviser met their needs, a strong majority (91%) said yes to at least some extent.

Advised Kiwis are on track for better future outcomes by being better budgeters. With budgets and plans in place, advised consumers are more confident in making big financial decisions with 94% saying they are very or reasonably confident compared to 83% of the unadvised.

Higher use of KiwiSaver will drive better outcomes. Across the advised and unadvised wage/salary earners, both groups had high rates of KiwiSaver contribution (82% vs 72%).

Advised Kiwis understand the value of reviewing and making changes to their mortgage. 86% of advised Kiwis with a mortgage have reviewed that mortgage in the last year, but only 68% of unadvised have done the same. 90% believe those changes will save them money in the long term.

Higher uptake of insurance across age and income levels protects the advised. Almost twice as many advised Kiwis have Life Insurance (59% compared to 32%) and Health Insurance (55% compared to 28%) than unadvised. Usage of other types of insurance such as Income Protection and Total and Permanent Disability Insurance are more than three times higher amongst advised Kiwis than the unadvised (34% and 10%, 31% and 10%).

Understanding risk and reward drives diversification and ongoing investment reviews. Beyond KiwiSaver and property, advised Kiwis are more likely to have other investments (61% vs 35%), indicating they have a wider diversification of investment assets than the unadvised.

Advised Kiwis plan for and expect a better retirement. Across every age band, advised Kiwis feel they have a better understanding of how much money they will need in retirement (62% vs 40% overall).

The Better Behaviours results clearly illustrate that advised Kiwis are more likely to have a documented budget and financial plan, to review their financial products regularly, to understand risk vs return, and to take-up and cancel insurance products when appropriate. They are also more likely to have positive mortgage behaviours, setting themselves up to save interest and carve years off the life of their mortgages.

Across the board (mortgage advice, investment advice, insurance advice and financial planning), quality financial advice has given Kiwis the tools to think about their finances in a pro-active way, given them more financial confidence and control, and has had a significant effect on their sense of financial wellbeing.