Author Katrina Shanks, CEO Financial Advice NZ. Article originally published in insurancebusinessmag.com/nz/

OPINION: As we all know, quality advice is not just about cold numbers – it’s about people, their behaviours, and their relationships with money. And with this in mind, I welcomed the new money personality quiz launched by Te Ara Ahunga Ora (Retirement Commission), to help Kiwis identify their own money personality and find ways to improve their financial well-being.

The new online quiz is the result of a study conducted by AUT, which looked for patterns in Kiwis’ traits and behaviours. Researchers identified five money personalities, each with their own attitude to risk, spending habits, and level of confidence in money management: the Enterpriser, the Minimalist, the Socialite, the Contemporary, and the Realist.

This has prompted me to think about how insurance advisers can use this information to ensure that their advice is more attuned to their clients’ specific needs and perspectives. And here are some thoughts I’d like to share with you.

Enterprisers

According to the study, people with the Enterpriser personality (28.6% of respondents) are typically financially confident, future-oriented, and enjoy managing their finances. They tend to view money as a tool for success and often take pride in their financial decision-making. On the other hand, their ambitious approach can sometimes lead to prioritising status and material possessions over long-term value.

So, how can insurance advisers help clients with this money personality? I believe it’s about emphasising the importance of a balanced approach, by aligning their ambitious goals with long-term financial stability. Enterprisers could benefit from a well-structured insurance plan that not only safeguards their current assets, but also fuels their future aspirations. The concept of insurance as a ‘success enabler’ – providing peace of mind and promoting robust financial health – could resonate with them.

Minimalists

As the study highlights, Minimalists value simplicity in life and finances. When it comes to money management, they are generally frugal, confident savers, and avoid – as much as possible – impulsive purchases. However, being risk averse can sometimes prevent them from optimising their financial potential.

When advising Minimalists, I feel it’s essential to respect their cautious approach and desire for simplicity. They might view insurance as a needless complexity. So, by emphasising the cost-benefit aspect, advisers can show Minimalists how insurance premiums are a form of planned spending which protects their hard-earned savings from the unexpected. Also, as Minimalists prefer a no-fuss approach, they may appreciate how their adviser helps them take the stress out of managing their cover.

Socialites

Socialites tend to be joyful risk-takers who are generous and confident in their money handling. The flip side of this confidence is that their high-risk tolerance and spontaneous spending habits can expose them to financial instability.

When advising Socialites, it may be important to match their enthusiasm and positivity. For example, it can be a good idea to focus on demonstrating how insurance acts as a ‘financial safety net’, allowing them to enjoy their preferred lifestyle without worrying about unforeseen financial mishaps. By associating insurance with a sense of freedom and financial peace, advisers could help Socialites view it as an enabler of their generous lifestyle rather than a mundane obligation.

Overall, the goal is to help Socialites understand that being financially protected doesn’t mean compromising their zest for life, but rather enhancing it with peace of mind and financial security.

Contemporaries

Contemporaries might seem overwhelmed by their financial responsibilities. Lacking confidence in money management, they tend to prioritise their present over the future and identify themselves as spenders rather than savers. They are generous even when they can’t afford to be, so building financial resilience is their goal.

When it comes to insurance advice, it’s crucial to instil confidence from the get-go. Contemporaries’ fear of making wrong financial decisions may lead to indecisiveness and avoidance, and advisers need to reassure them that they’re not alone in this journey. In fact, quality advice can help them navigate this space without feeling overwhelmed.

Advisers can also assist Contemporaries in developing their financial knowledge, by regularly sharing tips and insights via Newsletters or social media. Over time, this knowledge can boost their clients’ confidence and pave the way towards better financial resilience.

Realists

Realists share characteristics with each of the other money personalities, but take them to an extreme. The most introverted personality of the group, they’re more risk-averse than Minimalists; value money even more highly than Enterprisers; monitor their finances like Socialites; and take even less joy in thinking about money than Contemporaries. Unlike the latter, however, they’re not likely to make impulsive spending a habit.

Advising Realists on insurance matters presents a unique set of challenges. Their aversion to risk, high valuation of money, and cautious financial behaviour may seem like a solid basis for appreciating the role of insurance. But the introverted nature and avoidance of financial decision-making could make the process more complex.

In this case, empowerment is probably the main focus. Advisers can help instil confidence in their Realist clients, demonstrating the value of their decisions. Also, understanding how different insurance solutions cater to varying levels of risk might resonate with their risk-averse nature.

The bottom line

Whether it’s a tool for success, a protector of savings, a lifestyle enabler, or a source of peace of mind – a personalised approach makes advice not just financially sound, but emotionally appealing too.

Ultimately, the more advisers understand the diverse attitudes and behaviours towards money, the better equipped they are to guide their clients. So, whether you’re meeting a new client or reassessing the needs of existing ones, consider assessing their money personality as well. It could open up a valuable conversation.

Here to help

Here at Financial Advice NZ, our ongoing mission is to empower our members and advocate for the value of quality advice. To learn more about our various initiatives and how they can support you, or if you have any questions, please don’t hesitate to get in touch.