Advice a one-in-five event, study finds

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Less than 20% of New Zealanders have sought the help of a financial adviser in the last year, according to the second ANZ Retirement Commission 'Financial knowledge survey', ranking the industry below banks, family and friends, TV, websites and print publications as trusted sources of financial information.

Monday, June 22nd 2009, 9:23PM 1 Comment

by David Chaplin

However, Diana Crossan, Retirement Commissioner, said the advisory industry shouldn't be too concerned at the results as the definition of financial advice understood by the survey respondents was probably broad, including simple information about mortgages or bank accounts.

"The survey was representative of the whole population too, and many people just can't afford independent financial advice," Crossan said.

She said the entire financial sector has also been tainted by the collapse of finance companies as well as the unraveling global crisis, which has affected the reputation of many major institutions.

Just over half of the survey respondents said their bank was as a source of "financial information or advice" over the last year, well above 'friends and relatives' at 35% and media (including TV, print publications and websites), which were used by between 20-23% of the population.

But the report notes that the level of financial knowledge of respondents contributed to "marked differences" in where New Zealanders sought advice.

"The Low knowledge group is more likely than those in higher knowledge groups to talk to friends and family for financial information and advice," the study says. "In comparison to the lower knowledge groups, the Advanced knowledge group makes greater use of many sources of advice illustrating a strong relationship between financial knowledge and the use of financial advice."

According to the ANZ/Retirement Commission report, those most likely to use a financial adviser were: rural residents (30%); households with income over $100,000 (26%); home-owners (23%), and; tertiary educated.

Those least likely to visit a financial adviser had only a primary or basic secondary education (8%); had household income under $20,000 (8%), and; were renters (10%).

Crossan said financial advisers should find the report useful in understanding why and where New Zealanders go to in order to seek financial advice.

"We're looking at the same information to work out how we can be of help to people," she said.

Crossan also said the Retirement Commission was watching "with interest" the introduction of government-funded 'general advice' organisations in the UK, which will be able to provide simple, generic financial counseling to consumers.

"[The Retirement Commission] has always stopped short of giving personal advice," she said. "But people are always asking for more."

In another surprise finding, since the first survey in 2006, Crossan said New Zealanders appear to have cut back on the amount of insurance cover - including car, home and life - they purchase.

"We're concerned about the big drop in insurance cover. It could be a result of the recession," she said. "It's not clear whether they've thought about canceling their insurance or just stop paying the premiums when the bill comes in... maybe they don't have financial advisers."

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