1 Comment 1 Commentby 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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For most of my years I have made one basic comment which seems to result in a block to the message for many still.
We have all heard how there is a general consensus that many doctors just treat the "symptoms' instead of the 'causes..!'
My suggestion has been to apply the same theory to financial or investment advice.
It all starts back in our first years of life. We are trained to wash our hands when we go to the toilet, and it becomes a virtual habit for the rest of our lives.
Likewise, our financial "habits" are cemented into place in those very same early years of life.
Whoever you are, and wherever you are on this planet, you are the result of the first seven years of your life.
you are told to not do this or not do that instead of being allowed to experiment and find out in a way which sticks. Dont run with your drink or you will spill it, and so on.
Now here is the relevant point.
When I was a kid, we used to have "savings day" every Wednesday at our Otumoetai primary school.
You made sure you had your squirrel savings Post Bank savings book and your 'bob' to put in.
that "habit" helped instil the savings habit for many of us for the rest of our lives.
There is virtually NO need for further "financial education" because it becomes almost as habitual to save as it still is to wash our hands..!
Why then, if school is the recognised place for learning, is saving not an important part of the curriculum???
Then it would be so much easier for investment advisers to get on with adding the important stuff, like explaining that there is no such thing as "inflation."!
The real term is "devaluation" of your money.
If 'inflation' was real, then we could expect to be able to buy 2 houses from the one we bought 10 years prior..?
You start to get my drift now?
Now the advisers can begin to do a much better job of portfolio construction once they realise the battle is with "devaluation" of money, rather than "inflation" of assets.
Piggy (not bank) Muldoon used to openly curse us with a monthly money devaluation of 1% per month if my memory serves me well?
Jump out of the rut is the theme.?
Michael D