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Advisers should be coaches: Kneebone

New Zealanders have good levels of financial knowledge but putting it into practice is another matter, says David Kneebone, of the Commission for Financial Literacy and Retirement Income.

Thursday, September 26th 2013, 6:26AM 4 Comments

A recent study by the commission found that while almost half of people said they got most of their advice from their bank, that was closely followed by friends and family. Financial advisers came in third. Just 15% of people said they received information from an adviser.

Kneebone said that needed to change. “Just because your neighbour doesn’t have income protection, doesn’t mean you shouldn’t. Just because a workmate is a particular KiwiSaver fund, it doesn’t mean you should be, too.”

The survey found that more than 80% of respondents knew that a financial adviser had to give them a disclosure statement, and three-quarters said it was important to find out how an adviser was paid.

Kneebone said he was hoping that moves to increase the numbers of AFAs would pay off, particularly to develop KiwiSaver advice to people as their investments grew.

“It’s an issue for that industry that we have fewer than 2000 AFAs. My preference wold be to see a growing pool.”

Kneebone said New Zealanders needed to broaden their sources of financial information and advisers could play an important part in making sure they turned their knowledge into action.

“The challenge is not the knowledge that we’ve got, we know a lot about money but we don’t necessarily act rationally.”

Only a quarter of people have long-term financial goals. “People get it, but doing it is another thing. For a financial adviser, that direct contact is important. One of their roles is to encourage people to walk the talk. You can get all the information you need from a variety of sources … but advisers have a really important role in helping people make the right decisions.”

Kneebone said he was surprised at some of the coaching conversations he heard financial advisers get into. “They come across customers who know the steps they need to take but need a coach to push them along.”

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Comments from our readers

On 27 September 2013 at 9:12 am Paul Carrick said:
Advisers are already in many cases a coach, however this is not necessarily transparent.
The real issue is how do all parties get fairly rewarded/

On 27 September 2013 at 2:53 pm w k said:
@paul carrick - agreed. I assist my clients to do financial profile, budget & cashflow, etc - go through their bank statements, expenditures, etc. This exercise involved two trips and no less than 5hrs of my time, and it includes providing them with their budget and cashflow on a spread sheet. it helps me understand my clients' financial position better and ensure that they are able to afford the insurance I recommend as I am not a fan of clawbacks. it is always easy for anybody (especially those on salary and have no business running cost to worry) to say advisors must or should do this or that, etc., no problem with that, but what if the potential client says "no"? I doubt other professionals will let you go away for free for the equivalent kind of work done.

Btw, advisors can't live on fresh air and sunshine, we are very much like you guys, have a family to feed and mortgage to pay.

one last point, it's good that cflri have all the statistics, but do you have a solution?
On 27 September 2013 at 3:48 pm RFA - insurance said:
I don't think you necessarily need to go through their bank statements, analyse their expenses and provide a cashflow budget - that's what a budgeting service is for - and if you have to do that is that the type of client you want?

Any good sales/adviser is a natural coach/solution provider/listener anyway so not sure what the point of this article is really.

Are we supposed to call our clients every five minutes and tell them not to go the casino? Don't buy Meridan shares? Don't buy that new fridge on hire purchase?
On 27 September 2013 at 5:37 pm traveller said:
The problem is that if you tell a potential client you will charge, say, $100 for your time you will never see or hear from him/her again. And if you do the work, send them a bill and they don't pay, where do you go from there?

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