Tēnā koutou, tēnā koutou, tēnā koutou katoa
Thank you for the warm introduction – it’s wonderful to be back with you for another Financial Advice New Zealand conference.
Being able to attend sessions like this is an incredibly valuable opportunity to connect with the profession and hear what’s on your mind.
I can see some familiar faces in the room, which highlights the value of this conference to you all, whether it’s from the presentations, masterclasses or just the networking opportunities. Congratulations to Nick Hakes and his team for putting together a fantastic event.
Many of you will remember that when I was with you last year, I talked about work we were doing to look into access to financial advice. We launched the review at last year’s event in the city I grew up in, Christchurch. We did that because we want to ensure we’re playing our part in helping to deliver greater access to quality advice, now that we’re just over three years into the full licensing regime. The review focused on four areas:
- Consumer preferences and demographics,
- Industry business models and market dynamics,
- Digital advice and innovation, and
- Ease of provision of financial advice.
Improving access to financial advice for New Zealanders is really important to me. Yes, it aligns with our statutory mandate, yes it enables us to focus on the outcomes we want to achieve, but at its heart is ensuring everyday Kiwis get the help and the support they need for their financial wellbeing.
So, I’m delighted to announce we have finished our review. We will be publishing our reports today, and I want to talk you through what we found, including some of the opportunities and challenges we identified. All of us will have a role in the months ahead in terms of what we can do to get more people receiving the help and support they need.
I also want to take a moment to thank Michael Hewes, Romil Ghelani and Ross Skilton in the financial advice team and to everyone else at FMA who contributed to this work – it was a real team effort. The team sat down to do interviews with 80 stakeholders, including advisers, as well as speaking to financial institutions, education providers, fintechs, and professional bodies like FANZ. So many of you were generous with your time; thank you again.
Access to Advice consumer report findings
We reviewed financial advice accessibility from two perspectives:
Firstly, by bringing forward the voices of consumers, and then delving into what the sector was telling us. We asked research company IPSOS to speak to a thousand consumers about financial advice on our behalf. Broadly the topics focused on consumers’ thinking on financial advice, who they go to and any perceived barriers.
Some of the results may surprise you, while others won’t. The team and I will be staying around the conference after this more formal presentation and we would really value talking to you about the results.
The research showed 28% of New Zealanders aged 18 plus have accessed financial advice in the past 12 months. That’s just under 1 in 3. To my mind, that shows how much potential there is for more consumers to get financial advice.
The top three categories where respondents used financial advisers were at number one, Kiwisaver (23%), number two, mortgage brokers (22%) and then number three, banking (21%).
While consumers rated themselves just above 3.5 out of 5 in understanding what financial advisers do, it did also point to potential gaps in the public’s general understanding of what licensed and regulated financial advice services actually are. It was important that the IPSOS survey looked at the consumers view of what financial advice is.
Many consumers see financial advisers play a role in providing budgeting advice. Many thought you provide tax advice. Others see you as having a role in providing advice on investing directly in cryptocurrencies. On the other hand, only one in three thought financial advisers could help with getting advice on life insurance, and one in four on health insurance.
We hear from you that younger people are harder to engage, but more people in the younger demographic said they’d used a financial adviser in the last year than people aged over 60.
More than half of the people surveyed recognised that financial advisers can help with retirement planning. This is where we continue to see real opportunity for the sector. There are currently just over 100,000 people over the age of 65 in KiwiSaver. There are another 200,000 people due to be able to access their KiwiSaver in the next few years.
The profession can play a key part in helping Kiwis get the advice they need to make their retirement savings last.
Barriers to advice
So that’s a bit of an overview from what we’ve heard from consumers – but what did we get from you, the profession.
Financial literacy
Well, we heard concerns about financial literacy being a barrier to accessing financial advice. I’ve touched on the lack of understanding about what advisers can offer. From you, we heard that many people don’t understand the value of products like insurance or KiwiSaver.
We heard from you that many people don’t have capacity to think about these products because of day-to-day financial concerns. One fund provider the team spoke to told us that just getting people to make their first steps on their investment journey was often the hardest part of the process.
Perceptions around Affordability
Perceptions around affordability are another barrier highlighted by both consumers and advisers. Just under a third of consumers said affordability was a barrier in seeking advice. Only one in five consumers were comfortable paying a higher upfront fee for more comprehensive, detailed advice.
We also uncovered challenges with advice firms remaining accessible over the lifecycle of the product, such as for insurances, mortgages, or KiwiSaver. Some financial advisers told us that the commercial realities of running an advice business can, at times, mean they prioritise new business over servicing existing clients with regular reviews. This means it’s not commercially viable for advisers to assist some groups with comprehensive financial planning.
As a result, many Kiwis use family and friends, and online resources to make decisions about their financial wellbeing.
We think there’s a case for looking at how the sector and regulators can work together to ensure New Zealanders understand advice is available, accessible and affordable.
The role of regulation
The role of regulation came up, understandably. There’s been a lot of change in the last few years. More than half of consumers based their level of trust in financial advisers on whether they were licensed or officially regulated. Our view is the move to a licensing regime has driven increased trust in the sector.
But one of the things we took from our work, is that too many financial advice providers seem uncertain about how to tailor the nature and scope of their advice. Nature and scope is really about how you give your financial advice, what you consider and don’t consider. The new financial advice regime is a principles-based regime, which means you are able to deliver advice in ways that are rightsized for different consumers, circumstances, and channels.
But one of the challenges with this appears to be that for many firms, faced with uncertainty about how to tailor the nature or scope of financial advice, the default is to be cautious and conservative, to use the 6 step advice process each and every time. Our concern here is that this is making advice less accessible, not more accessible.
One of the messages I want you to take from today, is that we encourage you to innovate and think differently, to introduce new advice journeys that tap into consumer groups who are currently underserved. We want more people to get access to financial advice, to use your services.
An approach where you are restricting access because you’re worried about the FMA – that is not the outcome we are seeking in any way, shape or form. If you think you are having to do this, pick up the phone, talk to the team – we have an FMA stand at the conference, or chat with them at one of the many sector engagement sessions they run.
It boils down to this – we want more people to use financial advice, as we think it helps Kiwis get ahead.
We want all New Zealanders to get access to financial advice.
Understanding Māori consumer experiences
In our recently published Matangirua research, which explored Māori consumer experiences with savings and investments, and the fieldwork for this review, we identified trends of Māori consumers lacking trust and facing barriers to accessing financial advice.
Māori consumers say cultural concepts like manaakitanga or care and respect are important to them and their decision-making, but they don’t see them as being well understood across the financial services sector. Concerns were raised about how much the financial services sector more broadly understands the realities for whānau, hapū, iwi, and hapori, particularly around collectively owned assets.
The research also revealed however, that when financial advice providers adapt practices to address these barriers and seek to foster trust, there was improved access for Māori consumers.
We believe this is an opportunity for the financial advice sector.
Technology and AI
Finally, the report also looks at technology and the rise of AI.
We saw strong provider interest in using technology (including AI) to improve access to financial advice, especially in investment advice.
But advisers also told us they want and need the appropriate support, from a training and compliance perspective.
This ties back to my earlier point where advisers told us they were uncertain about navigating a principles-based regime, and how to handle new and innovative ways to give financial advice.
When we’ve engaged with advisers through the FANZ Connect Tour, there was also a sense that closing technological and skills gaps could speed up the adoption of technology in financial advice.
However, despite all the benefits of technology, don’t count out the human factor just yet!
Our research also shows four out of five consumers still want face-to-face conversations when thinking about financial advice.
New Zealanders want both digital accessibility and human connection, highlighting strong opportunities for technology-enabled and hybrid advice models that can reach consumers who don’t seek out financial advice.
We’ve also been looking at how we can use the data you give us to provide effective insights for you as an industry. We’ve brought the information you’ve given us from your 2024 and 2025 regulatory returns together and will be publishing it on our website next week.
The aim is to provide you with a clearer, more accessible view of how the advice sector is evolving. What the data shows is encouraging. The number of Financial Advice Providers has grown, and the number of advisers operating as part of the regime is now over nine thousand, an eight percent lift on a year ago.
Next steps
So, my aim in this session was to give you an overview of what we’ve found, and some potential ways forward. Improving access to advice is not something the FMA can or wants to attempt alone. It will require a collaborative effort between financial advice providers, professional bodies, and regulators to shift the dial.
We plan on starting the conversation with the sector through targeted roundtables in the months ahead. We’re also looking to further develop our work on how AI and financial advice can work to lift access to advice.
We’ve intended for this review to act as a driver of further conversations. If you have any questions about what I’ve set out today, please pick up the phone, drop us a note, pop by and talk to the team at the FMA stand, whatever you feel more comfortable with.
If you have ideas and wish to engage with the FMA to understand how compliance fits into starting new advice journeys, we welcome your engagement.
I’m going to end with a plea. We have a stand at the conference here for the first time – please don’t be shy. I don’t want the team to be lonely. Go, talk to them, it’s only by the profession and the FMA working together that we can ensure New Zealanders thrive.
Thank you for your time, and I’m more than happy to take any questions you may have.
