Research released by the Financial Services Council has shone new light on the contribution of the broader financial services sector to the New Zealand economy.
According to the report, named Towards Prosperity, the financial services sector is the second fastest growing and third largest contributor to economic growth in New Zealand for the last four decades.
It contributed a total $13.5 billion to GDP in 2017, ahead of agriculture, transport and utilities which contributed $12.9 billion, $10.6 billion and $6.8 billion, respectively.
The research also found that the growth of the financial services sector is not restricted to the CBDs of its major cities but is regional as well.
“Importantly this growth played a major role in supporting the wider New Zealand economy with the research finding that 60% of KiwiSaver managed funds are re-invested locally,” says FSC Chief Executive, Richard Klipin, “…and that the industry has unique role in supporting the production of other industries through helping them invest for growth or protecting them through insurance.”
The report shows that the ‘traditional view’ of the sector no longer holds true.
Klipin said the report shows that the ‘traditional view’ of the sector no longer holds true.
“The 57,000 financial services employees in New Zealand are more likely to be female, and in the 25-49 age group than the national industry average. This growing diversity is great news,” he said.
“It is a timely reminder that away from the headlines, financial services as a fast growing, and highly skilled industry makes an important and valuable contribution to New Zealand’s economic growth and well-being.”
The research noted there are a total 8,804 financial advisers in New Zealand, of which 1,884 are AFAs and 6,920 are RFAs (as at 2017).
Looking to the future of the life insurance industry, the report highlighted the number of policies (an indicator of the number of people insured) have been static since the start of 2013 and that growth potential would appear to be modest.
It noted that premium revenue for the industry is only still climbing due to the contractual increases (averaging 8 percent per year) in premiums for existing policyholders for factors such as inflation and the increased risk due to policyholders getting older.