In the Financial Services Council’s recently published research on how New Zealanders manage risk, 18 percent of respondents said they obtained professional advice for managing potential financial risk (8% from an insurance adviser and 10% from other professional advice).
FSC Chief Executive, Richard Klipin, says this is a low figure and needs to be lifted by the sector, which should aim to make the adviser a trusted, professional role so that when New Zealanders think about managing risk they won’t hesitate to see an adviser after finding out what their family and friends have covered (17% of respondents indicated this).
A recent AMP survey asked more than 7,000 of its clients how they find out about money matters and 31 percent said they turn to family and friends for financial recommendations and 18 percent use the services of an adviser or broker.
The FSC research also found that consumers didn’t know how to manage financial risks if they arose (see: Consumers unsure…).
Klipin said New Zealanders need to be further educated and informed around what risks can occur and when, and knowing the steps to take if they would occur.
“As a sector, understanding how consumers buy and making sure that we are aligned with our product and service offer to tap into when they buy, means that we’ll be much more successful at getting more people covered more of the time,” he said.
The top three reasons people said they didn’t take up personal risk insurance included:
- Being unable to afford the premiums
- Not being a personal priority
- Not representing value for money
One of RiskinfoNZ’s recent polls also found that affordability was a concern for consumers. We asked advisers the reasons their clients had shared about why they hadn’t previously considered personal risk insurance before seeking advice and 33 percent said they couldn’t afford it (see: Poll Results…)
On indications that consumers said they didn’t take up insurance because it wasn’t a priority and didn’t represent value for money, Klipin said: “I think that’s a signal for us as an industry that we need to do better in how we communicate the value that the sector delivers to New Zealand consumers.”
“I think that’s a signal for us as an industry that we need to do better in how we communicate the value that the sector delivers to New Zealand consumers.”
He said insurers are rethinking how they can engage with current and potential clients and how the sector can have mature conversations with New Zealanders about risk, noting the signals in the sector in terms of the innovation going on are healthy and hopefully game-changing.
“Affordability and value for money and prioritisation in your family budget is about what do you value?” he said, adding whether it’s holidays, paying a mortgage or school education, Kiwis will prioritise what they value most and make it affordable at the expense of other things.
“We’re not going to shift the dial in twelve months, this is going to need a sustained approach from the sector to help change and evolve the conversation so we can help New Zealanders take action.”
Click here to view the full report, Risking Everything – Insight Into How New Zealanders Manage Risk.