GUEST COLUMNIST – KATRINA SHANKS

Katrina Shanks says that as Kiwis start to consider their options and plan for a potentially turbulent 2023, many will be helped by financial advisers who can act as their trusted sounding board…

 

It’s safe to say that 2020 was not the start to the ‘roaring 20s’ that we all hoped it would be, and 2022 presented new challenges of its own. With a new year on our doorstep, Kiwis are weighing up their goals knowing that 2023 will likely require patience and a well-thought-out plan. And once again, financial advisers will be there to help them keep their goals on track. Here’s how.

Recent research(1) conducted by Kantar on behalf of share trading platform Sharesies confirmed that Kiwis are starting to feel the impact of tougher economic conditions.

As many as 60% of people surveyed said they had already changed the way they budget in response to the higher cost of living. Also, two-thirds of respondents were concerned about the future of New Zealand’s economy, and only 26% were hopeful.

A similar sentiment was echoed in the latest ANZ-Roy Morgan survey(2) in November, showing that consumer confidence fell to its lowest level since June 2022.

Of course, this is not unexpected. Until a few weeks ago, the resilience of consumer spending and confidence has been nothing short of remarkable – which could only lead to more inflation and more interest rate hikes. So, it was only a matter of time before these headwinds started to impact households’ bottom line.

However, it wasn’t all bad news. Both Kantar and ANZ surveys revealed that Kiwis’ balance sheets are relatively robust, and many households’ cashflow is okay. According to Kantar, for example, 46% were happy with their current personal financial situation.

…financial advisers can provide invaluable guidance, giving people confidence in the next steps to take…

What this tells us is that Kiwis are aware that challenging times are ahead, but many families don’t need to shift to emergency mode yet, meaning there’s an opportunity to plan without rushing into hasty decisions.

In this framework, financial advisers can provide invaluable guidance, giving people confidence in the next steps to take. Can quality advice be just the motivation that Kiwis need to set and achieve their financial goals?

Goal-setting support

Recently, I stumbled across an interesting article in Harvard Business Review(3), talking about why New Year’s resolutions (and goal-setting in general) often don’t work. As it turns out, there’s a large body of research on this subject. One study(4), suggests that just 19% of people maintain their pledges for at least two years – with 70% only maintaining them for a week.

According to the HBR’s article, there are many reasons why resolutions fall by the wayside, including not knowing how to pursue the goal, having insufficient willpower, and choosing goals that are too vague or ‘simply’ unattainable.

In our quest to improve our lives and strive for better, it can be difficult to measure our ability to achieve our goals or map out the steps forward. And so, sometimes we put a lot of time and effort into a long-shot goal, only to feel disheartened when we don’t achieve it.

Financial advisers can help clients set goals that are within their reach…

Does that mean big goals are always unattainable? Not at all: in many cases, ‘long shot’ is just another term for ‘long term’. With a clear plan, a realistic timeframe, and the right tools, people can do amazing things. In fact, if they don’t know what tools are available, they may actually underestimate their abilities and aim too low.

So, how can advisers help New Zealanders? If you’re familiar with the SMART goal-setting theory, you’ll have heard that, to be effective, goals need to be:

  1. Specific
  2. Measurable
  3. Achievable
  4. Relevant
  5. Time-bound

And this is where quality advice comes in.

Financial advisers can help clients set goals that are within their reach, and even expand that reach further. The six-step advice process is designed to establish goals that are both specific and relevant to the client’s circumstances. What’s more, by developing, implementing and monitoring financial plans, advisers can help clients set realistic timeframes and measure their progress along the way.

The bottom line here is that pursuing financial goals requires a healthy dose of motivation, and it can be easy to get stuck and lose our sense of direction, especially when the landscape keeps shifting before our eyes.

Quality advice can give Kiwis the benefit of a more distanced, well-informed view of their ‘big financial picture’.

The power of accountability

Accountability is another good reason not to pursue goals in isolation. According to a study published in the Journal of Applied Psychology(5), people are more likely to achieve a goal when they share it with someone they trust.

With this in mind, financial advisers can be accountability partners, helping clients to:

  • Validate their approach by providing a sounding board to check their logic and bounce ideas off
  • Remain focused in the face of unexpected challenges and noisy distractions
  • Overcome roadblocks by researching and explaining solutions

I believe the most important message we need to convey far and wide in these uncertain times Kiwis are not alone. They can rely on the perspective, insight and experience of the thousands of advisers providing financial solutions to everyday families and businesses across New Zealand.

Even when things don’t go to plan, rather than dwelling on the negative, a reality check from a trusted source can lead to a more strategic approach. After all, achieving goals is not just about discipline: it’s all about the journey, and receiving expert guidance from start to finish can make the ride a lot more comfortable.

Sources:

  1. Kantar Customer Leadership Index 2022
  2. ANZ-Roy Morgan, Feeling the strain (November 2022)
  3. HBR.com, Why We Set Unattainable Goals
  4. Sciencedirect.com, The resolution solution: Longitudinal examination of New Year’s change attempts
  5. Psycnet.apa.org, When goals are known: The effects of audience relative status on goal commitment and performance

Here to help

Financial Advice NZ’s ever-growing library of webcasts are available in its members’ section.

Financial Advice NZ was founded with a single-minded purpose: to help New Zealanders, and New Zealand as a whole, be financially better off.