New Zealanders think they have a handle on the financial decisions they’re making, although their investments don’t tend to match what they’re trying to achieve, and many people feel uneasy when it comes to talking about money.
Those are among the findings in the first report in a new series of research by the Financial Markets Authority to delve into everyday people’s attitudes to savings, debt and financial capability.
Based on in-depth interviews with 20 people and an online survey of 3,169 New Zealanders, the report found most Kiwis reckon they’ve got a good understanding of their debts and feel confident in their ability to make financial decisions.
The report found 42% of those surveyed felt either somewhat or strongly uncomfortable talking about their finances – and even more so if they were out of work.
“With so many New Zealanders hesitant to talk about their finances, seeking guidance or support may feel like a barrier rather than a solution,” the report said. “Encouraging open financial conversations – whether through trusted networks or a professional adviser – could help people feel more in control.”
And in saying that, two thirds were open to getting advice or learning about how to make their money go further, with banks topping the list as a source of information among 71% of respondents, followed by family at 61%, then financial advisers in third at 58%.
Relationships matter
“The fact that nearly as many New Zealanders turn to family as they do to banks highlights the importance of relationships in financial decision-making,” the report said. “Strengthening relationships between consumers and financial institutions could help ensure people receive accurate, reliable advice rather than relying solely on informal guidance.”
The research’s qualitative interviews found people were hesitant to receiving advice, with fears that financial service providers won’t treat clients as individuals and raised concerns about upselling and the alignment of an adviser’s interests with their customer’s.
“Ultimately New Zealanders want advice regarding their finances, but perspectives seem to be influenced by consumers’ anxiety about the practices and motivations of advisers,” the report said.
While people felt confident in their own decision-making, that didn’t translate to increased levels of trust in financial institutions, with credit unions seen as the most trustworthy with 46% of respondents rating them highly trusted, followed by investment firms at 44% and banks at 43%.
“This suggests that trust is not purely based on necessity but is also shaped by perceptions of transparency and value – indicating that neither banks nor investment companies have fully convinced consumers that their interests come first,” the report said.
The report found savings remains the cornerstone of financial security, and that people generally prioritised ready access to cash over the potential returns, despite having a goal of achieving higher returns.
Actions speak louder than words
Some 43% of respondents said they focused on securing the best interest rate or return when making an investment decision, which was at odds with the prevalence of low-rate savings accounts over term deposits or portfolio investment entity funds.
The FMA report found income levels were a significant factor in chasing certainty over potential returns, with many people simply taking a pragmatic approach to savings and investments or just not having the money for anything beyond their day-to-day expenses.
“It is likely that many New Zealanders stick with everyday transaction and savings accounts because they’re familiar and easily accessible,” the report said. “This highlights a key point: while high returns are attractive, having quick access to funds is equally important to many households, and finding the right savings and investment options means balancing potential returns against individual tolerance for risk.”
Gael Price, FMA head of economics and research, said that showed there’s room for financial service providers to help their customers.
“Stated financial goals don't always match investment behaviours, or understanding of key financial concepts,” Price said in a statement. “There is a disconnect between preferences and investment choices.”
Reporting by Paul McBeth. Image from Giovanni Gagliardi on Unsplash.
