An assumption often made of financial advisors is they are only motivated by financial incentives. However, this perception of greed and sales-driven tactics is because of the history surrounding the industry.
Finance can be complex, and often dealing with finances can be a daunting topic for many people. Most of the time, people do not like to talk about their finances, which can hurt their future financial position. Sometimes finances can be very complicated, and often it is not ideal to try and tackle these issues on your own; the right financial adviser should be viewed as a tool that can be utilised when decisions are tough or simply you just want some more information.
Things in life are often very complicated regarding money, and it’s okay not to be 100% confident with your financial situation and decisions. Getting help is not something that needs to be frowned upon or make you embarrassed it is simply the logical thing to do. When your car makes a funny noise, you take it to the mechanic, right? Well, this is the same with your finances and a financial adviser. Kiwis are notorious for not wanting to talk about their finances, a stigma that needs to be broken because it has been the downfall of many people financially for many years while having a simple fix of just asking for help.
What is a financial adviser?
Financial advisers are a group of qualified professionals with expertise in finance, whether investing, KiwiSaver, financial planning, insurance etc. A financial adviser can advise you on specific issues in which they specialise. To become a financial adviser in New Zealand, the person would need to have an accredited education equivalent to NCEA level 3, they would then have to do a course to obtain a New Zealand Certificate in Financial Services in which they would have to specialise in an area during this course. They would then have to apply for and hold a Financial Advice Provider (FAP) license to operate legally.
A financial adviser can understand your financial position to give you tailored advice in their specialist area. Any issue that you may have or simply if you unjust need a little bit of extra information on your finances or a financial product like a mortgage, this is where a financial advisor may be able to help.
Types of Financial Advisers
There are many different types of financial advisers, and the main difference between them is what they specialise in, so no financial advisor will be an expert in all financial fields. Depending on what advice you need, a financial adviser will specifically deal with your issue and provide solutions best suited for you. Some examples of what services financial advisers can offer are
KiwiSaver Advice
A KiwiSaver adviser will be able to advise you on what fund you should be in and with which provider would be most beneficial depending on your situation. A KiwiSaver adviser will set you up in the right direction to get as financially secure at retirement as possible.
Mortgage Advice
A mortgage adviser is someone who knows and understands the world of home loans, they will be able to guide you through what loan would be best suited for you depending on the repayments and everything related. A mortgage adviser will also help you find the best deal on interest rates to save you some money in the process.
Insurance Advice
An insurance advisor will advise you on all things insurance. Some will specialise in a particular type of insurance, and others will be able to take care of all things insurance for you and your family. Whether you need life insurance, health insurance, or home and contents, a financial adviser specialising in insurance products will be able to get you a great price with everything you need.
Investment Advice
Financial advisers will be able to help invest your money in the stock market and other assets. Often times the company in which this kind of adviser is part of runs a fund that they invest your money within. This is done to diversify your investment and attempt to create the best returns on your money possible.
Positives of a financial adviser
Financial advisers can be a significant asset for many aspects of your life, from securing a mortgage for a home to simply looking for guidance on what to invest in and why. Financial advisers offer many benefits and are usually regulated heavily by the FMA, this is to ensure that the adviser always has the client’s best interest at the forefront of the advice. A financial adviser can be a great asset to have when it comes to everyday life when dealing with your finances. It can be a great opportunity to align your goals and aim to achieve financial security in the best possible way.
Negatives of a financial adviser
Now, like with any industry, there can be a set few amounts of people who ruin the reputation of the rest, and this is no different for financial advisers. Unfortunately, at times decisions of some financial advisers do not have your best interests in mind and tend to look out for their pocket. The positive of this is that this is the minority of financial advisers, and due to strict regulation, it is becoming increasingly complex for this to occur.
Financial advisers usually come at a cost and often times a very high cost depending on their reputation and level of education and experience. Now, this cost can be very high for some financial advisers and often times it can be an expense that a large majority of people see as unnecessary. This cost oftentimes could potentially be seen as something that outweighs the positives however, this is not the case for all financial advisers. Another negative of financial advisers is that they are paid oftentimes by the products that they advise you to be a part of or buy, this can oftentimes lead to biased advice being given for the benefit of the adviser itself.
The stigma surrounding financial advice in New Zealand
An assumption often made of financial advisors is they are only motivated by financial incentives. However, this perception of greed and sales-driven tactics is because of the history surrounding the industry.
Before communicating with an adviser it is crucial to understand their personal experience in the industry and understand how they are remunerated. Overcoming shame, embarrassment & social stigma of getting financial help and learning to talk openly about your financial situation early is essential to build a stable financial future.
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