What is financial advice?

5 min read
24 March, 2021

We know from our research that around 18% of Kiwis receive financial advice. 35% of us have never received financial advice but would consider it. 

If you’re in that 35% and have been tossing around the idea of getting some help with your finances, we've answered some common questions that might clear things up for you and help with your decision – whatever that may be.  

What is financial advice?

Financial advice involves personal guidance and recommendations from a financial adviser around a range of financial products.

It’s a one-on-one ongoing relationship with a professional who provides financial advice to New Zealanders. This advice can take the form of suggesting certain financial products or investments that suit your goals, figuring out your financial priorities, helping you set up smarter savings habits and much more - all things that can potentially improve your financial and overall wellbeing. 

What is a financial adviser?

A financial adviser is someone who provides financial advice to New Zealanders. They can explain to you how certain products – like KiwiSaver, shares, insurance or investments – work, as well as providing personalised advice and recommendations. Some financial advisers may be able to give you advice across a broad range of financial products, while others may specialise in certain products. 

Before 15 March 2021, there used to be several categories of financial advisers. However, to keep things simple and make sure all financial advisers meet the same standards, these categories have been done away with.

Now, there are just financial advisers and nominated representatives. Nominated representatives work for financial service providers such as banks and insurers. Anyone offering financial advice is subject to standards of conduct, client care, competence, knowledge, and skill as outlined by the Code of Professional Conduct for financial advice services

What's the difference between a financial adviser and a financial mentor?

A financial mentor is free to work with, and they're equipped with the financial knowledge to help empower you to get control of your money. They work alongside you, your family and whānau to manage debt, advocate on your behalf and connect you to the support services you need. 

Financial mentors aren't able to call themselves financial advisers unless they've met the standards of competence required to advise on financial products.

What types of advice are there in New Zealand?

Some advice is specific to a particular product, with specialists who have expertise in a particular area. For instance, if you need help buying your first home, you may want to enlist the services of a mortgage adviser. An investment adviser will be more helpful if you’re wanting advice on growing your share portfolio, while an insurance broker can help you find the most suitable insurance policies for your needs.   

Do you need financial advice?

Whether you need financial advice or not depends on you and your personal circumstances, and what you’re hoping to achieve. One of the biggest barriers to Kiwis seeking advice is a perceived lack of wealth – in other words, many of us don’t think we have enough money to make advice worthwhile. But financial advice is for everyone, no matter how much money you have. The point of it is to make the money you do have work better for you.  

There are certainly benefits to getting advice; we know from our research into advice in New Zealand that Kiwis who get it are better off. Advised Kiwis:

  • are more confident;
  • are more financially knowledgeable;
  • manage risk better;
  • save more of their income; and 
  • rate their overall wellbeing higher.  

However, consider your goals and needs prior to seeking advice, so you can ensure you make the right decision for you.  

There is a range of support out there for Kiwis wanting help with their money, and we talk about some of these options in our blog Getting Help With Your Finances.  

There are also a range of free resources out there if your aim is to improve your financial know-how. You can check out our extensive list of blogs, podcasts, books, magazines and tools on our Money Resources for Kiwis page. 

How to find financial advice

Deciding that seeking financial advice is for you is one thing, but where do you actually go to find it?

Ask for a referral from your friend or whānau 

One way to find a financial adviser you trust is to ask friends or family members if they use one.   

However, keep in mind that the type of advice someone else is after might differ from what you need. Your sister’s adviser that helps her with her investment portfolio might not be the right fit if you’re looking for advice on comparing life insurance policies. Do your own research to find someone who suits you.  

Check the Financial Service Providers Register (FSPR)

You'll want to make sure your financial adviser is registered in accordance with the new financial advice regime that came into effect on 15 March 2021.

To do this, you can search for their name on the Financial Service Providers Register (FSPR). This is a searchable register of people, businesses and organisations that provide financial services in New Zealand. It contains information about the financial services they provide, relevant licences they hold and the dispute resolution scheme they belong to. If you can't find the name of the person you're looking for, they might be working under the licence of the company they work for. In this case, you can check with the company (e.g. your bank or insurer) that the person you're talking to is licenced.

Connect with several advisers to find one who's right for you

Finding a financial adviser is often the start of a long-term relationship, so it’s important you find someone who is the right fit for you. You might want to meet several people and see who you get on best with and who seems to understand your situation the best. Many advisers offer an initial session free of charge so you can get to know each other and see if the relationship will work.  

We hope that’s cleared a few things up for you around the topic of financial advice. We can’t tell you whether you should or shouldn’t get it, but hopefully with the information you’ve just learned, you’ll be able to make an informed decision for yourself.  

This information is general information only. It is not intended to constitute financial advice and does not take your individual circumstances and financial situation into account. We encourage you to seek assistance from a trusted financial adviser or other professional advice. 

The links that are provided are additional resources that you access at your own risk and the FSC takes no responsibility for any third party content. 

The FSC and its employees make no express or implied representations or give any warranties regarding this information and we accept no responsibility for any loss, damage, cost, or expense (whether direct or indirect) incurred by you as a result of any error, omission, or misrepresentation in this information.

24 Mar 2021.

Subscribe to our blog