The mental health of many New Zealanders can be hugely improved by a simple act: getting some financial advice.
The two things do not sound related at all but Joe Taylor, founder and CEO of digital KiwiSaver advice firm BetterSaver, says they are inextricably linked.
"One of the reasons I started BetterSaver was that I was working in the financial industry and came across many cases which showed me conclusively that mental health and finances were linked," he says.
"If someone is in a secure financial position, their mental health will be better – but New Zealand has a very real mental health problem and an equally real financial literacy problem. It goes hand in hand."
Research from Financial Advice NZ – a professional organisation for advisers – confirms that view, showing that more than half of investment-advised Kiwis (50.5 per cent) feel their mental health has benefitted from receiving such advice.
Many marital or relationship rows are triggered by arguments about money, for example, and most Kiwis (53.2 per cent) worry about money at least once a month. However, the vast majority (nearly 82 per cent) of New Zealanders have never sought advice from professional financial advisers, according to the Financial Services Council (FSC).
Why? One reason is they believe financial advisers provide less value than they cost. The biggest barrier, however, is a perceived lack of wealth. According to the FSC, the vast majority of unadvised Kiwis think advice is unaffordable or that they don't have enough wealth to justify it.
"The thing is, people who think this aren't necessarily wrong," says Taylor. "Traditional advice models haven't served the majority – financial advisers have historically only helped the very wealthy, those with over half a million dollars to spend."
Yet KiwiSaver has the potential to transform not only the lives of Kiwis, but the entire economy by ensuring a retired population with enough money to be active participants. That's where, Taylor says, BetterSaver comes in.
KiwiSaver is either the biggest or second biggest asset (after a house) most Kiwis will make – and yet 82 per cent of New Zealanders have never sought nor received financial advice. For many, KiwiSaver is compulsory saving but they do not think of it as an asset which can be managed to their benefit.
"As a country, we're not making the most of KiwiSaver," Taylor says. "Most people are completely overwhelmed by the prospect of improving their KiwiSaver results. They don't know where to start. They need advice."
BetterSaver's digitally supported model is more scalable, enabling help to reach far more Kiwis than a traditional, purely 1:1 advice model: "We can match our members with the right fund for them with, for example, a 5-minute online quiz. Think online dating for KiwiSaver providers. If they'd like to chat to a human adviser, that's an option too."
"Being in the right fund can make a colossal difference to people's future – and all the evidence proves that people getting advice are not just benefitting financially, they are improving their health and wellbeing too."
All that's needed, says Taylor is look at the results of recent surveys done by the FSC and Financial Advice NZ (FANZ):
New Zealanders who get financial advice have, on average, 50 per cent more in their KiwiSaver fund than those who do not take advice - $52,500 against $34,500. They save nearly four per cent more of their income than the unadvised – and their investment income is similarly four per cent better than those who do not have financial advice (FSC).
FANZ research shows advised Kiwis are twice as likely to feel at least reasonably prepared for retirement and much more likely to feel financially secure, have money set aside in case of an emergency and to be happy with their financial situation than unadvised Kiwis.
- 83.8 per cent of advised Kiwis think that financial advice has given them overall better life outcomes
- 77.3 per cent believe financial advice has given them the ability to live their desired lifestyle
- 76 per cent believe advice has bought them freedom from financial worry and stress
Taylor acknowledges that the current cost-of-living crisis in New Zealand will also be having an effect on confidence.
"Many people are clearly struggling to make ends meet and it's hard to think about the future at such a time. It's a disconcerting time for many. That's where a trusted adviser comes in. You don't know what you don't know, and talking to an adviser doesn't mean giving up control, it means being empowered to make better, more informed financial decisions that help to set you up for the future."
For more information: Better Saver