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The Case for Wealth Management name

The Case for Wealth Management

Why don’t we seek personal financial advice?

While the evidence shows a strong relationship between seeking professional financial advice and achieving increased financial prosperity[1], many are still hesitant to take the first step. We see several reasons for this hesitancy. For starters, it’s fair to say that financial advice services, and more broadly the financial sector, have endured a relatively mixed recent history which has resulted in a decline in public trust. As a result, the wider public have typically waited for a significant ‘life moment’ such as the sale of a major asset, an inheritance or retirement before engaging a financial adviser. More common however is that many of us don’t perceive that we have genuine wealth to manage, that the collection of assets we have accumulated in our lifetimes don’t call for a sophisticated or professional approach to properly manage.


What’s changed?

1. Legislation and Regulations

Following major events such as the 2008 financial crisis we have seen the introduction of new legislation and regulations in Financial Services, both internationally and domestically.  These have been designed with the intention of providing consumer protection and increasing trust and participation in financial markets.


2. Organic Wealth Creation

Many of our client base are in the wider Auckland area and almost by virtue of owning property have built up sizeable wealth through the equity in their family home. This awareness of equity is beginning to lead many to consider their next step in assessing their financial future. Homeowners begin to understand that indeed they have a balance of wealth that does require qualified expertise and guidance.


3. Access

The introduction of KiwiSaver saw many New Zealanders become participants in the financial markets for the first time. While in the early years balances were moderate and participation was largely passive, many New Zealanders are now faced with healthier and ever-growing balances.  With this people are starting to consider the options that this creates. In fact, many KiwiSaver balances are now significant and New Zealanders are beginning to become more actively engaged and ask important questions about what they’re invested in, fees, returns, and ultimately – are they in the right fund for them?

Additionally, the inception of online investing platforms has opened up financial markets to a wider audience.  These platforms have helped remove or reduce traditional barriers such as minimum account size and have made market participation far more accessible to average New Zealanders.  With recent Covid-19 lockdowns around the world these platforms saw a surge in popularity as new investors opened accounts.


These changes are all important elements of increasing trust, opportunity, awareness and participation in financial markets, but the missing piece of the puzzle is investors having confidence that their investments are right for them in the long-term and that they’re taking a comprehensive approach to the creation and management of their wealth.


What to expect with wealth management?

When engaging the services of wealth advisers, there are a number of obvious tangible benefits to expect. These include access to professionally managed globally diversified portfolios, disciplined rebalancing practices and as research shows, investors who seek financial advice achieve better financial outcomes.


However, the intangible benefits are equally or even more important.

1. Dealing with complexity and ambiguity

The role of a financial adviser is also to provide clients guidance in managing the complexities of their investments.  Often clients' assets will include a mix of liquid assets (such as cash, term deposits, shares) and illiquid assets (such as property, KiwiSaver and other superannuation schemes, and business interests). Some will be lifestyle assets, while others will be investments assets to help fund their financial needs in the future. An adviser will take a comprehensive view to develop an overall plan and ensure that all elements are working in harmony to help the client meet their lifestyle needs and objectives now and in the long-term.


2. Help you manage your emotions

Emotionally based decisions often end up being bad financial decisions.  Whether it be investors buying high in the ‘fear of missing out’ or selling low because panic set in as markets dipped (even if the level of volatility was still within expected ranges).  Part of an adviser’s job is to help clients manage these emotions and maintain discipline.  Firstly, before investing in anything they will help clients make sure that the investments they choose are suitable for the level of risk that they are prepared to take, and they are comfortable with the range of possible outcomes.  By working with clients on an on-going basis advisers coach clients through the market’s ups and downs and make sure they are still on-track to achieve their long-term goals and prevent them from making emotionally based, and potentially bad, financial decisions.


3. Focus on what you can control

While neither the financial adviser nor the client can control what the markets do or plan for every possible change in personal circumstances, by engaging with an adviser clients will build a robust strategy that allows the client the means to deal with change.  By developing a strategic plan advisers help clients focus on what they can control and make informed investment decisions as their life changes.  This gives clients confidence about their financial future and helps them feel less stressed about the elements that are outside their control.


We want our clients to live the lifestyle they want today, while keeping one eye on their financial future. A financial adviser helps you understand how you can make that happen, so you make informed decisions, changes or compromises to help you achieve both goals.


Date published: 18 October 2021

[1] Money and you - Financial Services Council consumer research report, August 2020

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