While many New Zealanders feel confident in their financial decisions, there are significant gaps between their financial goals and actual holdings of investment products, new research by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – reveals.

Good Cents: Kiwis on Savings and Debt looks into New Zealanders' attitudes and behaviours towards savings, debt reduction, and financial guidance.

It identifies three main areas for improvement for financial providers such as banks, insurers and investment advisers.

“Our findings show there is room for financial providers to help New Zealanders better align investment choices with financial goals, help them better understand debt management, and increase their comfort with seeking financial information,” says Gael Price, Head of Economics and Research at the FMA.

“Our findings paint an interesting picture.

“Stated financial goals don't always match investment behaviours, or understanding of key financial concepts. There is a disconnect between preferences and investment choices. While there is a strong interest in financial advice, many are hesitant to discuss their personal financial circumstances with others.”

Findings also include:

• 1 in 6 New Zealanders feel they are sinking financially – those in the 45-54 age bracket are struggling the most, with one in four saying they feel they are “sinking” financially.
• More than half of New Zealanders strategically pay off high interest debt first.
• 2 in 3 are open to receiving financial guidance, despite 42% saying they feel uncomfortable discussing their finances. People under 24 are least comfortable discussing their finances. This group is also the least financially literate.
• Active investment in higher risk and return products like shares is less common, despite high returns being a priority for nearly half our respondents. Those over 65 have unique features – they seek a stable return, and they are more likely than other age groups to have their money in term deposits.
• A quarter of respondents use buy now pay later (BNPL) services. This rises to 40% of Māori and Pasifika, which raises concerns. While BNPL services can help smooth out the impact of a purchase, having too much debt with these services can mean increasing repayment difficulties and late payment penalties. Māori and Pasifika are also just as likely to ask a family member or friend for financial guidance as asking their bank, meaning there’s a risk they might miss out on the benefits of professional financial guidance. Gael says these findings reflect great opportunities for financial providers such as banks, insurance companies and financial advisers to make financial information more accessible.

“They are not necessarily indicators of failure, but rather signposts pointing to opportunities where improvements can be made. These improvements can be driven by providers, by consumers, and by the FMA alike. We welcome engagement with industry and consumer groups about ways to respond to the insights in this report.”

Understanding consumer attitudes is now more important than ever and will help guide our regulatory focus and shape our outcomes-focused approach.

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