New Zealand’s financial advice landscape continues to face structural and consumer-driven barriers, with implications for insurance uptake and long-term financial resilience, according to new reports from the Financial Markets Authority (FMA).
The regulator’s consumer research found that only 28% of New Zealanders used a financial adviser in the past 12 months, despite widespread engagement with financial matters and ownership of key products, including insurance.
Insurance penetration remains uneven. While 59% of respondents held motor vehicle insurance and 50% had home and contents cover, only 34% reported holding life or health insurance, and just 10% had income protection policies. The likelihood of holding these products increased with income and education, highlighting disparities in financial protection across demographics.
The FMA noted a disconnect between consumer perceptions and the role of advisers in insurance. Only 31% of respondents believed advisers could help with life insurance, and 25% with health insurance, suggesting limited awareness of advisory support in these areas.
At the same time, advice uptake on general insurance remains low. Just 8% of respondents reported receiving advice on home and contents insurance, and 9% on motor vehicle insurance, indicating that many consumers purchase coverage without professional guidance.
“Financial advice plays a vital role in helping people make informed decisions about their financial futures. Our review shows there is significant opportunity to expand access to advice so more New Zealanders can benefit from it,” FMA chief executive Samantha Barrass said, speaking at the Financial Advice New Zealand Conference in Auckland.
Affordability emerged as the leading barrier to seeking advice, cited by 31% of respondents, followed by uncertainty about where to begin (26%). Women were more likely to perceive advice as unaffordable, while lower-income groups reported the greatest difficulty accessing services.
The findings align with the FMA’s sector-wide report, which identified structural challenges in delivering accessible advice. These include conservative interpretations of regulatory obligations, which can lead advisers to provide overly broad and costly services rather than “right-sized” advice tailored to specific needs.
For insurers and other institutions, the regulator highlighted missed opportunities to embed advice within existing customer relationships. While insurers often maintain ongoing contact through service channels, advice is not consistently offered, even where it could improve outcomes.
The reports also pointed to gaps in ongoing servicing. In life insurance, advisers face challenges in maintaining long-term client engagement, while in KiwiSaver and investment products, annual reviews reach only a small proportion of customers.
Digital innovation is emerging as a potential solution. The FMA reported a 90% increase in the use of digital advice tools, with around 165,000 retail clients receiving advice through such platforms in the past year. However, adoption remains cautious, particularly around artificial intelligence, due to regulatory uncertainty and implementation costs.
Consumer attitudes toward digital advice are evolving. Trust in AI-enabled advice ranged from 28% to 41%, indicating a “meaningful base” for future growth, the FMA said.
Despite these developments, informal sources continue to dominate financial decision-making. Nearly half of respondents (49%) sought advice from family or partners, while only 16% consulted a financial adviser.
The regulator noted that improving access to advice, particularly for insurance and retirement planning, will require coordinated efforts across the sector. This includes simplifying advice delivery, expanding digital channels, and addressing affordability and trust barriers.
“Access challenges are not driven by a single issue,” the FMA said, pointing instead to a combination of consumer understanding, regulatory interpretation, and delivery models shaping the advice gap.
