New research commissioned by the Financial Services Council (FSC) has revealed many New Zealanders are taking a high stakes gamble on managing risk.
The research ‘Risking Everything’ carried out by Horizon Research looked at New Zealanders attitudes to financial risk and how they protect their wealth should the worst happen. Over 2,000 Kiwis were interviewed.
“Risking Everything found that although most Kiwis are aware of their financial risks, they aren’t doing much about it”, said Richard Klipin, CEO of the Financial Services Council.
1. NEW ZEALANDERS ARE AWARE OF RISKS THAT MIGHT IMPACT THEM
Those surveyed identified global risks, natural disasters, loss of income/increase of expenses and illness or death when they were asked to consider types of risk. However, when thinking about these risks, 1 in 3 of those who identified them don’t tend to think about how these risks might affect them and 43% of respondents often forget about them if they do.
2. THE RISK OF LOSING INCOME IS NOT CONSIDERED BY THE MAJORITY OF NEW ZEALANDERS
The majority of those surveyed said that they had undertaken an activity in the past two-years to assess financial risk. Of those that had undertaken an activity to assess financial risk, the most common response was that the assessment had been taken when considering their property - car insurance, the cost of replacing home contents and the replacement cost of their home. Only 20% said that they had considered a risk of lost income due to illness or serious injury.
3. NEW ZEALANDERS DON’T HAVE SAVINGS OR INSURANCE IN PLACE TO COVER SHORT-TERM LOSS OF INCOME
Two-thirds of those surveyed thought that there was a moderate to high risk of major financial problems should a significant event happen such as serious injury or being unable to work. We found that many respondents said that they did not have enough savings in place to manage their financial commitments should they experience a short-term loss of income, and only half of those respondents saw the need for adequate insurance cover to mitigate those risks.
4. NEW ZEALANDERS ARE NOT ACTIVELY MANAGING FINANCIAL RISK
Considering the number of respondents that reported they had thought about risk and undertaken an activity to assess a risk, the research indicates that many New Zealanders do not appear to be actively mitigating the risks of a potential significant life event which could have a major impact on their day-to-day lives.
5. GOVERNMENT SUPPORT, ACC AND THE PUBLIC HEALTH SYSTEM
Around one in three responded that they did not need to worry about paying for medical treatment because of ACC or public health system coverage in New Zealand. However slightly more, 37%, disagreed and responded that they do worry about costs, rising to 45% who disagreed when considering personal risks to them or their household.
Visit the Financial Services Council page for more information on this research.