Welcome to Your Financial Compass

In my last post, I talked about the importance of getting financial advice that’s tailored to you—and, just as importantly, making sure you actually follow it. This time, I want to look at the other side of the coin: the kind of “advice” people receive all the time without even realizing it.

We all get given advice, whether we ask for it or not.

Sometimes it's obvious, like your old schoolmate raving about the cryptocurrency that made them a fortune (or so they think) in a few weeks.

Other times, it’s much more subtle, like a throwaway comment from someone you happen to see as an authority figure.

Here’s a real-world example I come across surprisingly often. A client will say something like:

“I’ve been thinking of switching my medical insurance to Company X.

Last time I was at the doctor’s, the receptionist asked, ‘Are you with Company X?’.

I said no, ‘I’m with Company Y,’

And they just kind of sighed and said, ‘Oh…’ like that was the wrong answer.”

That one moment—a tiny, offhand reaction from someone behind a desk—can lead to someone questioning their whole insurance setup. But here’s the thing: that receptionist probably wasn’t commenting on how good the policy was for you. More likely, they were responding based on how easy it is to deal with that insurer from their side of the desk.

And that matters. Because the easiest company for a receptionist or claims processor to deal with might not be the one that offers the most comprehensive cover, the best policy wording, or the highest claim limits for the things you care about.

That receptionist’s unintentional reaction could have a drastic outcome if it leads you to change providers without first understanding what you’re gaining—or potentially giving up.

The takeaway? Be careful about the advice you absorb passively. Not all of it is wrong, but not all of it is right either. When it comes to important decisions—like insurance, investing, or anything with long-term consequences—make sure you’re basing your choices on facts, not feelings or assumptions. And always speak to someone who has the whole picture in mind.

When I sit down with clients to talk through their financial situation, one of the questions I ask is, “What savings do you have, and how much of that would you want to spend if you couldn’t work for an extended period of time?”

The answer is usually the same to both questions: “Not a lot.”

“Okay, so in that situation, what of your normal expenses would you want an insurance company to start covering?”

Again, the response to this one is the same almost every time.

“Isn’t that what ACC is for?”

And the answer? “Yes, and no”.

Let me explain.

What ACC Covers (And What It Doesn’t)

If you’re injured in an accident, ACC will generally cover up to 80% of your normal income while you recover. That’s great—if your time off work is accident-related.

But here’s the catch: according to a study by Stats NZ in 2013 only about 31% of all disabilities for adults (age 15–65) are caused by accidents.

The main cause of disability in NZ - covering nearly 42% of all cases - is illness. That’s things like cancer, mental health disorders and musculoskeletal problems like arthritis. In those situations, your income from ACC will be the same as the name of Jeremy Clarkson’s farm: “Diddly Squat.”

Your options are limited: maybe a sickness benefit, family support, or burning through your savings. That’s where income protection insurance becomes essential.

(Other main causes of disability, in case you’re wondering, are ageing, 28% and the remaining are conditions from birth.)

What Income Protection Does

Income protection is designed to support you if you’re unable to work due to a health event, regardless of whether it was caused by an accident or not.

Here’s how it works:

• A doctor must certify that (depending on your insurance company) you’re unable to work more than 10 hrs per week, or perform some of the key duties of your job, or to earn a certain percentage of your usual income.
• Payments start once the waiting period that you chose when you took out the policy has elapsed. You can choose a waiting period (like 1 month, 2 months, 3 months, 6 months, 12 months, or 24 months.)
• Payments stop when either:
  • You’re well enough to return to work, or
  • You reach the end of your chosen benefit period (1 year, 2 years, 5 years—or all the way to age 65).

Importantly, income protection is a contract between you and the insurer, so once it’s in place, the terms are locked in. ACC, on the other hand, is subject to government legislation, which can change over time.

Can you insure your whole income?

Not quite. With income protection, you can tailor your cover to fit your budget and needs. You can typically insure up to:

• 62.5% of your normal income (if you don’t want to pay tax on the money the insurance company gives you), or
• 75% (if you do want to pay tax).

Plus, many policies allow you to receive payments in addition to ACC, rather than having them offset. That means if you're off work because of an accident, you could receive both ACC and income protection, leaving you close to (or even at) your full income.

Added Benefits of Premium Cover

Higher-tier income protection policies often include extra features like:

• Lump sum payments for certain broken bones or critical illnesses - even if you don’t need time off work.
• Caregiver support payments, if you have to take time off work to care for a dependent like one of your kids or your partner.
• Childcare subsidies, if your disability means you can’t care for your kids as usual.
• Rehabilitation and return-to-work support, to help ease the transition back to full-time work.

Why It Matters

The goal of income protection is simple: to ensure that no matter what happens to your health, you’re able to keep paying your mortgage, covering your bills, and feeding your family. In short, it protects your financial stability when your ability to earn is at risk.

So next time you hear someone say “Isn’t that what ACC is for?”, you’ll know: ACC helps with accidents, but income protection covers the rest—and the rest is where most of the risk lies.

Here’s the thing: everyone’s situation is different. Sometimes the differences are obvious—like family setup, your job or your income. Other times, they’re more subtle, like how comfortable you are with risk, or what your long-term goals look like.

That’s why getting advice—especially financial advice—that’s tailored to you and you alone, is so important.

It’s not enough to follow advice that worked well for someone else. In fact, acting on advice that was meant for someone else will often put you in a worse position than if you’d taken no action at all.

That might be great advice for them, but if it doesn’t fit your life and the subtle differences between you and that person. It could be your age, your occupation, your gender, medical history, smoking status, level of income, how many kids you have or even just how tall you are, it could steer you in the wrong direction.

That’s basically why my job exists.

My role is to understand people’s situations in detail—what they’re trying to achieve, what’s important to them, and what they’re already doing—and then figure out how best to help. I look at the full picture, and I help people put the right plan in place based on their goals, their priorities, and their life. And then I help them implement it in a timely manner so that it’s still relevant. And then? We review it. As often as they want to, or at least every 12 months, to make sure it’s still the best advice for them.

It’s easy to think financial advice is just about picking the right product, but really, it’s about strategy. And that strategy needs to be built around you.

I don’t know the first thing about building a house, or doing surgery, or running a restaurant. So I wouldn’t expect someone in those fields to be across the ins and outs of financial products either. Even if they’re someone you respect or trust, if they’re not working in this space every day, their advice might not be the right fit.

On top of that, advisers like me are required to keep our knowledge up to date. We have minimum hours of training and upskilling we have to complete every year—so the advice we’re giving isn’t just based on experience, it’s also based on the most current information available.

So yeah, advice matters. But personalised advice matters even more.

If you're making decisions about insurance, income protection, investing, or anything to do with your financial future, make sure the advice you’re acting on is actually designed for you. It makes all the difference.