New study of financial mentors shows pressures deepening on New Zealanders and the sector

Key stats:

• Practitioners support an average of 40 clients per month, and 46% say this feels like too much work.

• 83% say clients have more complex needs beyond financial issues, and 64% say clients have more complicated debt, with 65% seeing more middle-income clients.

• Cost of living (91%) and housing affordability (81%) are the biggest struggles clients face trying to pay off debt.

• Embarrassment/shame (87%) and being too overwhelmed (83%) are the leading barriers to engagement on difficult debt issues.

• 91% rank face-to-face as the most effective channel for engaging on difficult debt issues, and 90% say it’s much more effective than digital channels.

• Only 13% feel the current funding model fully supports their work; 31% say it hardly supports or doesn’t support their work.

DebtManagers and independent research agency TRA have released a new report, Towards a fairer financial world, capturing frontline perspectives from financial mentors and other financial capability practitioners nationwide. The study finds cost-of-living pressures are driving a sharp rise in financial difficulty, with bigger, more complex arrears and an overstretched support system creating pressure on both clients and services.

DebtManagers is New Zealand’s leading purchaser of difficult debt, specialising in socially responsible debt management. The company works with financial mentors around the country every day to help rehabilitate those owing money out of debt through fairer repayment plans with no fees or excessive interest.

DebtManagers GM Commercial, Isaac Manase, says, “Towards a fairer financial world brings together the frontline perspectives of financial capability practitioners on what’s driving financial hardship, the challenges the sector faces, and what works best in debt recovery and management.

“The report has important insights. Everyday Kiwis are facing tremendous pressure, matched only by the pressure on the sector itself, embarrassment and shame are major inhibitors to seeking help, and the best way to help people is establishing trust and creating genuine human connection through face-to-face engagement.

“As New Zealand’s leading purchaser of difficult debt, DebtManagers sees this first-hand. Sustainable recovery is rarely achieved through engagement alone, rather it relies on trust, clear communication, and coordinated, human-centred support across the wider sector,” says Manase.

Building on these findings, the report sets out a range of recommendations to help address these compounding issues.

“We all have a role to play in lifting financial wellbeing, and we hope this eye-opening report is the start of a deeper, more meaningful conversation about the sector, regulations, policy settings, and how we all work together to achieve that,” says Manase.

Changing client landscape: more complex, more pressured, more diverse

The report shows practitioners are under strain, supporting around 40 clients per month on average, and nearly half say the workload feels like too much. That pressure is being driven by a rise in demand for their services, from more parts of society, and people presenting with increasingly complex needs beyond financial issues.

“Practitioners are seeing debts getting harder to resolve. Over 80 per cent say clients arrive with more complex challenges beyond money, 64 per cent say debts are more complicated, and 91 per cent point to cost-of-living pressures as the biggest barrier to repayment.

“This isn’t confined to any one group either, with 65 per cent seeing more middle-income clients and 40 per cent seeing more higher-income clients.

“Reaching out early matters, but many people don’t engage because they feel ashamed, embarrassed, or whakamā, or simply overwhelmed. Compounding this is a concerning lack of awareness that free support is available through financial mentors,” says Manase.

Creating small sparks that drive change

Often, it’s a small early win that breaks through paralysis and builds momentum.

Manase: “Rapport and trust are the cornerstone of effective engagement, and face-to-face support remains the gold standard for creating this. 91 per cent of practitioners rank it as the most effective channel while 90 per cent say it is much more effective than digital approaches.

“It makes sense, trust and rapport are best built through human connection – body language, empathy and presence all matter.”

A sector and a system at its limits

The report shows only 13% of practitioners feel the current funding model fully supports their work, while 31% say it hardly supports or doesn’t support their work at all.

"Resourcing levels are stretching services, especially in rural and high-deprivation communities where there may only be small, part time teams available, and inconsistent processes can slow progress even when people are ready to engage,” says Manase.

A better way forward

With a strong evidence base, the report recommends targeted initiatives that would improve outcomes for people struggling with debt and their finances:

1. Build a consistent and compassionate sector. Establish clear national standards for conduct for government, creditors and collections, and funding models that encourage collaboration over competition on the ground. A sector working together to a clear set of rules means better outcomes overall.

2. Strengthen the foundation of practice with better resourcing and more awareness. If people know about the support available and engage earlier, and practitioners have more resources to help, people will end up better off.

3. Align wider policy settings for financial stability. Address the gap between income and real living costs and connect policy systems around people’s lives. Addressing housing and living costs and creating deeper links and shared pathways for government services will better support recovery.

4. Human connection should be amplified, not replaced, by technology. Digital tools should remove barriers, not relationships, supporting in-person work by streamlining administration rather than outsourcing decisions to technology solutions.

The full report is available here.