KiwiSaver fund choice often poorly informed
Wealth management adviser
Lisa Parata said another emerging issue was the preference into investing with a social conscience.
‘‘More people are opting into socially desirable funds, ones for example that filter out investments on the basis of ethical considerations such as gambling, so that could be a consideration when you are looking for a provider.’’
Mr Alexander said, at grassroots level there was little education around explaining KiwiSaver options and the multiple layers of providers made it all the more confusing.
‘‘Anybody can promote it, but banks, advisers and others are limited to around 25 basis points as a fee, so there tends to be little advice in the market and people leave their money in positions that may not suit them.’’
Mr Donald agreed that while major distributors like AMP and Booster had done a great job and the automatic enrolling has been a good system, there should have been more provision for advice when KiwiSaver was rolled out.
‘‘The banks have call centres, but these are not utilised well. So there is a basic misunderstanding of how KiwiSaver works.
You wouldn’t go into
Australia superannuation without getting advice, he said.
‘‘Government invested upfront in the scheme, so it could have allocated $500 to educate every individual going into KiwiSaver up front and you could have a class of advisers that just gave advice for KiwiSaver.’’
He said currently there was little commission or fees payable to qualified advisers. For example, default provider Booster paid a commission of 0.25% per year and a $30 finder’s fee.
‘‘In general, however, independent financial advisers don’t actively go out looking for KiwiSaver clients, though it does form part of anybody’s retirement mix.’’
‘‘I think the most important advice I could give really, would be to ensure you are in it and your kids are in it.
‘‘Investing is a longterm move. The markets will go through fluctuations, but on a 60year timeline, for example, is where the miracle of compound interest really kicks in.’’