Many missing out on better KiwiSaver returns, service says

AUCKLAND: KiwiSaver members are missing out on thousands of dollars by being in the wrong fund for them, research by a new digital advice service shows.

A $10,000 investment in 2013 in the topperforming growth fund over the past seven years would be worth $21,719.

But the same investment in the bottomperforming conservative fund would be worth just $13,885.

Joe Taylor, founder of BetterSaver, said there were a lot of people sitting in conservative default funds because they had never made an active choice.

‘‘In reality with their goals or timelines they should probably be in a growth fund. So they are leaving money on the table.’’

Mr Taylor, a former Fisher Funds marketer, set up BetterSaver in 2018 with research initially centred around giving KiwiSaver funds a grade based on their ethical investment approach.

Now, he has expanded it to offer an online service which will recommend funds from a preselected panel of providers based on a person’s savings goals, tolerance for investment risk and ethical stance.

The panel offers funds from Aon, Booster, Pathfinder, Fisher Funds, Generate and Milford Asset Management.

It is free for people to use the digital advice service but if they choose to switch to a provider, that provider will pay BetterSaver an advice fee of 0.25%, equivalent to $2.50 per $1000 invested.

All providers on BetterSaver’s preselected panel pay the same fee to ensure there is no bias in recommending a provider based on its advice fee.

Mr Taylor said the digital service was backed up by a financial adviser who could be contacted via online chat or through a callback arrangement.

‘‘It is not purely digital. ‘‘It is hybrid advice in the sense that we have one human adviser on board and she is available through chat.’’

Mr Taylor said it had used Morningstar data to analyse volatility and returns as well as fees and its sustainability rating to come up with a panel of providers which met its standard criteria.

It then approached the providers to reach an advice payment agreement with them.

But some providers have not been included because they would not pay the advice fee.

A white paper by BetterSaver on its methods reveals Simplicity’s conservative fund meets its fund selection criteria but is not offered on the platform because there is no agreement to pay the advice fee.

Other providers such as Pathfinder and Juno meet its ethical standard but not its overall criteria.

The white paper notes people can be put into the Pathfinder scheme by getting advice from its human financial adviser but not Juno because there is also no agreement to pay the advice fee.

Mr Taylor said it had about 50 people who had used the service so far through its testing stage and it had a waiting list of about 35,000 people.

Its next step was building a dashboard that would take in data from a customer’s KiwiSaver fund and use it to provide ongoing advice.

‘‘We will be getting API feeds of client fund return data into our portal and will be using it for an ongoing advice hub where we will talk about contribution rates, how they can meet their goals faster, that type of thing.

‘‘The idea is we will have a higher digital touch point than [other] providers would.

‘‘We want to improve people’s lives.

‘‘A lot of people aren’t making the most of it. We think there is a big opportunity to help a lot of people do better.’’

❛ In reality with their

goals or timelines they should probably be in a growth fund. So they are leaving money on the table