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C & D

Smarter KiwiSaver Investing

For most New Zealand investment fund managers, the largest investment that they manage is their range of KiwiSaver products. Some managers have made the conscious decision not to market their own KiwiSaver product, but instead market their skills to a range of KiwiSaver providers. Effectively they are benefiting indirectly from KiwiSaver, without the need to actively market to the public.

We see this as a sign of professionalism and confidence in their management ability. We say this because it is clear from Research House reports into KiwiSaver that the largest funds which are predominately in-house managed funds appear to be the also runs when it comes to investment performance. Being a good strong marketer of product does not imply that the product is going to be a strong performer.

When the industry finally adopts a set of uniform performance reports, it will make it easier for investors to see how their KiwiSaver provider is performing relative to their peers. At times it feels like the reason no uniform reporting standards have been adopted is because these may not be in the best interests of the KiwiSaver provider. It could have a negative impact on their marketing efforts.

The KiwiSaver business for the large providers is in some ways similar to the airline industry. Instead of bums on seats, the all important factor is the number of signed up investors. If you are going to take an expensive overseas trip, in all likelihood, you will have spent hours researching where you want to go, what you want to achieve, and how much it is going to cost. After you have made the trip, you will have memories, hopefully most will be good. You may also have regrets that you could have done parts better, or that you could have taken in other sights, enjoyed more local food and wine. For those who made their bookings on the internet, their regret may be that they did it themselves, and that they did not really know what they were doing such as arriving at the wrong destination.

The chances are, for people aged under 40, KiwiSaver is going to be their largest non-property investment. It is going to have a major influence on the investors’ standard of living at retirement. Yet it seems that the majority of KiwiSaver investors have done little or no real research on their investment. For these people, their best investment decision may be to choose to have a review carried out by an authorised financial adviser who is not employed by a KiwiSaver provider. The adviser should also be able to identify any other areas that may be having an impact on your financial health and wellbeing.

Disclaimer

Steven Barton (FSP 32663) and Susan Pascoe Barton (FSP 32382) are Certified Financial Planners and Authorised Financial Advisers.  Their initial disclosure statements are available free of charge by contacting them on (07) 3060080 or they can be downloaded from www.pascoebarton.co.nz. This column is general in nature and should not be regarded as personalised investment advice.