I had someone ask me the other day.
“I am employed and enrolled with Kiwi Saver at my bank as it was all I knew, and I didn’t put much thought in it at the time.
Now my colleague has a KiwiSaver managed by her financial adviser, which made me think of my current KiwiSaver situation.
So, what really is the difference between KiwiSaver schemes that banks offer and other companies?”
A short answer to this: Not a lot, they are all managed funds invested the same way in various types of asset classes like Shares, property, fixed interest, and cash. All have fees and the same KiwiSaver rules apply.
BUT here are some points to consider which at the end of the day make a difference to the overall return of your KiwiSaver.
What are the KiwiSaver fees? Well, there are admin fees, performance fees, fund type fees, these all should be displayed and broken down transparently. Some providers have a return performance looking and sounding better than it is with the fees and taxes not accounted for.
Beware of the hidden, performance or undisclosed fees/where they are hard to find!
Depending on which fees you pay and fund you choose someone at 20 today, could pay an average of nearly $40,000 or less than $8000 in KiwiSaver fees till 65.
Another point to consider is banks don’t give personalised advice, but other companies can use financial advisers.
The task of a financial adviser is to scan, research and evaluate all available providers in the market to analyse the best provider by the level, quality, and number of benefits they offer, fees and charges, historical performance just to name a few. Evaluate the best funds and match it with the personal goals and risk appetite of that individual.
Banks give general advice and inform about the products they sell. That is when you have only one option of KiwiSaver provider, with no personalised advice and no monitoring for performance but the fees are still charged.
Things to think about when selecting that fund are –
- Current age
- Time till retirement
- Require access to the funds eg first home withdrawal
- Regular contribution
- Current balance
- Tax Rate