Kernel KiwiSaver Plan on the Ascent

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The Role of KiwiSaver Advice

Written by Dean Anderson, Founder and CE of Kernel

It’s no secret that KiwiSaver plays an increasingly important role in Kiwis’ ability to retire on their terms. After all, it’s likely to be our second largest asset at retirement, after property.

With over 3 million members, New Zealand’s collective KiwiSaver assets have reached $100 billion, twice the amount recorded in 2018. The Financial Markets Authority (FMA) recently projected that these savings could grow to over $2 trillion by 2070. A figure that highlights the scale and influence KiwiSaver will having in shaping the future of New Zealand.

As KiwiSaver continues to grow, it's anticipated there will be a rise in political intervention in shaping its structure. The recent election serves as a pertinent illustration, showcasing instances where political rivals suggested policies that tamper with the fundamental purpose of KiwiSaver.

Financial advisers must ensure there is a strong voice advocating for the interests of New Zealanders. This collective effort is crucial in ensuring that any policy interventions align with the needs of end customers. Your role as impartial experts makes your voice indispensable in shaping policies that serve the best interests of the public.

As KiwiSaver account balances continue to grow, it's becoming more common to see balances in the hundreds of thousands, reiterating how crucial it is for members to access reliable and impartial financial advice.

This guidance should go beyond merely structuring KiwiSaver investments to align with clients’ objectives; it also needs to involve thoughtful considerations on how this capital will be utilised during retirement.

With a significant portion of the 724,000 members aged 55+, including 214,000 individuals over 65, financial advisers need to ensure they have the tools and processes to effectively integrate KiwiSaver into their comprehensive suite of financial planning services.

Fortunately, a significant number of independent financial advisers are actively involved in this discussion. According to our recent adviser survey, 82.5% of advisers indicated that they currently offer advice on KiwiSaver or have intentions to do so. This comes as no surprise, considering the high calibre of our independent financial planning industry, which frequently adopts a holistic approach.

Certainly, a common argument among those yet to venture into KiwiSaver advice revolves around the balance of time and return. The effort required for providing advice, coupled with compliance costs, often does not align with the potential income achievable through delivering impartial guidance. This is especially notable since, historically, the space has been occupied by ‘free’ KiwiSaver advice, supported by a trail commission model.

Given the FMA’s expressed dissatisfaction with the trail model in their Value For Money assessments, there’s the possibility that fee and servicing models related to KiwiSaver will need to undergo transformation.

For advisers contemplating the future, the strategic use of technology and collaboration with a variety of reputable providers can enhance the productivity and profitability of KiwiSaver advice, all while ensuring exceptional value for customers.