There is now a plethora of KiwiSaver providers all telling you to switch to their fund, usually focusing on one ‘hot’ feature. So how do you know if you should jump ship and move? Well basically, speak to an Authorised Financial Adviser (AFA) who will provide comparable information enabling you to make an informed choice. Without doing so you could switch over without realising that it isn’t in your best interest.
It’s always good to stay on top of your money and your KiwiSaver account usually plays a large part of your financial future. Therefore, switching providers on the back of a mass advertising campaign, direct phone call or bank visit really doesn’t make sense.
Our clients often contact us to say they have been contacted directly by some providers and been told they should switch due to higher returns or lower fees etc; or been advised by the local bank teller that they should switch as it’s easier to have everything in one place. The one factor that is always missing is that in not one scenario has the new provider ever offered personalised tailored advice, taking into account the individuals wants, needs and attitude to risk. When looking at KiwiSaver investment, several factors need to be taken into account – fees, performance, fund management and fund choice. A provider may be red hot on one but this won’t necessarily work in your favour. For example, a 0.5% lower fee isn’t going to help grow your funds without a proactive fund management. Likewise, all providers take their turn at the top so switching to someone who has just had record breaking highs is almost pointless as you’ve already missed the growth. KiwiSaver fund performance needs to be looked at over at least a three year period, rather than just the last quarter or the last twelve months.
Quite often, it can pay to stay with your current provider but choose a different fund (or split of funds). Some providers allow you to invest your current fund balance and ongoing contributions differently, enabling you to treat one aspect more conservatively and aim for more growth with the other. We are not saying do not switch providers as we sometimes recommend our clients to do so, just make sure you are doing it for the right reason with the full facts.
We’re always happy for a coffee and a chat, so plan with Foresight and give us a call!