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Advisers asked to help default review

The government is looking to tap the knowledge of financial advisers as it tries to decide what to do with the default KiwiSaver provider system.

Wednesday, November 14th 2012, 6:49AM

by Niko Kloeten

Commerce Minister Craig Foss has released a discussion document on whether changes should be made to the default KiwiSaver provider arrangements.

And the document includes a number of questions for financial advisers around issues the review will grapple with, particularly to do with investor behaviour: “What is your experience with risk/volatility and member behaviour in response to it?”

Advisers and product providers are asked for “suggestions and cost estimates for a programme of engagement with default members to help them transition to active choice products”.

Advisers are also asked to “explain the process you currently use to guide KiwiSaver active choice members into an investment fund that has the appropriate risk profile?

“What factors and weightings do you take account of, for example – age, gender, income, whether they intend to make a first home withdrawal and, if so, when?”

Foss said, “The Government is committed to ensuring that KiwiSaver is operating at an optimum level. To do so, the default provider scheme needs to be designed for investors’ best interests.

“KiwiSaver has continued to grow rapidly since its introduction – in the past year about 17,500 New Zealanders have joined each month. This takes total membership to more than two million.

“It is important that current and potential KiwiSaver providers and members have the opportunity to comment on possible changes to the default provider scheme,” says Mr Foss.

The discussion document asks whether default provider arrangements should consider the role of scale and fees and be tailored for an investor’s life stage and likely risk profile. It also discusses the practicalities of transitioning to a new arrangement.

Six default providers were appointed for a seven-year term when KiwiSaver was launched in 2007. These appointments expire on June 30 2014.

Life-cycle funds no substitute for advice

Niko Kloeten can be contacted at niko@goodreturns.co.nz

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  • Bank advice 'an area of concern'
    “Well said Dirty Harry! In the example you used, who is to say the customer doesn't owe $5,000 to a third tier lender...”
    1 day ago by Cynical Ex-banker
  • Bank advice 'an area of concern'
    “FACT: I went into my bank to make an enquiry. After completing that I was asked if I was in K/Saver. I said I was in...”
    1 day ago by LPL
  • Bank advice 'an area of concern'
    “In other words, the true home of 'too much selling and not enough advising...’; If someone walks into a bank and says...”
    1 day ago by Dirty Harry
  • What’s the point of independent advisers?
    “Good work from Mr Berry. The “views paraphrased from the large fund manager” are ridiculous and if these views are...”
    1 day ago by Brent Sheather
  • What’s the point of independent advisers?
    “Great article. Is one of the problems also that the providers (banks/insurance companies/fund managers etc) don't offer...”
    1 day ago by btw
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AMP Home Loans $200k+ 7.14 5.89 6.29 6.55
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Credit Union South 5.75 - - -
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General Finance 5.95 6.25 6.50 7.10
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ICBC 6.75 5.99 6.39 -
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Kiwibank 6.65 5.99 6.39 6.65
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