Tate calls for KiwiSaver advice funding

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Institute of Financial Advisers (IFA) president Nigel Tate is to use the launch of Financial Awareness Week to call for a portion of KiwiSaver cash to be set aside to fund financial advice for savers.

Tuesday, August 16th 2011, 7:22AM 2 Comments

by Benn Bathgate

Tate will raise the issue at a debate in Wellington on the benefits and drawbacks around compulsory superannuation and whether it is appropriate for New Zealanders.

Speaking to Good Returns yesterday, Tate said, “As part of the debate tomorrow in Wellington I’ll be highlighting the fact I believe the Government should be reducing the level of upfront support to KiwiSavers in lieu of providing them with a portion of upfront support and a portion for advice.”

He said new research from a study being released this Thursday found only 25% of KiwiSavers had taken financial advice, a situation Tate claimed was “absolutely ludicrous.”

"Where we have, for example, a 25 year old going into a default fund, because they don’t know any better, they don’t know they should be getting advice, they don’t know that most likely they should be in a growth fund, by the time they get to retirement, they’ve missed out on something like $250,000.”

Tate also believes KiwiSaver will provide a catalyst for greater financial awareness and literacy as savers’ balances grow.

“Studies in Australia have shown that once investment levels in superannuation funds reach $20,000 people start to notice what is in their retirement funds,” he said.

“Average KiwiSaver levels now sit at approximately $12,000 so we expect increasing levels of awareness in years to come.”

He said that events such as the Wellington debate aim to raise the level of the public’s financial awareness so people, “have the tools before they need to use them.”

The debate around compulsory superannuation also includes Grosvenor investment head David Beattie, former NZ head of Russell Investments Ed Schuck, NZX chair Andrew Harmos, ISI chief Peter Nielson and Labour Party spokesperson for Small Business and Commerce Hon Lianne Dalziel.

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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