$10 a year not enough for good advice
Advisers are scratching their heads over how to provide their clients adequate advice on KiwiSaver for the “princely sum” of as little as $10 a year.
Thursday, May 3rd 2012, 7:14AM 
8 Comments
by Niko Kloeten
The number of KiwiSaver members passed 1.9 million in March, but according to the latest report by Morningstar, the total amount of money in KiwiSaver is $11.26 billion, meaning the average balance per member is under $6000.
According to Murray Weatherston of Financial Focus, the numbers just don't stack up when one takes into account the relatively meagre commissions advisers get for KiwiSaver.
KiwiSaver doesn't figure at all in the advice he gives to clients "other than to recommend to employees that if they can afford their contributions they put the minimum amount in to get the maximum amount from the government and their employer," he said.
"The reason I don't deal with KiwiSaver is I have no idea how to meet the requirements of the Financial Advisers Act and do everything they require for the quite small remuneration that one gets.
"I would believe most KiwiSavers are unwilling to pay any fee at all in order to get advice. If you take the average KiwiSaver fund balance of $5000 and the average trail of 20 basis points, you have to do everything to comply with the Financial Advisers Act for the princely sum of $10 a year."
A number of other advisers spoken to by Good Returns have expressed similar sentiments.
However, Goldridge Wealth Management chairman Bill Dahlberg said clients are already showing signs of greater interest in KiwiSaver as their funds grow.
"After four years of talking with our clients, and KiwiSaver accounts now over $10,000, and some up to $50,000, the clients are taking a more active interest in what is one part of their investment planning."
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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Comments from our readers
Lawyers, doctors, plumbers, electricians all charge for their time, the later for travel to. Nobody does anything for nothing any more.
If we move as an industry to charging without exception I believe there will be greater acceptance.
The biggest winner in the creation of KiwiSaver is consumers and that’s how it is supposed to be.
People are actually actively saving for the first time in their lives; without the unnecessary fee gouging.
KiwiSaver was never designed to make advisers wealthy and make a quick buck. Most consumers appreciate not having to deal with an unnecessary middle man. Nobody is asking advisers to provide advice for $10, because they’re not really needed and offer no value in the KiwiSaver space.
If there were a lot more people like Mortgage Broker since 99, then I am sure the profession as a whole would be viewed rather more favourably than it is by the general public as it is now. Well said sir.
In answer to your question - Yes.
I also think tradespeople should be regulated. Doctors should be more accountable. And, lawyers already are - they now need to clarify fees up front.
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It's about building up relationships with your clients, so when your KiwiSaver clients and their children want have their life cover looked at or get a mortgage in the future, then you want to be the person that they decide to call.
I am 45 and I know a lot of Aussie's my age that have $300,000+ in their funds, so based on that it would be over $600 per client.
Brokers need to stop thinking about whats in their wallet for the short term and think more about looking after their clients for the long term, because at the end of the day this is what any client would expect.