KiwiSaver could help fill advice gap

KiwiSaver could be part of the solution to provide financial advice to older New Zealanders who do not have large amounts of money to invest, adviser Martin Hawes says.

Monday, June 10th 2019, 6:00AM

Hawes is also chair of the investment committee of the Forsyth Barr KiwiSaver scheme, Summer, and is on the board of variable annuity provider Lifetime.

He said it was hard for people “in the middle”, who might have $100,000 to $200,000 saved, to get personalised advice.

Many financial advisers found it hard to achieve diversification with smaller sums and those people tended to default to invest in term deposits that proved insufficient.

Suggesting that people read up on the principles of investment was no substitute, he said, because while it was possible to master the concepts most people found it much more difficult to apply it to their own situations.

But he said, now that the law is being changed to allow people over 65 to join KiwiSaver and move between funds, it could provide an option.

He said it would be a “readymade, attractively priced” fund for retirees that would be perfectly liquid because they could draw on their money whenever they needed to.

Many providers allow for a set amount of withdrawal on a regular basis.

“I think that’s going to work really well for people,” Hawes said.

He said it would be particularly efficient for KiwiSaver schemes that had financial advisers working alongside.

“KiwiSaver may be a pretty good solution for these people.”

Hawes said there was a huge need for financial advisers. Many Baby Boomers were finding, now matter how hard they found it to grow their wealth in the first place, using that wealth to generate a stream of sustainable income was the hardest thing they had encountered in the financial world.

Hawes said it was likely that the new advice environment would mean the end of “one-man band” advice firms. But he said that would not be an issue so long as independent advisers were able to band together in small groups to continue to offer a service.

Tags: financial advisers KiwiSaver Martin Hawes