tristan.nz

Rupert Carlyon believes the right KiwiSaver is every Kiwi's right. 

The founder and managing director of kōura Wealth says many New Zealanders are missing out on hundreds of thousands of dollars in retirement savings because they have not made the right KiwiSaver decisions.  

"People aren't engaging properly with KiwiSaver," he says. "They're not getting the right advice so they're not making the right fund choices.  And the cost of making the wrong decision with KiwiSaver is huge."

"There is a real issue with KiwiSaver outcomes in New Zealand at the moment. People have expectations of what their KiwiSaver will give them and unfortunately the reality is likely to be very different. The most frustrating thing is that making the right decisions early on (fund selection and contribution rates) can make a huge difference in the long run. People put off making KiwiSaver decisions because it is too hard and it is confusing. Still, every day that a decision is delayed is a day less than your KiwiSaver is working for you," says Carlyon.

"It is not surprising people are not making the right decisions as less than 20 per cent of people talk to a financial adviser. People will often turn to their parents or Google for KiwiSaver advice. As an industry we need to become better at helping our customers."

In response to what he sees as a glaring need for New Zealanders to get access to better quality help and advice on their KiwiSaver, kōura has introduced a digitally advised KiwiSaver scheme focused on helping people make the right KiwiSaver decisions.

Carlyon says New Zealand's financial industry has been slow to adapt to the concept of digital financial advice compared to how things are progressing overseas. "Internationally there is over $1trillion invested through digital advisers, yet here in New Zealand there is almost nothing".  

Digital platforms have transformed the financial advice landscape by helping customers make the right investment decisions using data and algorithms to tailor unique solutions to a client's situation.

"One of the reasons people aren't making the right decisions is that it's really hard to get good, fair, impartial advice and help," says Carlyon. "Most people think about which KiwiSaver provider they should join rather than what fund is right for them. It is important for people to realise it's not really about the provider, it's actually about the fund and how appropriate that fund is for your situation."  

Research carried out by kōura last year showed 53 per cent of New Zealanders were sitting in the wrong type of KiwiSaver fund for their objectives, and 20 per cent were invested in default funds.

"We saw all this and realised it was a pretty terrible situation and that we needed to help people do much better with their KiwiSaver. That's why we built a digital advice tool.

"Internationally, digital advice gives everyone the benefits of a personal financial advisor to build a perfect financial plan irrespective of the amount you have invested or how much you earn. New Zealanders deserve something similar and we firmly believe that digital advice will give people better retirements."

The kōura digital advice tools will ensure you are in the right fund when you start, but more importantly they will check in with you each year to make sure that your KiwiSaver is still right for you. "We make it really hard for you to make the wrong KiwiSaver decisions," says Carlyon.  

If there was any dispute about the need for digital advisors before Covid 19, the market turmoil in March certainly curtailed that.  

"Covid tested the advice paradigm extremely well," says Carlyon. "In March, a huge number of people got caught out by being in the wrong type of KiwiSaver fund. Many of them switched from growth funds to conservative funds as they panicked because they were approaching retirement or wanting to purchase a house this year. The people that switched have missed out on thousands of dollars."

A recent report published on the US digital advice industry showed customers who had invested through digital advisors were less likely to react to falling markets. People invested through digital advice platforms were less likely to change their investment strategy during the March market turmoil than other investors. For the most part investors who did not react will be significantly better off than those that did change their investment strategy. The kōura client base replicated this global outcome – less than 1 per cent of kōura members switched in March compared to up to 12 per cent for other providers.  

"KiwiSaver is a complex product," says Carlyon, "and for people to meet their KiwiSaver objectives, they need help and the only way that we can give everyone access to good quality advice is to do it digitally – there aren't enough advisers in New Zealand to give everyone the personalised advice that they need to sort out their KiwiSaver. At the moment, kōura is one of the only places you can go to get proper digital advice here in New Zealand.   

"Our purpose is to make sure everyone gets the retirement they deserve and, more importantly, the retirement they expect."