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David321

234 posts

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#295275 18-Mar-2022 11:12
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Hi all,

 

A bit of a conversation starter about weather it is worth using brokers for Kiwsaver as I am interested to hear peoples thoughts.....

 

Ive had Swain Woodham manage my Kiwisaver since I was in it at the age of 18 (I'm 34 now). Kiwisaver has not been something I have not thought about too much, I assume my balace is healthy for my age ($110,000) and figured there was nothing much else to consider - apart from fees, but balancing the price of fee's of the top providers vs their returns looked like a number crunching nightmare I preferred to steer clear of.

 

Last night I had my advisor from Swain Woodham around home for a review of my wife and I's kiwisaver, and he has switched our investment companies saying the new ones we are with will provide better returns etc. We are happy with the changes made and have peace of mind everything has been looked at and things are going well for us. 

 

The only thing that does not sit to easy with me is the fee of having Swain Woodham as our brokers, they charge 0.75% of our fund balance per annum, but apart from providing advice when we need it and a review once per year if we want it, that seems like easy and good money for them - for example my balance of $110,000 gives them just over $800 of my money per year.

 

I did not go in to this to much as I did not want the uncomfortable conversation with the broker about "is it really worth it", as I imagine their default reasoning would be their expert advice and making sure we are getting value for money. I figure we could possibly approach another company to take over without a broker and then not have to pay that 0.75%, but with our limited knowledge we could loose more in returns than loosing the 0.75% per year to Swain Woodham.

 

Long story short, what does everyone here think? would you pay 0.75% for the expert advice once per year and having the reassurance your Kiwisaver is performing well, or is it easy enough to do yourself earning the same returns as you would as if you had expert advice?

 

It would be great if it was the investment companies paying the brokers a commission from their pockets rather than mine, like mortgage brokers work, but then they may be inclined to go to the companies paying more to brokers rather that what is best for their client, at least paying a percent of your balance they have it in their best interest to increase your balance as much as possible, therefor increasing their returns?  





_David_

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Dynamic
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  #2888086 18-Mar-2022 11:17
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What is the gain to you of switching companies?  I expect they would have provided figures to back this claim up - e.g. average return over the last 5 years of your current and the recommended new provider.

 

If the gain is an additional 3% per year and it's costing you 0.75%, WIN.

 

Note I don't do Kiwisaver personally and have never tried to compare providers.





“Don't believe anything you read on the net. Except this. Well, including this, I suppose.” Douglas Adams

 

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PocketSmith for budgeting and personal finance management.  A great Kiwi company.


JayADee
2029 posts

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  #2888106 18-Mar-2022 11:46
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I'm happy doing my own and I'm happy with how it's going but my husband who isn't especially good at this kind of stuff and didn't put any effort into learning  hasn't done particularly well at it and it's really cost us. So if you want to do your own research and compare funds yourself the information is online. Otherwise, if you don't want to think about it then you're going to have to get professional advice I guess.


  #2888113 18-Mar-2022 11:56
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so you give them 0.75% but do you also get charged a Fund fee? for the funds they invest in?




duckDecoy
560 posts

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  #2888116 18-Mar-2022 11:59
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David321:

 

Long story short, what does everyone here think? would you pay 0.75% for the expert advice once per year and having the reassurance your Kiwisaver is performing well, or is it easy enough to do yourself earning the same returns as you would as if you had expert advice?

 

 

No, I would not. That is more than some kiwisaver providers entire annual fee !!

 

If it were me I would find a lower fee aggressive (due to your age) fund and run with that.  Simplicity has an indexed fund with quite low fees, that could be a starting place.

 

No one kiwisaver provider has stood out as being better than the others AFTER FEES across the entire history of kiwisaver.  Some are better some times, others are better at other times.  I very much doubt your brokers can pick winners, **if they could they would not be brokers any more and would have retired**, although they could possibly steer you away from losers.  So what are you paying them for exactly that you couldn't look at yourself? 

 

There are many online government supplied tools that let you rank kiwisaver funds by performance over time.  Perhaps try sorting by performance across 10-15 years and pick one from the top 10 say, with a focus on low fees.


timmmay
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  #2888181 18-Mar-2022 12:31
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Simplicity and Fisher Funds would be good providers to compare with your current provider.


David321

234 posts

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  #2888187 18-Mar-2022 12:46
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timmmay:

 

Simplicity and Fisher Funds would be good providers to compare with your current provider.

 

 

 

 

Our broker just took my wife out of Fisherfunds and put her in "select" (I think that was the name of the company).

 

He took me out of ANZ and put me into Kiwi wrap.





_David_

  #2888344 18-Mar-2022 16:07
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do you pay a fund fee ontop of his .75%?




Handle9
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  #2888365 18-Mar-2022 17:18
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You’re getting fee’d to death. You’re paying a broker fee on top of the fees from the fund. If you get charged 1% by the fund you choose you need to make a 1.75% + inflation return just to stand still. This seriously compromises your ability to grow wealth.

If you need advice find an IFA who charges an hourly rate, not commission. You may well pay the same but it decouples you from the incentives that often exist within the finance industry.

  #2888380 18-Mar-2022 17:55
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or just manage it yourself use the comparison tools and make a decision from that


Handle9
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  #2888440 18-Mar-2022 18:47
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Jase2985:

 

or just manage it yourself use the comparison tools and make a decision from that

 

 

For me that's fine but some people may or may not have the skills or confidence to do this. An IFA can be very valuable but the way the industry works stinks.


  #2888457 18-Mar-2022 19:40
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im meaning to pick a fund. if you pick a managed one they do it for you. which is probably what the broker is doing anyways.


tukapa1
578 posts

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  #2888877 20-Mar-2022 07:26
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Happy to do mine myself - have been with Milford aggressive for a little while now after doing some research.

 

Morningstar reports are a good place to start to compare Kiwisaver funds

 

https://www.morningstar.com.au/Funds/KiwiSaverReports

 

Check out the latest survey report - fund returns start on page 4 and are split into fund types eg conservative, balanced, growth, aggressive etc.

 

Various historical results to compare - 3 month, 1 year, 3 year, 5 year and 10 year.

 

 

 

 


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