Switching Kiwisaver, ditching the broker

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Forums › Finance and wealth management › Switching Kiwisaver, ditching the broker

David321

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#303010 10-Jan-2023 13:23

Hi all,

My wife and I currently have our Kiwisaver accounts managed by Swain woodham (brokers/advisors) who have invested our funds into two seperate accounts.

Swain woodham take 0.75% per annum of our total balance for their "monitoring" of our funds and then the provider fee's come out as required also. But as our balances have increased significantly since joining many years ago the 0.75% cut Swain Woodham take is getting quite substantial so we are looking to ditch swain Woodham and switch to other providers without using a broker to avoid the 0.75% fee we currently pay swain woodham.

We are both in our mid thirties so will be looking at growth funds, after a few hours of research online I have seen Millford and Fisher funds would be good options based on past returns, although I know you can't use this alone to decide as we have all know past performance does not indicate future performance.

The fee's seem reasonable when compared to their returns, Fisher Funds are a bit higher than millford from what I can see, but I don't want my wife and I both in Millford as I remember our advisor saying they never recommend this incase one company collapses you still have your spouses balance to live off.

Im interested to hear others thoughts on this, I have no question in particular I guess apart from would this be a good move? I know financial advice must come from a registered person etc but I am more looking to hear other peoples thoughts and input rather than take it as advice.

Bonus question, one thing that has just sprung to mind is this, would it actually be a bad time to move providers considering the current downturn? considering that we have less in accounts now that when we switch a year or so ago, I keep hearing our companies will be buying up cheap stocks right now in anticipation there will be a big bounce back? therefor if we were to cut our losses and switch now we would not have the chance for the big bounce back of our accounts due to not being with the provider longer enough for them to buy cheap stocks on our behalf with our money? or does it not work like that? perhaps when our money is with the new provider and allocated we have just as much of a chance of a bounceback than if we remained with our current provider because bounce backs depend on total balance? Im am fairly certain it would be a case of bounce back relates to account balance and switching at any time would neither be beneficial or non-benefishal, but wanted to check!

_David_

SomeoneSomewhere

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#3019534 10-Jan-2023 13:27

In general, it shouldn't matter when you switch funds if you're switching from e.g. a growth fund to another growth fund. You're selling the old fund for less money but the new fund is cheaper. The only exception is that I think your money sits in cash with IRD for a few weeks during the transition, and if the market goes up massively during that time you've lost out a bit.

I've generally heard advice to go for low-fee funds rather than more expensive actively managed funds - as you're finding, the fees are excessive. Returns are hard to predict and there's very little clear evidence on actively managed funds being more profitable than index funds.

Fees, on the other hand, are guaranteed.

wellygary

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#3019536 10-Jan-2023 13:28

Have you asked Swain Woodham to justify their ongoing fee of 0.75%?...

I could understand a one off fee to help you select a fund, but how can they justify on going cash to basically "watch the watchers"

timmmay

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#3019557 10-Jan-2023 13:49

There's also Simplicity. Lower fees but from memory return after fees is slightly lower than Fisher Funds. Fisher Funds fees are pretty high. Last year they gave themselves a "performance bonus" as documented in the fees schedule for meeting targets, which was approximately as much as the fund had gained in the past year - about $1K from memory. When I asked about it they said the bonus period was different from the tax year, or something like that. Wasn't impressed. They're very reputable generally though.

David321

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#3019588 10-Jan-2023 14:47

Just browsing now, these performanced based fee's are interesting especially when some of the returns are luck.

I have heard many say actively managed funds are not work the extra fee's they come with (including my broker) but it seems hard to find funds that perform well in the growth category that are not actively managed.

_David_

pih

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#3019590 10-Jan-2023 14:51

We moved to Milford about a year ago. Can't say much about returns: everything has largely been in downturn since we moved, with some recent gains to get us back to where we were 6 months ago, but I was very happy with the application and transfer process, and the app is pretty good. Happy so far and would recommend, if that counts for anything.

jonherries

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#3019592 10-Jan-2023 14:52

We are with simplicity. It is non-profit so they donate any profits to charity and they seem like equivalent ETFs (maybe even an ETF aggregator).

They show you everything you own (ETFs, shares, bonds etc)which is interesting. They also have an ethical investing framework.

They also do homeloans for members and you can just invest with them separate to KiwiSaver too.

Jon

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wellygary

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#3019607 10-Jan-2023 15:25

jonherries:

They also have an ethical investing framework.

Jon

Yeah, about that....

"we outsource our global investments to Vanguard Asset Management Limited (Vanguard). Vanguard shares a similar low-cost philosophy"
https://simplicitykiwi-assets.s3-accelerate.amazonaws.com/public/Uploads/98838d511f/Simplicity-KiwiSaver-Scheme-Bilingual-PDS-25-May-2022.pdf

7 December 2022
"In truth, Vanguard has never shown any real vigour for mitigating climate change. It remains the largest investor in six of the world’s top ten polluting companies and, as Capital Monitor pointed out earlier this year, there’s always been a whiff of smokes and mirrors about its emissions reporting."
https://capitalmonitor.ai/institution/investment-managers/vanguard-nzam-exit-is-opportunity-for-investors-to-vote-with-their-feet/

marpada

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#3019659 10-Jan-2023 15:48

You can find extensive reviews about Fund Managers in the Money King NZ blog, for example https://moneykingnz.com/simplicity-review-could-there-be-better-fund-options-out-there/ and https://moneykingnz.com/milford-review-better-than-index-funds/

PANiCnz

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#3019677 10-Jan-2023 16:26

There is a school of thought that you can't predict future performance, but you can predict future fees. This article has a good overview of the low-cost KS options in NZ.

r/PersonalFinanceNZ is worth a read, this sort of question is pretty common.

jonherries

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#3019689 10-Jan-2023 16:53

wellygary:
jonherries:

They also have an ethical investing framework.

Jon

Yeah, about that....

"we outsource our global investments to Vanguard Asset Management Limited (Vanguard). Vanguard shares a similar low-cost philosophy"
https://simplicitykiwi-assets.s3-accelerate.amazonaws.com/public/Uploads/98838d511f/Simplicity-KiwiSaver-Scheme-Bilingual-PDS-25-May-2022.pdf

7 December 2022
"In truth, Vanguard has never shown any real vigour for mitigating climate change. It remains the largest investor in six of the world’s top ten polluting companies and, as Capital Monitor pointed out earlier this year, there’s always been a whiff of smokes and mirrors about its emissions reporting."
https://capitalmonitor.ai/institution/investment-managers/vanguard-nzam-exit-is-opportunity-for-investors-to-vote-with-their-feet/

Hahaha - thought twice about writing that and that is why I didn’t say it was a good framework (better than not having one I suppose)… for example they say they don’t invest in nuclear power which is dumb in my book as it is a good bridge for many countries to get off coal/gas and does that then include fusion as well?

Jon

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#3019710 10-Jan-2023 18:10

@David321 - my two cents: from what you've described, it sounds like the brokers/advisors aren't adding value and simply 'clipping the ticket'. I'd lean towards the researching fund advice that @marpada has posted.

Ultimately what fund provider you choose is up to you but I would suggest looking at past performance... if a fund has a track record of never delivering good returns, I would avoid it. Also would recommend avoiding providers that hide their performance (not going to name names but there are two or three providers that do this) and focus on blasting out 'ethical'/'ESG' themes. You need to be comfortable and understand how your funds will be invested.

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ANglEAUT

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#3019759 10-Jan-2023 20:37

jonherries: ... They also do homeloans for members and you can just invest with them separate to KiwiSaver too.
Jon

For me, it felt like they basically top up your deposit, they don't do a full home loan service. Yes, I know their we site says differently; maybe it was the eligibility criteria that caused this end result.

They also do Simplicity Living: Rent for the long term and get on with living. Sick of having to pack up and move every 12 months? We remove the uncertainty by offering long-term tenure.

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