Kiwis opt to manage own funds

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Do-it-yourself has crept into the KiwiSaver space, and while it is not for everybody, some Kiwis like it.

Kiwibank, SuperLife and ING are among KiwiSaver providers to allow members to choose the asset class of funds they wish to invest in.

ING introduced the concept via its network of financial advisers some three years ago with its SIL KiwiSaver. Three years on, 18 per cent or 63,589 of its members are on SIL KiwiSaver.

SuperLife's similar scheme, on offer since 2007, allows KiwiSaver members to change their allocations and monitor their funds online. More than half of its 18,000 members are doing so.

Kiwibank in July launched its KiwiSaver offerings, including a "self-managed" scheme. A month later, 7 per cent of Kiwibank KiwiSaver members were self-managing their contributions.

Kiwibank Wealth general manager Tracey Berry said the bank did not have a figure in mind when it launched the scheme. "But the 7 per cent is telling us that there is certainly a market for those who'd like to make a decision with their investment choices and in terms of compiling their own portfolio," she said.

ING KiwiSaver distribution head David Boyle said about 30 per cent of SIL KiwiSaver members are on Lifetimes options – where the allocations are automatically made depending on the age of members. As to the extent to which the remaining 70 per cent are self-managing their funds, he said it "would be difficult to answer today".

Superlife director Michael Chamberlain agreed that the number of people self-managing their funds is "not easy to know" because some people "self-manage and change on a frequent basis some on a few years basis".

But self-managing "is not suitable for everybody", said David Kneebone, manager of sorted.org.nz.

"I think the key thing is that people make an informed choice about what type of fund that they are in, what risk levels are appropriate to them and then how they want it to be structured," Kneebone said.

Chamberlain, Boyle and Berry agreed. They said self-management is designed for individuals who are typically more sophisticated investors and are comfortable making their own decision and having the desire to do so.

The most important thing for any KiwiSaver member is to seek professional advice before making their investment choices so they understand the risks and returns of the funds they are investing in, they said.

Kneebone said the Retirement Commission's research suggests many Kiwis perceive KiwiSaver "to be an easy product to deal with" because in many cases their employer did most of the work and they don't have to make any decision once they've ventured into it.

"They can see the benefit, they've got it. And that's it.

"Of course what we'd love them to do is, along the way, assess whether they are on the right fund, whether they are paying the right amount of fees compared with other providers, and whether they are at the right risk levels.

"If they then extend that and they say I think I can do a better job than a fund manager and I'd like to control the asset allocation, good on them! It all depends on people's own ability to be comfortable with what they've done."

Berry expects that more KiwiSaver members will self-manage as they become more knowledgeable, accumulate investment experience and balances become more meaningful.

- © Fairfax NZ News