Confident Kiwis investing more, but help needed for some
Increasing numbers of New Zealanders may have greater wealth in the future, thanks to confident engagement with investments.
But many vulnerable Kiwis could be collectively missing out on millions by not being more engaged. Those most disadvantaged are Māori and Pasifika, says a Kiwi Wealth report, and it’s on financial services providers to step up and help drive engagement.
Kiwi Wealth’s State of the Investor Nation survey showed New Zealanders felt wealthier than they did 12 months ago, with 25% of Kiwi investors (including KiwiSaver members) making changes to their investments. Of those, 41% had increased money in their investments while 25% had reduced money.
The report found homeowners and those with higher wealth were more likely to make changes, while renters and non-Pākehā citizens were least likely. It also found that 15% of KiwiSaver members did not know what fund they were in – a problem that was particularly acute for younger New Zealanders, Māori and Pasifika, renters and those on lower incomes.
Joe Bishop, Kiwi Wealth General Manager Customer, Product and Innovation, said those who regularly checked their investments, risk profile, goals and investment performance were more likely to build wealth.
“One of the biggest contributing factors to long-term returns is the level of involvement from the investor. The data is quite encouraging on one hand because more New Zealanders appear to be checking their investments and, when they feel it’s required, are implementing changes to their risk parameters or asset class.
“But the number of KiwiSaver members who don’t know what fund they’re in is a concern, especially given lower income earners and young people are the ones who need KiwiSaver to perform the most.”
Bishop said the onus was on financial providers to support and encourage members to be more engaged.
“Many members are simply not getting enough information, at the right time, to make informed decisions. Publishing annual statements and fees in real dollar terms – something we’ve been doing for over a decade – is the bare minimum.
“Providers have a moral duty to help their customers better understand their future wealth and how small decisions now can have a huge impact on their future.”
Bishop said KiwiSaver was a particular concern. Almost three million New Zealanders are KiwiSaver members, meaning they are all investors. But a lack of knowledge on how to take control of their account means they could be missing out on a lot of money when they will need it most.
“The true power of KiwiSaver can only be realised when people engage with their investment earlier in life,” he said.
“That’s hard for some people to do who may be dealing with an investment horizon of around 30 years or more. People just can’t see, or plan, that far ahead into the future.
“But those small changes, such as being in the right fund and having the right contribution level, can have an impact on the amount saved at retirement.”
It was time for providers to step up to the plate, he said.
“The time has surely passed where providers can still treat their members like a number. An effective strategy for wealth building is a transparent partnership between the fund manager and the clients.
“KiwiSaver members should be empowered with better information and retirement planning tools so that they can then make informed decisions on the retirement lifestyle they want and how to create enough wealth to fund it.”
Kiwi Wealth’s 2019 State of the Investor Nation report can be accessed at https://www.kiwiwealth.co.nz/report/state-of-the-investor-nation
State of the Investor Nation 2019: Who’s
making changes to their investments?
|Most likely||Least likely|
to increase investment (eg moving to more aggressive, but
41% of all investors
$130,000 household income (52%) |
Young people under 35 (45%)
|More than $70,000 household income (29%)
Indian / Chinese (32%)
|Reduce chance of
investment returns (eg moving to a fund with lower returns
but considered less risky)|
25% of all investors
|Over 55 age (33%)||Aged 35-54
Māori / Pasifika (16%)
|Change investment type (asset
27% of all investors
|More than $130,000
household income (38%) |
Indian / Chinese (32%)
|More than $70,000 household income (23%) |
Young people under 35 (24%)
|Change to risk
21% of all investors
|More than $130,000
household income (28%) |
Māori / Pasifika (27%)
|Over 55 age (18%)|
More than $70,000 household income (19%)
New Zealand / European (19%)