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New KiwiSaver switching platform grades investments

New KiwiSaver switching platform grades investments on social responsibility (ESG factors)

The launch of the KiwiSaver switching platform, BetterSaver this week will for the first time offer all New Zealanders the ability to select their retirement fund according to an independently verified environmental, social and governance (ESG) grading.

At a time when one in five New Zealanders are still stuck in poorly performing default schemes, the new platform is currently the only dedicated KiwiSaver switching service that provides people with information in an easy-to-digest format, an ESG grading on each fund and the functionality to change KiwiSaver providers quickly and easily.

CEO and founder of BetterSaver, Joe Taylor, said that the average New Zealander’s KiwiSaver balance is around $18,000, which is not large enough to motivate most people to pay for financial advice from an authorised financial adviser.

“Up until now KiwiSaver providers have been able to claim that they consider ESG matters when they invest, but there has not been the ability to independently verify the truth or extent of their ESG commitments,” said Taylor.

“BetterSaver retained independent responsible investment consultant, Dr Rodger Spiller, to develop a framework that looks at each fund’s performance based on five social responsibility factors.”

The five factors which each fund is graded against are:

1. The Fund Manager (How transparent is the fund manager about where it invests your money?)
2. Exclusions (What does the fund avoid investing in?)
3. Inclusions (What does the fund seek to invest in?)
4. Engagement (Does the fund engage with companies to encourage better practice?)
5. Memberships and Research (How does the fund manager gather responsible investment information?)

An active investor himself, Taylor said friends and family frequently asked him which KiwiSaver fund he thought was best for them, but not being an authorised financial adviser, he was unable to offer personalised financial advice.

“I’d refer them to the information available online, but they would often come back complaining that it was too difficult to compare the different options as there was so much information.

“There are more than 240 different fund options available, with many claiming to consider ESG factors in their investments. However, getting the right information is both time consuming and a hassle. BetterSaver changes that.”

Taylor said his personal experience, the realisation that the average person doesn’t want to pay for financial advice and the fact that an estimated 400,000 Kiwis have lost out on more than $1 billion in returns because they’re in a default scheme, led him to see a gap in the market for a dedicated KiwiSaver switching platform.

“BetterSaver does not provide financial advice. The platform simply makes information accessible and easy to understand; it allows users to sort funds by type, and compare by performance, fees, and social good.

The platform is aimed at Kiwis who are starting out in KiwiSaver, as well as those aged in their 20s-50s who want to compare the more than 240 options they have to choose from.

BetterSaver will be paid a commission by some providers when somebody uses the platform to switch their KiwiSaver; however, BetterSaver in no way influences the decision-making process other than to present information objectively and independently.

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