KiwiSaver Fee and Performance Comparison

KiwiSaver Fee and Performance Comparison

I’ve been hearing from a few of you because you have been opening up your KiwiSaver account statements at this time of the year. And there have been a few unexpected surprises in there. For the very first time every provider has had to put the fees they have charged you in black and white showing a dollar amount, not just a percentage. Prior to this only a couple were putting that information out there. Disclosing actual fees in dollar terms has made the KiwiSaver providers squirm and it’s also making a few of you uncomfortable as well. Good.

If you think that they have done this purely because it’s in your best interests to know exactly how much you are being charged for the service you are receiving, then think again and it might be time to take off those rose tinted glasses.

I blogged on this back in March 2017: KiwiSaver Switch

Please go back and read it as it puts more context around this blog post today. But for those amongst you who can’t be naffed the gist was this:

I was looking at changing my daughter to a different provider but before I did I researched the fund and the fees she was currently paying. Well, I tried to! But I never really found out because finding out what fees she was being charged over and above her seemingly reasonable $2 monthly charge was like finding a needle in a haystack. Impossible. I was given the complete run around by ANZ so long story short I switched her away from them because I was so annoyed at their NON disclosure. I kept using an expletive that rhymed with ‘bankers’ because I was so annoyed!

Now let’s also be clear, fees are not everything right? You actually want a fund that performs well, after all there is no point paying the lowest fees on the market if your fund is then a rubbish investment. I have spoken to a number of people who are ‘happy’ to pay higher fees for a service because they feel they are getting a good return on their investment, so all power to them, as long as they have researched their choices they can do whatever they like.

Maybe I am just greedy: I want both low fees AND a great return. I don’t think that is too much to ask, do you?

Since I wrote that post about 15 months ago, a lot has changed. For a start my whole whanau has changed KiwiSaver providers. But perhaps more importantly the FMA (Financial Markets Authority), after a lengthy consultation process has forced all KiwiSaver scheme providers to disclose the total fees you and I are charged, in a dollar amount (not just a percentage). This took effect on April 1, 2018. So when you and I are opening our annual statements this year, for the first time we know how much WE put in and how much THEY took out. And this is what has been making a few of you uncomfortable and has had you asking yourselves “am I getting value for money here”?

Now to be clear the percentage we were being charged for the service they provide has always been there on our statements. Seeing 1.13% or 1.3% had most of us going “MEH, so low, not worth taking notice of!” But when we see it in dollar terms, something we can more easily relate to, it feels a whole lot different and has lead to a few cases of “I’ll show you mine if you show me yours” with your friends. I’m talking about KiwiSaver Statements ya’ll.

Many of us spend more time driving around petrol stations trying to get 10c off a litre instead of the poxy 6c that you are offered if you hand in a supermarket coupon (is it just me or do you think that printing that useless voucher is a complete waste of paper and ink?) If only we spent as much time looking at our KiwiSaver statements because there are far bigger savings to be made there. Every dollar your provider sucks off you in fees is a dollar not invested in your fund. Over the lifetime of your KiwiSaver investment this amounts to BIG money. BIG MONEY.

The point of the blog post today is to show you two actual statements side by side. One is my own Simplicity KiwiSaver annual statement and the other is from one of my subscribers who got in touch to show me their ANZ KiwiSaver statement. Nothing like a real life example to show the facts. I’m kinda comparing a Braeburn with a Granny Smith. Both apples. Just slightly different and in fairness to myself these banks and providers use a lot of “smoke and mirrors” which IS confusing! It’s no wonder so many Kiwi’s remain in a default KiwiSaver fund.

What do I think you should do with this information?

I would like you to go and get your own KiwiSaver statement out and compare it to these ones below and have a think about the following:

  • Are you in the right fund?
  • How does your return compare with the ones below? Are you happy with this return?
  • What about the fees you pay? Higher or lower than these examples? How do the fees your provider took out compare with the money you diligently put in?

I don’t care who you are with, it’s your decision to make based on your situation and the information you have. Just do your research before you think about staying put OR changing provider.

You will find that the Sorted website has a useful tool to help you compare funds with your own:
KiwiSaver Fund Finder

And while you are online, this is worth a watch as well:
Simplicity: How 1.3% really is 25% and why that matters.

Simplicity also have this fees calculator on their website:
Simplicity Fees Calculator

I expect that providers of a service are in it to make money, but how much is enough? How much am I prepared to forgo so I can line my providers pockets? My answer was NOT MUCH and although I didn’t mean this blog post as an advertisement for Simplicity, well, take a look at the numbers below and they do a lot of speaking for themselves. And to be clear, I am not affiliated to them in any way. When I talked through my numbers with the person who sent me their ANZ KiwiSaver statement they were shocked that they paid double what I paid AND their returns were less. Where is the ROI for their service? I would much rather support a New Zealand company who has transparency in what they do than one that sends its enormous profits offshore and baffled me with bulldust (yes, I am being polite here) when I tried to find out exactly how much my daughter was paying them. They were literally stealing candy off a baby and it irked me greatly.

So without further ado.

KiwiSaver schemes comparison - Click on image to enlarge

And finally, just to spell this out a little further. The ANZ fund that this subscriber has is actually made up of half Balanced Growth Fund and Half Growth Fund. I have listed their returns from the Sorted KiwiSaver Fund Finder above but just to compare the Simplicity Growth Fund with the ANZ Growth Fund:

Simplicity Growth Fund
Returned 8.19%
Fees charged .52%

ANZ Growth Fund
Returned 7.53%
Fees charged 1.27%

So the ANZ fund charged more than double the fees of the Simplicity fund AND it returned less. To give my professional opinion, bearing in mind I certainly do not claim to be an AFA… THAT SUCKS! Grab your own statement and compare it to those above and feel free to make up your own mind though.

Happy Saving!

Ruth

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