KiwiSaver is one of the most important financial tools available to New Zealanders. For many people, it will form a large part of their retirement wealth. Despite this, the quality of advice across the industry often falls short of what is truly needed.
Too often, KiwiSaver advice is reduced to a basic process. A short risk questionnaire is completed, a fund is selected, and the job is considered done. That approach may meet a minimum standard, but it does not serve clients well over the long term.
Moving Beyond The Basics
A simple risk profile questionnaire has its place – it helps start a conversation. But it is only one small part of the picture.
Real advice goes deeper. It considers:
- How a person actually reacts when markets fall
- Their past behaviour during periods of uncertainty
- Their long-term goals and timeframes
- Their income stability and future earning potential
- Their broader financial position, including debt, insurance, and other investments
Many people believe they are conservative investors. In reality, they may simply be uncomfortable with short-term volatility because they have not been properly guided or educated.
Without that deeper understanding, clients are often placed into overly conservative funds. This may feel safe in the short term, but it can come at a significant long-term cost.
Understanding Risk Versus Volatility
One of the biggest gaps in KiwiSaver advice is the confusion between risk and volatility.
- Volatility is the short-term movement of markets
- Risk, in a long-term sense, is the chance of not achieving your financial goals
These are not the same thing.
Avoiding volatility by staying in conservative investments may reduce short-term discomfort. But it increases the real risk of not having enough at retirement.
Over a working lifetime, this difference can be substantial. In many cases, it means:
- Hundreds of thousands of dollars less at retirement
- In some situations, the difference can reach into the millions
This is not a minor issue. It directly impacts the lifestyle someone can afford later in life.
Education as a Core Part of Advice
Great KiwiSaver advice includes ongoing education.
Clients need to understand:
- How markets behave over time
- Why downturns are a normal part of investing
- The importance of staying invested
- How compounding works
Without this foundation, even well-structured portfolios can fail. People lose confidence during market downturns and make reactive decisions that harm long-term outcomes.
An adviser’s role is not just to recommend a fund. It is to help clients build confidence and clarity so they can stay the course.
Guidance Through Market Cycles
Markets do not move in a straight line. There will always be periods of decline.
This is where real advice proves its value.
Clients need:
- A steady voice during uncertain times
- Someone to sense check decisions before changes are made
- Reassurance grounded in evidence, not emotion
Having a trusted adviser during these periods can make a significant difference. It helps prevent short-term decisions that can permanently reduce long-term wealth.
KiwiSaver as Part of a Bigger Picture
KiwiSaver should never be treated in isolation.
It needs to sit alongside a client’s full financial position, including:
- Cash flow and savings habits
- Debt management
- Insurance and protection planning
- Other investments and assets
- Retirement goals and timelines
Great advice connects all of these areas. It ensures KiwiSaver is aligned with a broader strategy, rather than being treated as a standalone product.
A More Holistic Standard for the Industry
As an industry, there is a clear need to lift the standard. Clients deserve more than a basic recommendation. They deserve:
- Thoughtful and personalised guidance
- Ongoing support and education
- A long-term partnership focused on outcomes
This is how better decisions are made. This is how confidence is built. And this is how meaningful wealth is created over time.
Final Thoughts
KiwiSaver is simple in structure, but powerful in impact. The difference between average advice and great advice can be life-changing.
Great KiwiSaver advice is not about ticking boxes. It is about:
- Understanding people
- Guiding behaviour
- Building knowledge
- Supporting decisions over decades
When done well, it gives clients clarity, confidence, and a far stronger financial future.
This article is for informational purposes only and should not be considered as financial advice. It is always recommended to consult with a qualified financial professional before making any financial decisions based on your individual circumstances.
