National Capital Founder and Director Clive Fernandes is calling on Kiwis to be more vigilant about whom they accept financial advice from.
Fernandes, an Authorised Financial Advisor, says he is finding increasingly that people coming to him for guidance on their KiwiSaver have been previously advised by someone unfit to do so.
“Getting investment or KiwiSaver advice from a mortgage or insurance broker could be very harmful to the clients outcomes, as per examples I have come across. Registered Financial Advisers are qualified to give only class advice* on products such as KiwiSaver, and it is imperative that consumers understand that distinction. In my experience, I have seen that consumers simply don’t.”, says Fernandes.
Fernandes added that this put the onus on Registered Financial Advisers (RFAs) to ensure that they do not cross the line between genuine class advice and personalised investment advice.
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MBIE and the Treasury are reviewing the default provider settings. The review covers the policy settings that underpin the appointment of new providers and the terms on which those providers are appointed. As a significant number of people have stayed in default funds, it is important that default funds work well for people.
Clive Fernandes of authorised KiwiSaver advice service, National Capital says the approach being to review the default scheme isn’t the right area of focus.
“The KiwiSaver default scheme concept was required when three million Kiwis needed to be onboarded as KiwiSaver members in a short period of time,” said Fernandes.
“However the situation has now changed significantly. Now that most Kiwis are already signed up to KiwiSaver and new signup numbers each year are lower, the 'default scheme' idea is no longer required.
“Instead, people should be given access to personalised advice right as they are signing up. We should be encouraging new entrants to make an active choice to best set them up for their future and specific goals. This would help to solve a lot of issues and would be in the best interests of members vs providers,” he said.
National's latest policy would allow New Zealanders to use their KiwiSaver funds to start a business.
Clive Fernandes, Founder and Director of National Capital responded: "This is a terrible idea. The primary reason for small businesses failing is undercapitalisation. And here we have a policy which is encouraging someone who is unemployed to start a business using $20,000 from their retirement savings. It’s a recipe for disaster.
“KiwiSaver was intended as a retirement savings scheme. We already have a problem, that even with KiwiSaver, a large proportion of Kiwis will not have enough money to retire on. Encouraging them to withdraw even more from their KiwiSaver accounts will only exacerbate the problem."
A recent survey of 1,000 New Zealanders has revealed that Kiwis are more concerned about shedding the extra kilos than ensuring they have enough money to retire.
The survey by National Capital found that more than two thirds (67%) of women aged 18 to 65+ said their top goal of the next six months was weight loss. Far less of a priority was planning for retirement (17%) as was sorting out their KiwiSaver (12%). Of the men surveyed, 57% said their top priority was also weight loss while only 19% had sorting out their KiwiSaver at the top of the list.
Clive Fernandes, founder of National Capital said it was concerning just how many Kiwis are unprepared when there is evidence to show New Zealanders aspire to achieve a better standard of living in retirement than can be supported by superannuation.
“In the time it could take to sign up to a weight loss programme or go for a run, New Zealanders can also take a free KiwiSaver Health Check to make sure they are optimising their investments for retirement, before it’s too late.
“It might not feel urgent or important when you’re 10 to 20 years away from the traditional retirement age of 65, but taking the time now now could mean an extra $87,000 in your pocket when you reach that stage,” said Clive.
Research by National Capital has revealed that three out of four (71%) Kiwis are unsure how much money they will need to retire when the time comes.
The survey of more than 1,000 respondents (aged 18 - 65+) was designed to uncover attitudes and behaviours towards KiwiSaver, retirement planning, personal goals and financial security after discovering only 1 in 3 New Zealanders felt financially secure.
Most New Zealanders aspire to achieve a better standard of living in retirement than can be supported by superannuation - yet, according to National Capital’s research, New Zealanders only start planning their retirement as they approach the ‘traditional’ retirement age of 65. Clive Fernandes, Founder and Director of National Capital think this is far too late.
“KiwiSaver could and should be playing a more significant role in helping people retire with more, yet the research shows it is not being maximised,” said Clive.
Further highlighting the issue, over 37% of respondents said planning for retirement is not a priority because they are simply “too busy dealing with the now, to worry about (my) retirement”, with Clive explaining that greater priority needs to be given to retirement, so it becomes a more equal split.
National Capital has announced the appointment of James McKelvie as Head of Advice Logic.
Clive Fernandes, Director of National Capital, says, “We bring sophisticated retirement advice to all Kiwis, irrespective of what their asset base is. James will play a pivotal role in helping National Capital reach its goal of helping 1 million Kiwis become financially secure through the continual refinement of our advice logic to ensure it reflects the best practices and insights from local and international research.
McKelvie will play a crucial role in the design and delivery of personalised KiwiSaver advice to Kiwis. His role will focus on developing the financial strategy underlying the KiwiSaver advice provided, continually refining & improving the advice logic to ensure better retirement outcomes.
On his new role, McKelvie says, “National Capital has identified a way to bridge the advice gap between New Zealanders and their KiwiSaver accounts. I look forward to working with Clive and the team to develop advice logic that can be digitised to deliver personalised advice on a large scale.”
“When Covid-19 hit, fuelled by declining KiwiSaver balances, misinformation and a lack of advice, an estimated 50,000 Kiwis panicked and moved, with most moving into a more conservative fund under the guise that they would be minimising further losses. The longer these members stay out of Growth/Balanced funds, the bigger the potential loss,”
“For this group alone, we estimate the collective loss of funds to be $925,664,182 in 10 years from now or $3,578,215,119 in 20 years.”
The real danger is not what has already been lost due to recent market upheaval, but rather what this group is now set to miss out on in terms of future returns if they stay where they are.
KiwiSaver plays a critical role for many people’s retirement and this loss equates to an estimated $20,580 in 10 years or $80,726 in 20 years, per person, “A significant chunk of change that would have served them well, come retirement,” he adds.
National Capital has announced the appointment of David Anamosa as Investment Research Lead.
David contracted to National Capital for a year before being appointed in his new position at the end of March.
Clive Fernandes, authorised financial adviser and Director of National Capital, says, “In this role David will be instrumental in helping National Capital refine our advice model which uses principles of behavioural finance & good investment research to empower New Zealanders to get better outcomes from their KiwiSaver investments.
On his new role, David says, “I’m excited to be working alongside Clive Fernandes and the National Capital team to help strategise and achieve the goal to help one million Kiwis’ become financially secure by maximising their KiwiSaver investments.
“It has been a fantastic experience being involved in the creation of the investment selection process National Capital uses to recommend KiwiSaver funds to its clients and when the opportunity came up for this role, I couldn’t refuse,” adds David.