Seek professional considered advice and analysis before letting anyone move your KiwiSaver account. Milestone has developed a report that is essential reading for all KiwiSaver holders, especially those who have been recommended to move their KiwiSaver account.
Switching is where an organisation or individual recommends to a KiwiSaver holder that they move their money from one fund provider to another fund provider or from one fund to another fund with the same provider.
There is nothing illegal about the act of switching and KiwiSaver has been constructed so that in most cases, there is no cost for you to move from one fund or provider to another. (Some providers may charge an exit fee.) If you are being advised by an Authorised Financial Adviser (AFA) then they have to achieve specific knowledge, competency and skill requirements, and under the Code of Professional Conduct, they must place the interests of the client first and act with integrity. Therefore, there is a greater chance that an AFA has made a recommendation to you to switch based upon it being in your best interests.
However, Registered Financial Advisers (RFAs) and QFE Advisers have no such responsibility to act in your best interests or to act with integrity (although the good ones do that). QFE advisers can only provide recommendations on the products promoted by their employer and RFAs can only provide ‘class advice’ on KiwiSaver and would be acting illegally if they provided a client with specific personalised advice on switching KiwiSaver.
You may decide to switch all on your own with no external advice being provided. You are free to do this but ensure you make a decision based upon logic and research rather than hearsay, emotion, or chasing last year’s highest performer.
Switching is good if one is moving to a fund that:
If all the above factors are not present, then STOP and start asking some serious questions around why you are being recommended to switch or why you are planning to do it yourself. Ask yourself: Who or what is driving this decision? Is it in my best interests? Will I be better off in the short and long-term by taking this action? If the answer is no, then seek professional advice from an AFA. They will know what to do.
The level of analysis on whether you should switch your KiwiSaver and to which provider or fund will be determined by factors such as the current KiwiSaver balance, your investment objectives, timeframe and where your KiwiSaver is currently located.
If you are being advised by an organisation or individual, then the very least you should expect is a report from the entity that outlines the following:
If you have already switched your KiwiSaver and have not received appropriate written advice then you have the ability to complain to the adviser or organisation that provided you the advice. If the complaint is not resolved to your satisfaction, then you can complain to the Financial Markets Authority (FMA) or the Dispute Resolution Service of that adviser.
Milestone offers a special service to KiwiSaver investors who are concerned about whether they are in the most appropriate KiwiSaver fund. This is initially a class service and if specific personalised advice is required, then a fee will be quoted to produce a report on whether your existing KiwiSaver fund is appropriate for you.