Financial Hazards are everywhere. Unfortunately, over the last few years, we have seen that some of the most hazardous behaviour has come from financial product providers themselves. It is true to say that the finance companies and some fund managers simply got too greedy.
In the main, KiwiSaver providers have not had that problem. However, they are now sitting on about $13bn of the public's money. In a few years, that should increase dramatically, particularly if compulsory KiwiSaver membership happens.
This is big money and these are big numbers. Now that this is happening, % point tweaks upwards in terms of fees could mean millions in extra revenue for a provider. That's how big the numbers are.
So I get the feeling that there are providers beginning to get over-excited, suggesting more sophisticated (and expensive) ways to save in KiwiSaver, in the form of "life-cycle" or "life stages" funds.
Nothing wrong with that. If the member wants to do it and agrees that it's sensible - then they should go for it.
Where I have an issue is the suggestion that a workplace enrollers should go straight into these funds as part the automatic process.
Automatic enrollers haven't signed any forms. They haven't given permission to providers to take risks with their money. My view is that providers should keep this money safe until the member is ready to take an informed decision themselves.
If the providers want more people in the more sophisticated and expensive funds, then they make a compelling case to the public and convince them.
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