Advice is important to make sure New Zealanders get the most out of KiwiSaver, the country’s biggest provider says – but it suggests much of it should be supplied free.
ANZ has released a survey and whitepaper to mark the 10th anniversary of the retirement savings scheme.
It called for the scheme to be made compulsory, for providers to be required to offer free savings advice to members and help for those in the decumulation phase.
It said the need for advice was apparent in the results of a survey of 1000 people, which showed most had not even worked out how much they were likely to have saved by 65. More than 20% said that was because it was too difficult to do so.
The survey found 28% of respondents said it was best for KiwiSaver funds to be made available as a lump sum at 65. Another 19% thought it was best in installments. More than 40% said a combination would be best.
Almost 30% said they wanted their KiwiSaver provider to give them a set of regular withdrawal options to choose from at retirement, but 62% wanted access to free professional advice.
ANZ said roboadvice would play a bigger part in future advice for KiwiSaver members.
A third of respondents would prefer to get retirement savings advice from a person and 31% said they would use a sophisticated online calculator, either alone or with someone helping them. Just under 20% said they would prefer just online tools and 16% wanted a DIY approach.
Members with little knowledge about KiwiSaver were more likely to want advice from a person, at 47%.
ANZ said the government should also provide some guidance around assumptions and parameters regarding roboadvice to make sure there was consistency in the provision of mass-scale advice.
“At ANZ, we offer free financial advice to ensure members can continue to benefit from exposure to markets, with the right risk profile for their retirement circumstances,” ANZ said.
“We also promote use of the regular withdrawal option to discourage people from impulse buys or reallocating their money to misguided investments. While this is a good first step, there’s still plenty more the government and financial services industry can do to help educate New Zealand’s ageing population on how best to decumulate to achieve a comfortable retirement lifestyle.”
ANZ recommended that KiwiSaver providers be required to check in with members a year after they withdrew money for a first home and encourage them to seek advice.
It said providers should also encourage female members to get personalised advice.
“The government and financial services industry should work together to enhance the financial capability of New Zealanders receiving NZ Super. This could be in the form of a comprehensive information pack that accompanies SuperGold cards, with directories on where to access financial advice, and a range of investment and decumulation options available to them.”