Kiwisaver cuts stir concern: Wealth managers brace for impact as government contribution drops

The reduction in NZ government’s contribution to KiwiSaver may cause angst amongst the wealth 

management industry with firms whose main focus is KiwiSaver. 

If I was a KiwiSaver , I would be looking closely at any costs on my retirement pot to compensate for this reduction. 

I would start by taking a closer look on performance and managers fees. 

Historically, wealth management industry has operated extremely profitably on the typical ad valorem fee – 

charging a percentage based on the market value of my portfolio. 

The question is how fair is this to investor clients?  

With little human input in managing funds and ubiquitous passive 

fund boom where with a couple of clicks funds are placed in an investment vehicle. 

Cheap, quick, robotic, little or no manager input. 

A better model would be for KiwiSaver managers to charge a flat account fee of NZD100 pa? 

KiwiSaver fees have a compounding negative impact on returns. 

The stratospheric fees charged by hedge fund managers of 2% account and 20% performance fees are less common. 

The cry by the more observant “but where are all the customers’ yachts” as most luxury leviathans were owned by the managers.