Kiwisaver Investors Desert Their Banks

massey-university

Fri Jun 07 2013 12:00:00 GMT+1200 (New Zealand Standard Time)

Kiwisaver Investors Desert Their Banks

Friday, 7 June 2013, 9:53 am
Press Release: Massey University

Kiwisaver Investors Desert Their Banks

New research from Massey University has analysed KiwiSaver fund and member flows and found that many investors are choosing to leave the schemes run by their banks.

For the year ended March 31, the five major banks collectively had 28,139 members transfer out of their KiwiSaver funds, which represented 58.7 per cent of the number that transferred in.

“The negative association between fund and member flows and the KiwiSaver provider being a bank was a real surprise,” says Dr Claire Matthews, Massey’s director of financial planning.

“In a previous survey conducted for FINSIA, KiwiSaver members indicated a preference for having their KiwiSaver account with their bank so they could see their balance via online banking.

“However, this might mean that members are constantly monitoring their account and their funds’ performance – and choosing to move when performance is poor.”

Dr Matthews says the approach of focusing on fund and member flows for the research project was key.

“We really wanted to understand what KiwiSaver members actually do in terms of their investment behaviour – not what they say they do.”

She says the findings highlight the immaturity of investors in KiwiSaver and the need for education and advice to ensure they are making appropriate investment decisions.

“While investors do appear to be chasing returns and avoiding fees, that’s not always the best approach to a long-term investment,” Dr Matthews says.

“Both returns and fees are important but it’s a sign of an immature market when investors chase historic returns with an expectation that they provide some indication of future returns, which of course they don’t.”

ENDS

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