For as long as I have been writing about money, which is longer than I would like to admit, I have shared my knowledge with others, my kids included.
Here’s the rub:
As any parent will know, kids love to ignore parental advice. It must surely be Murphy’s Law, that the more you harp, the deafer they become.
My “kids” are now young adults in their 20s and my influence has diminished with every passing year but I like to think some messages have stuck, for example my three golden rules:
1) Don’t get into debt
2) Pay off your house as fast as possible, if and when you get a mortgage.
3) Choose your life partner VERY VERY carefully.
The other money stuff, like KiwiSaver, doesn’t seem to stick. I’m pretty sure if they could tap their savings for the emergency beer fund, they both would have zero balances.
You can imagine my shock when my youngest returned from university last week and informed me he’d had a nice chat with a friendly bank teller about KiwiSaver. Seemed quite proud of it.
My head tilted sideways in bemusement.
Me:
“Ugh, so you know you’re already in KiwiSaver right?”
Son:
“Yeah.”
Me:
“So what did you talk about?”
Son:
“He asked if I knew my balance and whether I would like to see my balance in one place, when I logged in my banking app.”
Me:
And….
Son:
“So I was in a hurry trying and I didn’t want to miss my ferry. I just signed something and left.”
Me:
“What?! So you switched to the bank’s KiwiSaver?”
Son:
“I’m not sure.”
Me:
“What pretty sure that’s what happened mate. You better ring and cancel that order.”
Son:
“Oh.”
Despite calling back within an hour, the train had left the station.
THAT’S HOW EASY IT IS TO SWITCH FOLKS.
Some background…
Prior to 2016, if you wanted to change KiwiSaver providers, you had to get a statutory declaration signed by a JP or a lawyer and then march yourself to the office of the new provider. As you can imagine, hardly anyone switched! Too much effort, not enough concern for KiwiSaver.
In 2016, KiwiSaver moved into the digital space and switching providers online became a thing.
Simplicity was among the first to go paperless, marketing the two-minute switch, a slogan that others would copy.
But back to the defector…
He’s received onboarding welcome letters and is waiting for his funds to be moved across. This is supposed to happen within 10 days. Why so long?
It’s not a simple bank transfer. Your fund manager has to sell all the units of whatever you’re invested in and then the money goes into one custody account, and into another where on receipt they are reinvested. This means you are technically out of the market for a few days.
Some people use this as an excuse not to switch because of fear they’ll miss some big upward swing in the market.
In reality those big shifts don’t happen all that often and when they do happen the markets do eventually recover anyway. Also, given the long duration of KiwiSaver (45 years – if you’re starting young and not planning to use the money for a house deposit,) you have a long time to be invested.
So now, I’m personally curious to see how good a job his new provider does in communicating with him, and educating on KiwiSaver. Will seeing his balance actually get him more interested and or engaged? I’ll let you know.
I’m also curious to see how they manage their back-end and whether it’s superior.
My son is disappointed he’s switched, because he never intended to. He only wanted to see his balance.
He’ll probably move again once I show him how easy it is to DIY.
Its not something I recommend people do for fun, only if they have good reason to.
And what’s a good reason:
Plenty actually. Better communications, a better back-end, better returns, lower fees, and if it’s important to you, (ESG) environment, social or governance reasons regarding how and where your funds are invested. Some providers like Simplicity, Pathfinder and Medical Assurance Society, also have a charitable component too, where a portion of your fees are donated.
At the end of the day, it’s a personal choice which is why I won’t meddle if the kiddo decides he likes it better with his new provider. How that plays out with his step-dad, a fund-manager, is another question%)
