The KiwiSaver system, designed to help Kiwis save for their future, may inadvertently leave older individuals in a challenging position when it comes to managing their savings. While the system provides a solid foundation for retirement planning, the transition from accumulation to distribution phase presents unique complexities that are not adequately addressed.
Romil Ghelani, Head of Financial Advice, highlights a critical issue: the lack of comprehensive support for individuals approaching retirement. He emphasizes that the financial transition during retirement is one of the most significant life changes, requiring careful consideration and professional guidance. Ghelani argues that the KiwiSaver system, comprising providers, banks, and financial advisers, could do more to bridge this advice gap.
The issue lies in the fact that while products and services exist, they are often tailored towards higher-net-worth clients, leaving the majority of Kiwis to navigate retirement planning on their own. This is a concern, as retirement planning involves complex decisions about withdrawal options, risk tolerance, and long-term financial goals. Ghelani suggests that advisors could play a crucial role in filling this gap, offering personalized advice to a broader range of clients.
KiwiSaver providers are taking steps to address this issue. ANZ Investments, for instance, proactively contacts members a year and six weeks before they can access their funds, encouraging them to consider their options. Sian August, General Manager, emphasizes the importance of understanding individual risk appetites and goals, dispelling the misconception that all members must withdraw their funds at age 65. She also highlights the option of regular withdrawals for a steady income stream, as well as the ability to continue contributing to KiwiSaver even after age 65.
ASB's Wealth General Manager, Emma-Jayne Liddy, shares a similar approach, recognizing the evolving needs of KiwiSaver members as they approach retirement. ASB provides free advice sessions and guidance to help customers make informed decisions about their retirement savings, including the impact of lump sum withdrawals versus continued investment. Murray Harris, Head of KiwiSaver at Milford Asset Management, offers free access to financial advisers and digital tools to explore withdrawal scenarios, with additional support available through their wealth management team.
However, the challenge remains that while these providers are taking steps to improve support, the system still caters more to higher-net-worth clients. This leaves a significant portion of Kiwis without the personalized guidance they need during a critical life stage. Ghelani's call for a more comprehensive approach to financial advice is a compelling argument for the system to better support all Kiwis, especially as more individuals reach retirement with substantial savings.
In my opinion, the KiwiSaver system has the potential to be a powerful tool for retirement planning, but it must evolve to provide more tailored support for older individuals. By addressing the advice gap and ensuring that professional guidance is accessible to all, the system can better empower Kiwis to make informed decisions about their retirement savings, ultimately leading to a more secure and comfortable future.
