[GRTV] Too many KiwiSaver managers not adding value

David van Schaardenburg, a senior partner at Findex, says members are not getting value for money in relation to the fees they are paying on their KiwiSaver funds.

His research showed over five years, as many as 83% of KiwiSaver funds are not hitting, or beating, their market benchmark.

This was down to a lack of skill on the part of too many advisers and managers, he said, and he admitted it was a poor indictment of the funds management industry. With the industry dominated by the large four banks, he said, there was a reluctance to reduce fees.

The average fee for KiwiSaver funds was not coming down, he said, despite many funds not performing to their potential.

Does this mean the active v passive funds debate needs to reopen?

Not all passive funds are cheap, he added, so sticking to passive funds for fairer fees is not necessarily the solution. It was put to van Schaardenburg that the FMA might need to step in as some kind of regulator – as the FMA already has to sign off on product disclosure statements it already does this up to a point but yes, he felt greater control from the FMA might be needed.

At the same time, though, he felt the onus was also on advisors on behalf of their clients, as well as fund managers themselves, to look at fund updates and the fees being charged.

There was a big disparity in fees – at the bottom end you have Simplicity, while for the same funds some managers charge 5 to 6 times as much.