More than a million people will be seeking advice on their KiwiSaver, Harbour Asset Management co-chief executive Andrew Bascand says.
Speaking at the recent launch of the Evidential KiwiSaver scheme, Bascand laid out his forecast for the growth of KiwiSaver.
“The all-consuming wave is well underway.”
“You can’t avoid that KiwiSaver is the future of financial advice in New Zealand.”
“Under the current KiwiSaver settings I think that KiwiSaver goes to just under $400 billion in 10 years’ time.”
(This speech was made before the Budget announcements).
Bascand’s model assumes members over 65 take money out of KiwiSaver, he has used an average contribution rate of 4.3% and salary and wage inflation at 3% annually. His market return is 4.25% after tax.
“I think in all respects my $400 billion here of KiwiSaver is slightly conservative.”
Under this model KiwiSaver goes from being $2 in every $10 of household wealth to $4 in every $10.
Bascand looks to Australia and how superannuation has grown.
One of the trends he expects New Zealand to follow is that an increasing amount of superannuation (KiwiSaver) will move to managed portfolios on platforms.
He reckons 50% of super in Australia sits on platforms and New Zealand is around 25%. New Zealand will grow, maybe not to the same level as Australia, but in his view it will increase.
More and more KiwiSaver members will start seeking advice making it a profitable sector to operate in.
Surveys show 25% of members have sought advice so far, however Bascand questions the data and whether it is true independent financial advice or just information from a provider to a member.
The key takeout is “people are thinking about (advice).”
Based on his $400 billion growth predictions and 25% of members seeking advice that means there will be $60 billion of funds which could come under advice
He notes Australia has been struggling with providing advice as its superannuation has grown. New Zealand will be no different.
“I actually don’t think there are enough advisers in New Zealand to do this today.”
