The recent announcement that the NZ Super Fund was considering investing in the Government’s proposed Auckland light rail networks has re-ignited calls for KiwiSaver to be used to fund local infrastructure investments. On the surface, the case for investment in long-term infrastructure assets appears compelling. Infrastructure projects are long-term, defensive investments that often come with monopolistic characteristics. Historically, many infrastructure projects have offered compelling rates of return. Auckland alone is estimated to need $7 billion in infrastructure spending over the coming decade as the city expands by the size of Tauranga every three years. 1 KiwiSaver, being a long-term investment vehicle with over $46 billion in funds, appears well placed to help fund these projects. But like many things in finance, when subject to rigorous analysis, cracks appear. There is no reason why infrastructure assets offer superior returns. Over the long-term, sec...

Last month I had the privilege of speaking at a friend’s funeral. Thankfully, in this case, it was the celebration of a full and highly successful life. As I reflected on the life of my friend it occurred to me that much of his success in life was related to his ability to forge strong relationships. Like a great many effective and self-aware people, he knew what he was good at – and he knew how to use the skills and talents of others in areas he wasn’t experienced. In my role as a Financial Adviser I frequently meet with people who find themselves at a junction in life that requires experience and knowledge they don’t have. Typically, at this point they have come into some money, perhaps from an inheritance or they acknowledge they need to start putting money aside for their retirement. These people need the expertise of a Financial Adviser, but financial advice comes in different shapes and sizes. Giving thought to what sort of a financial advice relationship best suits...

Why have so few employers chosen a preferred provider scheme? The March 2017 FMA KiwiSaver Annual Report showed that 20,004 employers have a preferred KiwiSaver scheme. As IRD records show that over 200,000 companies deduct PAYE, this suggests less than 10% of all employers have a preferred scheme. This is lower than was originally intended when KiwiSaver was first introduced. But is it leaving New Zealanders worse off or does it not matter? In the United States, United Kingdom and Australia, employers are required to select a licensed manager at the outset. In New Zealand it was contemplated that after an introductory period which was designed to build confidence in KiwiSaver, both employers and employees would transition from the default regime to selecting a scheme that best aligned with their objectives. Ten years on, this is exactly what has transpired, with employees at least. Of the 2.8 million 1 New Zealanders who have been enrolled in KiwiSaver 1 , only 16.4...

Does more choice make for better investment outcomes? I’ll start this month’s column with a question — does the vast range of breakfast cereal in the supermarket lead us to make an informed choice when it comes to our breakfast diet? In my case it only succeeds in leaving me standing blocking the supermarket aisle as I quizzically read the ingredients labels. Perhaps it is a by-product of our consumer society, but I suspect that we have been conditioned to think that more choice is better. I am not sure that this is always the case. I started to think about this issue recently when I heard that there were now 30 KiwiSaver providers offering in excess of 240 different KiwiSaver funds to the New Zealand consumer. Various analytical tools have been developed which allow you to compare KiwiSaver funds on such measures as performance and costs. These tools may be a starting point, but they are based on historical data and can lead to flawed hindsight based conclusions....