Exploring Self-Select KiwiSaver: A Quiet Revolution in Retirement Saving

For years, KiwiSaver has been a cornerstone of retirement planning for everyday New Zealanders. But what if you could take greater control of how your hard-earned savings are invested? Enter Self-Select KiwiSaver - a growing trend that empowers investors to build personalised portfolios. It's quietly reshaping the way Kiwis think about their retirement savings, blending flexibility with the potential for greater long-term growth.

What is Self-Select KiwiSaver?

Traditional KiwiSaver schemes are largely pre-set, offering limited choices such as Conservative, Balanced, or Growth funds. In contrast, a Self-Select option allows members to actively choose their underlying investments. Whether it's individual shares, ETFs, managed funds, or other assets, Self-Select KiwiSaver puts control back in the investor's hands.

Why is it a "Quiet Revolution" in Retirement Saving?

Unlike the big, flashy changes in financial markets, Self-Select KiwiSaver has crept in under the radar.

• Empowerment: Investors can align their savings with their personal goals, risk tolerance, and values (e.g., ethical investing).

• Transparency: Investors know exactly where their money is going.

• Customisation: The ability to tailor investments means you’re no longer stuck with “one-size-fits-all” solutions.

This flexibility is particularly appealing to savvy investors or those who already manage other investment portfolios.

Who is it For?

• Hands-On Investors: People with investment knowledge who enjoy selecting their own assets.

• Wealth Builders: Those aiming for high growth, seeking to maximise returns over time.

• Values-Driven Investors: Kiwis who want their investments to reflect personal ethics or sustainability priorities.

Potential Advantages

• Higher Growth Potential: By selecting growth-focused assets, investors could outperform traditional KiwiSaver funds.

• Diversification: Self-Select options can allow exposure to a wider range of asset classes, including direct shares and global opportunities.

• Cost Control: Direct access to certain investments may help manage fees over the long term.

Risks and Considerations

• Knowledge Requirement: Selecting your own investments requires understanding markets, risk, and asset allocation.

• Volatility: Customised portfolios can experience greater ups and downs compared to a diversified managed fund.

• Time Commitment: Managing your own portfolio requires ongoing attention and decision-making.

Self-Select KiwiSaver Providers

Self-select KiwiSaver schemes allow investors to customise their retirement portfolios by choosing specific investments, such as individual stocks and exchange-traded funds (ETFs). As of December 2024, the following providers in New Zealand offer self-select KiwiSaver options:

1. Sharesies KiwiSaver Scheme:

• Features: Allows members to select from nearly 100 NZX-listed companies and ETFs to create a personalised investment plan.

• Base Funds: Offers six base funds ranging from conservative to high growth, which can be combined with self-selected investments.

• Additional Information: Provides tools and limits to help manage portfolio risk and diversification.

2. KiwiWRAP KiwiSaver Scheme (offered by Consilium):

• Features: Enables investors to work with financial advisers (such as us at Compound Wealth) to tailor portfolios, choosing from over 400 different investment options, including global shares and managed funds.

• Adviser Collaboration: Prioritises financial advice, allowing for a personalised approach to KiwiSaver investments.

3. Craigs Investment Partners KiwiSaver Scheme:

• Features: Offers a self-select option where members can customise their portfolios with individual stocks and ETFs.

• Investment Options: Provides access to a range of investment choices, though individual equity offerings may not be structured as Portfolio Investment Entities (PIEs).

These providers offer varying degrees of flexibility and investment choices within their self-select KiwiSaver schemes. It's essential to consider factors such as fees, investment options, and the level of control you desire when selecting a provider. Consulting with a financial adviser can also help ensure that your KiwiSaver strategy aligns with your retirement goals.

Is Self-Select Right for You?

While Self-Select KiwiSaver offers exciting opportunities, it’s not for everyone. It suits investors who are comfortable making decisions and staying engaged with their portfolios. For those who prefer professional guidance, a managed KiwiSaver option or advice from a financial adviser may still be the best route.

Self-Select KiwiSaver is a powerful innovation, giving New Zealanders the tools to take control of their retirement savings like never before. While it may not yet dominate headlines, its ability to empower investors signals a shift in how Kiwis approach financial independence. For those willing to embrace it, this quiet revolution might just be the key to unlocking a more personalised and prosperous retirement.

Compound Wealth is Compound Wealth are based in Mount Maunganui, Tauranga and offer KiwiSaver, Investment & Retirement Financial Advice to clients all over New Zealand.