When did you last review your KiwiSaver fund selection? If you’re like many New Zealanders, the answer is probably “never” or “not for years.” While a set-and-forget approach might feel convenient, it could be costing you thousands of dollars in retirement savings.

The Default Trap

Many KiwiSaver members have only a basic understanding of how their funds work. They often assume that staying with their original provider, or a default provider and fund, is good enough. In reality, this assumption can lead to suboptimal outcomes.

What’s more concerning is that many people have remained in the same type of fund for a decade or more, regardless of whether it suits their age, risk profile, or financial goals. A conservative investment fund that seemed sensible at age 25 when you were looking to access funds to purchase your first home may be entirely inappropriate at age 45, when you are saving for your retirement.

Active Management vs. Evidence-Based Investing

KiwiSaver fund managers vary significantly in how they invest. Many use an actively managed approach, attempting to predict market movements by buying and selling stocks. This strategy typically comes with higher fees, additional fees if performance targets are met, and, according to extensive research, often underperforms over the long term.

At Cambridge Partners, we take a different approach: evidence-based investing. Rather than trying to time markets, we rely on globally diversified portfolios built on decades of academic research.

Key advantages include:

• Cost Efficiency: Lower management fees compared to actively managed funds.
• Research-Driven: Strategies grounded in proven principles, not speculation.
• Diversification: Exposure to multiple asset classes and economies through ETFs.

This approach acknowledges that consistently predicting markets is nearly impossible, even for professionals. Instead, it focuses on capturing market returns efficiently while managing costs and risk.

Managing Risk Throughout Retirement

One of the most common mistakes is reducing risk too early. KiwiSaver is designed for two milestones: buying a first home and retirement. But retirement doesn’t mean your investment journey ends.

Consider this: someone retiring at 65 may live another 20–30 years. During that time, their KiwiSaver balance will benefit from a continued exposure to growth assets. Moving everything into conservative investments at retirement could mean missing out on decades of potential growth, which can significantly impact your quality of life later.

A personalised KiwiSaver plan considers your timeline, income, and risk tolerance, helping you maintain an appropriate level of growth investments well into retirement.

The Value of Professional Advice

For higher-income earners, KiwiSaver is just one part of a broader financial strategy. A qualified Financial Adviser can ensure your KiwiSaver complements your overall wealth plan, whether that’s building assets, planning for retirement, or managing tax efficiently.

Advisers provide clarity on contribution strategies, risk levels, and how KiwiSaver fits alongside other investments. This tailored approach helps avoid common mistakes, such as investors being too conservative too soon or allowing emotions to drive decision-making.

The Self-Selection Challenge

Self-selection options are becoming more common, giving members control over individual investments. While appealing, this requires expertise most people don’t have. It’s like prescribing your own medication without the right knowledge. You will more than likely make investment decisions that harm your future financial health.

Self-selection can be useful for learning or investing surplus funds, but for your core retirement savings, professional guidance is incredibly valuable.

Take Control of Your Financial Future

KiwiSaver is a cornerstone of your retirement wealth. A personalised strategy that adapts as your life changes can make a significant difference to your future lifestyle.

You don’t need to become an investment expert, but you do need to make informed decisions. Working with a professional ensures your KiwiSaver is aligned with your goals and risk profile.

When did you last review your KiwiSaver fund? Your future self will thank you for taking action today.

Find out whether you’re on track with our KiwiSaver quiz, and learn how a simple mistake could cost you $200,000.

This article is for general information purposes only. It does not take into account your personal financial situation, objectives, or needs, or constitute a personal recommendation. Cambridge Partners recommends you seek professional advice from a Financial Adviser before making any investment decisions.