Ep. 6: How do you make your KiwiSaver account reflect the future you want?
It’s time we reveal the Sharesies KiwiSaver Scheme. Why did we make one? How is it different from all the others? What guardrails are in place—and who is it for?
We hear from Sharesies co-founder Leighton Roberts, Head of Super and Funds Matt Macpherson, and Design Lead Katy Elgar about what our Scheme means for the KiwiSaver landscape, and their vision for the future.
Listen to the full episode
Welcome to The Payoff, a podcast series where you’ll hear from everyday New Zealanders about their experiences and their dreams when it comes to putting money away for the future.
We’re talking KiwiSaver.
Ko Brooke ahau.
I’m Brooke Roberts, one of the CEOs of Sharesies, and today we pull back the curtain on the Sharesies KiwiSaver Scheme.
If we can do anything to get people excited about their KiwiSaver, we’re all for it.
Meet some of the team behind it …
We know that at the moment people aren’t putting enough away, and I would argue it’s because we’re not doing enough.
Find out how we’re doing it differently …
When you look at KiwiSaver, there hasn’t been that much innovation.
And why does choice matter …
The thing that I’ve found really helpful is that I’ve been able to actually lower my risk.
That’s the beauty of it, you can edit it at any time.
Knowing exactly where your money is going is really cool.
On the Payoff, we’ve talked about using your KiwiSaver to help set yourself up for the future, and what that might look like at different stages of your life.
But in reality, over the last 16 years that KiwiSaver has been a thing, the experience for most New Zealanders hasn’t changed a heck of a lot.
Now, if you know a thing or two about Sharesies, you’ll know we like to shake things up with the aim of making your finances more accessible and relatable.
My name is Leighton Roberts and I'm one of the co founders at Sharesies.
My name's Matt Macpherson, I've been at Sharesies for just over two years.
And you're allowed to tell people your job title now, Matt.
That's right, and I'm the GM of, um, Super and Funds, which we call Super Fun.
Matt and Leighton are joining the show today. They’re with me to talk about what Sharesies is doing in the KiwiSaver space—and ‘super fun’ is a great way to describe it!
I remember the team used to go for a beer on Thursday, they’d go for one beer, and it used to crack me up cause whenever they’d talk about it, they’d use a code word. I can’t remember what the code word was …
It starts with W …
Was it wibble?
I’ll be invalided back to Blighty before you can say ‘wibble’.
You might be wondering why Sharesies has decided to tackle what’s been described on this podcast series as something that’s well … boring.
It’s never talked about at a barbeque, and in fact most people would rather not think about KiwiSaver because it’s something off in the distance, that they can’t access until they’re 65.
And yet it’s potentially the biggest nest egg a person will have in their lifetime!
I asked Leighton to take us back to when we first thought we’d look to offer KiwiSaver and the vision we had.
As with lots of things, it came from a good old problem statement, right? Which is people in KiwiSaver didn't know they were investors.
New Zealanders are investors. I want them to know that they're investors, and I want them to know a little bit more about it and be engaged with it. And the main reason for that is not so that everyone's trading their stocks every second day, which sometimes some people think is what we're meaning. It’s not.
I want people to be saying, look, my KiwiSaver is down and it's because Apple's iPhone was a nightmare or something, you know, whatever it is, something just hasn't delivered. And I've got the bit of detail, not just either not talking about it at all, which largely happens now, or no idea on why that's happening.
So I want people to talk specifically sharing war stories on, on why that happened and I think this is just gonna, really become an education piece for so many people standing around that barbecue.
I asked Matt what he sees as the biggest pain points for people with KiwiSaver.
Three things that stand out for me, first of all is participation.
There's around a third of New Zealanders who are either not enrolled, or if they are, are not contributing.
And for reference, Auckland is about 30, you know, about a third of New Zealand, right? So there's a lot of people who are being left behind.
So that's the point, one. The second, is, I think the understanding is a little bit too patchy still. We've seen people in the, you know, in the industry, we've seen people in the wrong funds or switching to the wrong funds at exactly the wrong time.
And you know, that demonstrates to me that people don't understand how a KiwiSaver managed investment scheme, retirement savings scheme, works.
The final thing is we just simply don't have enough in our KiwiSaver accounts. The average balance is under $30,000—compared with Australia where it's about $150,000 AUD.
I think that just shows we're not just, we're not contributing.
So how exactly is the Sharesies KiwiSaver Scheme different from the rest? Well, we thought we’d ask some of the first members that signed up to see how they’re finding it. Some of these are staff, cause they had it first!
I find that it’s a lot more friendly in terms of the user experience.
Basically, on my last scheme, it would be really hard to find it, and I had to log in which I could never remember my password. With Sharesies, I just open my app and it’s right there and just see the balance all the time, which is quite exciting.
I think for me, it’s just the information and accessibility of it, like just the fact that I can go in and see all my individual buys or any sells that I’ve made, I can see when the money has shown up. Yeah, I think it’s just all the information that I get around it that’s the big difference for me.
Back to Matt now, who talks about what the Sharesies KiwiSaver Scheme is hoping to achieve.
So I think when you look at KiwiSaver in New Zealand, there hasn't been that much innovation. Especially if you look at the most popular options, they're pretty hard to separate. So the key difference we provide is that control aspect.
And because we know that the experience is really important, we're going to go to lengths to make it easy to navigate and access. You'll be able to see more in our experience than you would normally see in a KiwiSaver or a banking app.
Giving people the ability to be able to engage a lot more with what their KiwiSaver is invested into. Brooke Roberts
So how does the Scheme actually work? Matt puts it in a nutshell.
I guess if you can picture how KiwiSaver works today, where you have one fund, and you have maybe thousands of members in that fund, and they're all getting the same thing.
That's how it is across most schemes, and we have that in ours, we call them base funds and it's like the foundation of your KiwiSaver.
But beside that, what we've got is a fund that is unique to each individual member, and they choose the design of that fund, you know, with support and with some, guardrails and some tools and things.
What Matt’s talking about there is something we call ‘self-select’ but more on that coming up.
But then what you've got, you’ve kinda got this different picture rather than everyone all having the same, you know, a share of the same thing. And funds are great right, funds are really efficient, but essentially we’ve got a fund for every member that is personal depending on how they want to invest.
Having more choice and control, if you want it, makes perfect sense, but that in itself is quite a change in mindset for New Zealanders.
I don't see ourselves as a competitor with the other schemes. I think it's a trap to think that we are competing with other schemes. I think the biggest thing we want to work against is kind of apathy and people not really engaging with their KiwiSaver.
You know, we're competing with complacency, not enough people paying attention to what their money is invested, or, or what it's been used for as well, and how that aligns with, you know, the future that they want to live in.
A lot of people have chosen where their KiwiSaver, um, is invested just on convenience alone, right? So ... people are like, I've chosen the bank because it's one fewer lot of sign-ons and things I need to remember. Like a considerable proportion of people have chosen it for convenience. And, that's just a little bit alarming.
So let’s bring in another awesome member of the team.
Cool, so, my name's Katy. I am a product design lead at Sharesies and I work in the superannuation and funds team.
What that involves is doing a lot of customer research and concept design for the user experience of whatever product they're working on. So for me that's been KiwiSaver for the last two years.
I think a highlight has just been seeing how excited people are when we show them prototypes of what KiwiSaver is going to be like.
It's, it's been really humbling and motivating and a bit intimidating as well because people have described to me situations where they have grown up in a family where their dad only talked to their brothers about investing and they feel really excluded from those conversations because what they saw in the KiwiSaver prototypes that we showed them was a way for them to take control of that narrative, understand where their money is going, and really make their own choices about how that is and to educate themselves I suppose because they’ve gone out, they’ve asked for that kind of help, and when it hasn’t been given to them, that, you kinda end up in this place of not knowing what to do so it’s easier to do nothing. So that's definitely a highlight.
Looking at the sheer number of KiwiSaver providers out there—there's close to 40—what Katy’s been able to validate is that the decisions about how your money is invested are pretty much left to someone else.
It’s that same thing of other people doing this for you. Both with the banks and, a lot of other scheme providers and I think that is, that's the gap we saw is people that we talk to, it's not that we think people want to do this all themselves, they want to manage every single investment that their KiwiSaver is running into, but they want to have the choice and they want to have a bit of a say in the direction that their money is heading and I think that was, that was a huge one.
Ok, so within limits, or the guardrails set up, you have a lot of choice and control in the Sharesies KiwiSaver Scheme. That’s awesome.
But what if you're someone who likes to live life on the edge, and on a whim you decide to YOLO your entire nest egg into the latest meme stock?
Well, that’s exactly why we have a safety feature that we call ‘guardrails’. Here’s Matt to explain.
So we do a bit of scrutinising of the investment options to make sure they're suitable. And especially to make sure that investors are really well informed of the risks, the volatility, the, you know, any other material that they may need to make informed decisions.
And then the guardrails themselves, you know quite simply they're just limits on the amount that you can invest in any one option. The big guardrail is that you can have anywhere, between 50 and 100%. That has to be managed by a professional investment manager, right? Via a fund. And then for the self-managed part, one other limit is you can't put more than 5% of your contributions into any single company. So the guardrails, they really promote, I guess, and force diversification as a core, risk management strategy.
So how does it feel to have self-select as an option?
There’s certainly a bit of trepidation with self-select because you are putting money into individual companies, but I’ve found really helpful is that I’ve actually be able to lower my risk.
I’m almost all in at the 50% mark. I played around with it probably 5 or 6 times, but that’s the beauty of it, you can edit it at any time.
I really like having the choice because even with your funds you don’t always know exactly what you’re putting your money into, so knowing exactly where your money is going is really cool.
It’s scary at first, when you realise what you’re able to do, but it’s quite cool with all the information you can get through it, and the risk indicator thing that they give you, and getting a score and seeing the comparison between I’ve added a few picks and just seeing what happens when I change those picks and change the percentages. But yeah, I really enjoy it.
If you’re thinking that having to make investment decisions about your own KiwiSaver sounds all too scary. That’s completely fine. It’s not for everybody, and you can leave it to fund managers to do it for you.
No. Look, I don't think all New Zealanders wanna be managing their own KiwiSaver and making those investment choices. It's, you know, a lot of money. It could be quite a scary decision.
We built the scheme to cater for the people who want to, either make none of those choices and just go into a fund. Or to have some control, right? So they don't have full control, they don't choose all of the underlying investments that their fund goes into. But yeah, you can start small.
You could have a tenth of a percent of each contribution going into a fund, for example. And you would still be self-select investing.
The self-select part of the Scheme is something that can be added over time. Perhaps as your confidence grows, and it can start off very small. We really support them through that. It’s about confidence, it’s about having the confidence to make those choices.
Another thing that we’ve learnt is that the KiwiSaver experience has to resonate.
Remember Simran back in episode 1?
If you go to a gym that looks nice, you’re more likely to turn up, you’re more likely to engage with it and feel better about it vs something that gets the job done but you don’t feel good there, and so things like user interface, makes it easier for me to see what’s going on easy to log in, easy to check, something that makes me feel like it’s not a chore and that just makes all the difference because I’m more likely to engage with it.
Back to Katy, who talks about some of the ways she’s helping to design a more motivating KiwiSaver experience.
If we can do anything to get people excited about their KiwiSaver, then, like, we're all for it. So, things like charts, things like, uh, a breakdown of, yeah, where your fees are going, if you've withdrawn anything.
Things that are really important to the customers that we've spoken to are things like transparency, being able to see where their money goes, and equally how many fees they're paying.
We heard stories of people whose employers were short-changing them with their contributions and just being able to see those contributions come in as it happens and double check that the money that you think you should be getting is actually what you are receiving. That's huge for people.
So, really letting people take ownership and take control, I think of what is their money at the end of the day.
Switching your KiwiSaver probably feels really hard. In fact, as Katy found out, it can be dangerously easy.
One very memorable one for me, which is hilarious but is also like, a bit worrying, was the guy I talked to who was like, “Oh, I just signed up while I was on my way home from work, like, while I was in the car”. And I was like, “Oh cool, like, how did you find that experience?”
He was like, “Yeah, I was just at some traffic lights”, and I was like, “Oh goodness, I hope you weren’t behind the wheel” and he kind of like brushed it off. And I was like, that's one tagline we can use, like so easy, you can do it while you're driving. So that was quite intense, but definitely, the sign-up experience in general, people think is going to be like a really arduous process.
They assume there's going to be a lot of forms. You're going to have to know. I don't know like what your salary is and how much tax you pay, but especially if you're already a Sharesies customer. You already told us that information when you signed up to Sharesies.
And so really all you need to tell us is what you want to use your KiwiSaver for—so generally a house or retirement—and then how far away that is for you. And then what kind of fund you want, like a growth, balanced, or conservative. And we do all the hard stuff like going to your previous provider, talking to the IRD, making sure that money comes in, and then you're in, you're done.
Please if you’re listening to this in your car and you’re near traffic lights, just don’t sign up there. Pull over. It’s super quick to sign up, but yeah make sure you’re in a safe spot.
We’ve shared a lot about why we believe KiwiSaver is important during this series, maybe one of the most important decisions you can make with your money for the long term.
Like I don't just want to end up in a world with heaps of homeless, um, or poor elderly. I don't want any of my friends to be like that, or anyone in New Zealand, and I think. We've had a really, really balanced economy for New Zealand for a long time, but we've now got like a wealth gap widening.
KiwiSaver can play a massive part in reducing that and making sure that people, when they get to their, uh, that retirement age. Have that security around them. And, we um know that at the moment people aren't putting enough away, and I would argue that's because we're not doing enough as a country, or politically, or whatever that is, to incentivise people to do that like other countries do, and I think at some point that's going to have to change.
So what are the top three takeaways from this episode? Well, this is where we ask you to reflect.
Will you have enough money to stop working or retire so you can live your hopes and dreams?
If your answer yes. Kei te pai. That’s awesome!
If your answer is no, what do you need to do to change this?
Thanks for listening to the Payoff. Whatever you decide to do with your KiwiSaver, we encourage you to make a great choice for future you.
Whether that’s building a home for old dogs, opening a comic book shop, being able to crash your kids OE, hanging out at the beach everyday, or hooking up that motorhome and hitting the road.
And If you want to try a new approach, we’d love to help you on your journey. Find out more at: sharesies dot NZ forward slash KiwiSaver.
And if you’re already a Sharesies investor you can sign up to KiwiSaver through the app.
Now I know this is meant to be the last episode, but we’ve had some great questions and thoughts come through. So, we’re going to do a bonus episode: KiwiSaver Q&A.
if you have any questions you’d like answered, submit them through Spotify, our Sharesies Instagram, our Sharesies Share Club, on Facebook.
Or you can email us at firstname.lastname@example.org.
Until then, ka kite.
Now for the legal bit
The Payoff is not financial advice. We recommend talking to a licensed financial adviser. You should review relevant product disclosure documents before deciding to invest. Investing involves risk. You might lose the money you start with. Content is current at the time.
The Payoff is for a New Zealand audience.