One of the biggest consumer rip-offs that even Consumer NZ seems to approve is the sale of gift vouchers to ignorant or ill-informed customers.

More and more businesses seem to be entering these "print your own money" schemes. Some even have the audacity to put time limits on the period for redeeming the vouchers.

It is my understanding from talking to people on the inside that a huge number of gift vouchers are never redeemed. The businesses in effect have been given a loan which need never be repaid.

Then we have the regular outcries of injustice when a large business goes into receivership with large numbers of gift vouchers unredeemed.

When a person buys a gift voucher they are in effect giving an unsecured loan to that business. It is time that financial experts called the public's attention to the scam. Giving cash or using internet banking to deposit a cash gift into someone's bank account is a safer and more sensible way of making a gift. Do you agree?

One thing's for sure - gift vouchers don't make a spectacular display under the Christmas tree!

And I agree that it's good to draw people's attention to the fact that many gift vouchers are never redeemed. Even as I type this, I think of one that's been languishing in my glovebox for too many months.

I think, though, that calling vouchers a rip-off or scam is over the top. And you're ignoring some advantages of giving a voucher compared with giving cash.

But first, Consumer NZ is hardly a big fan of gift vouchers. Since last August, it has run a gift card campaign called "Drop the dates".

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"More than 70 per cent of us regularly buy gift cards," says the Consumer website. "But strict expiry dates mean many consumers are getting stuck with cards they can't redeem. The amount being lost is likely to add up to millions of dollars every year.

"When a gift card expires, the retailer keeps any remaining money. They're not willing to share how much that is exactly. But company accounts reveal gift card income is calculated on the assumption a percentage of shoppers will never spend all the money on the card.

"And retailers gain significant benefits from gift card sales. They get payment in advance and the prospect of further sales when the card is used." Since the campaign started, Consumer says Bike Barn, Baby Factory, Countdown, Farro Fresh, Hallensteins, Kathmandu, Macpac and Noel Leeming have dropped expiry dates altogether. And others have pushed them out to five years. Meanwhile, Apple Store, Barkers, Bunnings, EB Games, Foot Locker and Mighty Ape didn't have expiry dates in the first place.

I support Consumer's campaign, and suggest readers favour the above shops, and try to push other retailers to drop expiry dates.

As I say, though, gift vouchers have some advantages over cash. Many recipients of cash won't get around to spending the money on something special, and it will just disappear into grocery or electricity bills. A voucher almost forces them to buy a treat.

Also, if you give a voucher, you've given at least some thought into what the recipient might like. You don't usually give a book voucher to someone who reads very little, or an outdoor equipment store voucher to a couch potato - unless you're trying to change their behaviour, and good luck with that!

And a voucher to an unusual shop might introduce the recipient to a whole new world.

Over all, I think gift vouchers are popular because they can work well. Despite my confession about my glovebox, I've many times enjoyed entering, say, a bookshop, with a voucher that invites me to splurge on exactly what I want.

It's better, though, if I don't feel pressure to spend the money within a fixed time. It would be great to see an end to expiry dates on all vouchers.

Paying for advice

My wife and I are selling our larger Auckland house, hoping to realise property gains, downsize and put some money in the bank. We are both in our mid-to-late-50s, have KiwiSaver in place, and are fairly financially literate.

However, it might be a good opportunity to take stock and seek advice. Do you offer advice? Alternatively can you recommend a good independent financial adviser we could talk to - meaning someone who won't just base their advice on potential commissions?

I'm not an authorised financial adviser, so legally I'm not allowed to give one-on-one advice except in columns and on the radio.

But I suggest you read the Info on Advisers page on www.maryholm.com, which explains why I agree with you - that it's better to get advice from someone who doesn't receive commissions but instead charges you a fee.

Then contact several of the fees-only advisers listed at the bottom - perhaps after looking at their websites to see if they seem like your type of person.

It's great to see that the number of advisers who charge fees seems to be growing in New Zealand, and elsewhere.

Reuters recently reported on US research that shows a surge in the number of investors who don't want to work with an adviser who receives commissions on product sales. Their services "often appear to be 'free' to the investor, but often lead to conflicts that cost them money over time," because the investor is put into risky or inappropriate investments, says Reuters.

The researchers, Cerulli Associates, "found that about half of all investors polled late last year are interested in paying for financial advice, up from 40 per cent in 2008. But a whopping 79 per cent of investors aged 30 to 39 would like to pay for help." Regulatory changes in the US have "helped boost awareness of the fact that we all pay for these services - one way or the other", says Reuters. "As recently as 2010, some 64 per cent of investors thought investment advice was free, or they had no idea whether they paid for it or not," Cerulli says. "Now, the clueless category is down to 44 per cent of the total." All the advisers listed on my website offer a free initial phone call or meeting. Make the most of this with several of them, then choose one. It's worth putting effort into getting the best one for you. And it's worth paying for unbiased advice.

Note, though, that some are not cheap. Ask upfront what they will charge.

KiwiSaver

Your recent column on KiwiSavers' mostly happy returns was very interesting - well done!

Just a question on the tables showing returns for employees in balanced funds. The highest is 24 per cent, average is 14.9 per cent and lowest is 9.4 per cent.

Is this an annual return, before fees and taxes?

I'm asking as I was - until I read these figures - quite happy with my return of 9 per cent net of fees and taxes. But now I'm thinking that's definitely not good at all?Those returns are after fees and taxes. But, as I said, the returns are in a way "artificial".

They are calculated by looking at how much money someone has put into KiwiSaver and their current balance. That means that all the other inputs - including not just investment returns earned by the provider but also government and employer contributions - are counted as returns. And fees and taxes are subtracted.

The point of doing this is so you can compare your investment in KiwiSaver with other possible investments, such as shares, rental property or non-KiwiSaver managed funds, where you wouldn't get government and employer inputs.

The 9 per cent return you're looking at will be just the investment returns earned by your provider. And you should be happy with that. It's very good for a balanced fund.

As I said last week, most KiwiSaver funds have performed really well in recent years. Don't expect that to continue. There will be downturns ahead. But it's still wise to keep contributing. Because of the government and employer boosts, KiwiSaver will remain hard to beat over the long term.

For other readers: The lowest, average and highest percentage returns for employees in other fund types, based on numbers sent in by about 300 readers, are:

Conservative: 2.3, 12.4, 27.2

Growth: 4.2, 17.3, 44.2

Aggressive: 8.6, 18.3, 44.7

For non-employees they are:

Balanced: 5.1, 11.9, 22.8

Growth: 2.4, 11.5, 27.3

For other funds, there were too few responses.

Kids' stuff

Over the past couple of years our family has started saving (modest) amounts of money in various accounts. Better late than never, right?

Five per cent from every pay cheque goes into savings, and 3 per cent into our KiwiSavers. We save $5 into a savings account for each of our kids, currently seven and 10, each week. Our goal is to have some of their tertiary fees or similar saved by the time they finish high school.

Finally, we put $10 into each of their KiwiSaver accounts every week. However, I am perturbed to see a big chunk of the money we save being deducted in administration fees by the bank, especially on such modest total balances.

Are there providers that offer zero fees for kids? And is there a central place to find out fee information between providers?

That's a great idea to set up regular savings. And your amounts - 8 per cent of pay for you plus some for the children - aren't modest. They should add up nicely over the years.

On KiwiSaver fees, when the scheme first started, the government not only gave everyone a $1000 kick-start, but also $40 a year towards fees.

Providers usually charge a fixed fee of about $25 to $50 a year, plus a percentage of your balance. Given that most children had low balances, the $40 roughly covered their fees. But since the kick-start and fee subsidy have both stopped, KiwiSaver is no longer particularly attractive for children - in most cases.

However, the good news is that the following providers have told the Commission for Financial Capability that they waive fees for under-18s who contribute regularly: Aon, Booster, NZ Funds and QuayStreet.

It's a good idea for children to transfer to one of those providers, although once they reach 18 I suggest they also consider other options, using the KiwiSaver Fund Finder on www.sorted.org.nz

The Fund Finder is also the place to get unbiased general info about providers' fees.

NOTE: Information in this answer proved to be incorrect. It is corrected as follows in the following week's column:

Question: Just to let you know that Aon only offers reduced fees for kids - but not free. So essentially it works out to the same total as my kids are currently charged at ASB.

Answer: Unfortunately that wasn't the only mistake in last week's column, where I said, "the following providers have told the Commission for Financial Capability that they waive fees for under-18s who contribute regularly: Aon, Booster, NZ Funds and QuayStreet."

I don't know where the communication broke down, but I've now checked with the providers, who say:

Aon's flat admin fee is $40 a year for under 18s, compared with the full rate of $49.50. There is no requirement to contribute.

Booster waives its flat fee for anyone of any age with a balance below $500, but has no special deal for children. There is no requirement to contribute.

Craigs waives its flat fee for under 18s. There is no requirement to contribute.

NZ Funds waives its flat fee for under 18s if they contribute $100 or more over a six-month period.

QuayStreet waives its flat fee for under 18s. There is no requirement to contribute.

The flat fee is, of course, only part of the story. Providers also charge a percentage of your balance. But for children with low balances, paying no flat fee can make quite a difference.

Seminar winners

The winners of the five free tickets to a public seminar I'm running in Wellington on Tuesday, August 8, are Karl Brewerton, Sherry Coulson, Tricia Cullen, Shiree and Fraser Kingi and Shane Willis.

Quite a few who replied said they would like to give a ticket to a child, grandchild, godchild, niece or nephew. Nice!

Thanks to the many readers who entered. Better luck next time.

For info on the seminar - on Making the MO$T of Your Money - see www.maryholm.com

• Mary Holm is a freelance journalist, a director of the Financial Markets Authority and Financial Services Complaints Ltd (FSCL), a seminar presenter and a bestselling author on personal finance. Her website is www.maryholm.com. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary's advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com or Money Column, Private Bag 92198 Victoria St West, Auckland 1142. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice.