New Zealanders who received KiwiSaver advice held about 52% more on average, a study shows. Photo / NZME
The difference between a comfortable retirement and falling short often comes down to one overlooked factor: getting the right advice early.
KiwiSaver is one of New Zealand’s most powerful financial tools. It combines regular saving, employer contributions and long-term investing to build retirement wealth almost by default. Yet despite similar incomes and working lives, outcomes vary dramatically. Some members retire with balances that meaningfully supplement NZ Super. Others fall well short.
The reason is rarely market timing or picking the “right” provider. More often, it comes down to whether someone received advice early enough to set their KiwiSaver on the right course.
A striking number of KiwiSaver members remain in funds that don’t suit their age or long-term goals. Many sit in default or conservative funds for years – sometimes decades – without revisiting that initial decision.
At first glance, this feels sensible. Conservative funds are labelled “low risk”. They fluctuate less. They feel safe.
The problem is that short-term safety can come at a high long-term cost.
For younger members with decades until retirement, the biggest risk is not volatility – it is missing out on growth. Small differences in returns, compounded over time, can translate into tens or even hundreds of thousands of dollars by retirement.
Put simply, being too cautious for too long can quietly erode future living standards.
This pattern is common among self-directed investors. Left to their own devices, many default to “playing it safe” – holding too much in conservative assets or cash, and failing to adjust as their time horizon evolves. While this may feel comfortable, it often comes at the expense of long-term outcomes.
For many people, KiwiSaver begins with a default. You start a job, you’re enrolled, a fund is chosen – and life moves on. Once that initial choice is made, inertia takes over.
Others remain conservative because markets feel intimidating. Past downturns loom large, even when they were temporary. Loss aversion – our tendency to feel losses more intensely than gains – encourages people to remain overly cautious, even when the odds are stacked in their favour over the long run.
These patterns are particularly pronounced among groups that historically engage less with investing. Women, for example, on average hold more conservative KiwiSaver portfolios and retire with lower balances than men of similar demographics.
None of this is irrational. It is human behaviour. And that is precisely where advice matters.
The most valuable role of KiwiSaver advice is not predicting markets or chasing hot funds. It is far more basic – and far more powerful.
Good advice helps people align their KiwiSaver settings with their life stage, time horizon and tolerance for risk. For younger members, that usually means leaning into growth assets early, when time and compounding are on their side. For those nearing retirement, it means adjusting risk thoughtfully rather than abruptly.
Advice also provides context during inevitable periods of volatility (such as that experienced in recent months). Markets fall. Headlines get alarming. Without guidance, some investors switch into conservative funds after downturns, locking in losses and missing the recovery. With advice, they are more likely to stay the course – or even keep contributing when prices are lower.
Self-directed investors, by contrast, often fall into the trap of trying to “time the market”, moving in and out based on short-term events. In practice, this usually means selling after markets have fallen and reinvesting after they have already recovered, significantly reducing long-term returns.
Advice can also help prevent reactive switches into the latest “hot” themes at exactly the wrong point in the cycle.
While advice can assist with broader issues such as tax efficiency, investment behaviour – not tax optimisation – remains the primary driver of long‑term outcomes.
The role of a financial adviser has evolved accordingly. It is no longer primarily about selecting investments, but about helping people make better decisions over time – providing context, discipline and behavioural coaching in an increasingly complex investment landscape.
International research supports this. Russell Investments’ 2026 Value of an Adviser study estimates the potential value of financial advice in the US at 4.92% a year, with the largest contribution coming from behavioural coaching. In other words, much of an adviser’s value lies in helping people avoid costly mistakes – holding too much cash, switching at the wrong time, or reacting emotionally to volatility.
While this research is based on global markets, the same behavioural patterns are clearly evident in KiwiSaver.
The difference this makes is not theoretical.
A 2020 Financial Services Council study found New Zealanders who had received KiwiSaver advice held, on average, about 52% more in their accounts than those who had not. That gap is consistent with differences in behaviour – being in growth funds earlier, contributing more consistently, and sticking with long‑term strategies rather than reacting to short‑term noise – but it’s an association, not proof of causation.
There is a perception that financial advice is only for the wealthy. In reality, KiwiSaver advice is often most valuable at the beginning – when balances are small, habits are forming and time is abundant.
One of New Zealand’s underappreciated advantages is how accessible KiwiSaver advice is. Many providers and advisers offer guidance at little or no direct cost. Advice is not reserved for those nearing retirement; it is available to young workers starting out.
That stands in contrast to overseas experience.
New Zealand’s relatively broad access to KiwiSaver advice stands out internationally – and not by accident.
In Australia, fewer than 10% of people now receive professional financial advice. That gap widened after the 2019 Royal Commission reforms, which banned commissions and shifted advisers to fee‑for‑service models. While transparency improved, advice became uneconomic for many middle‑income households.
A similar pattern has played out in Britain. Since the Retail Distribution Review in 2013 eliminated commissions, advisers have focused on affluent clients. Today, fewer than one in 10 Britons uses a financial adviser, according to the Financial Conduct Authority.
The United States tells a related story. About one in four Americans are working with a financial adviser or planner, with robo-advisers filling part of the gap. Those without advisers tend to stay in default retirement options.
Across these markets, the lesson is consistent: when advice becomes inaccessible, it is not the wealthy who miss out – it is the middle.
New Zealand faces similar pressures, with about one in four Kiwis receiving professional advice in the past year. The difference is that KiwiSaver advice is still often supported by modest commissions, allowing many people to access guidance without upfront fees – particularly early in life, when it matters most. Of course, it’s also worth asking how your adviser is paid, so you understand the fee structure and incentives.
Recent research shows the challenge is not just access, but confidence and engagement.
The Financial Markets Authority’s 2025 Good Cents research found about two-thirds of New Zealanders are open to guidance, yet 42% feel uncomfortable discussing their finances. Cost concerns, low trust, and uncertainty about value remain barriers – especially for lower-income households.
When asked where they would turn, most cited banks or family, with fewer naming financial advisers directly. A lingering fear that advisers may upsell or act in their own interests continues to weigh on engagement.
At the same time, investment risk is rising. KiwiSaver has shifted materially towards growth assets, with higher‑volatility, risk category 5 funds increasing from about 10% to more than 40% of balances between 2021 and 2024. As more New Zealanders take on growth exposure, the need for guidance becomes more important, not less.
The real gap is not availability, but action. Many Kiwis want help, but discomfort, low trust and perceived cost still hold them back – and that hesitation can compound into poorer long‑term outcomes.
Being in the right fund early, contributing consistently, and staying invested through volatility can dramatically change retirement outcomes. Advice helps make those things happen – not through complexity, but through clarity, discipline and better decisions over time.
Generate is a New Zealand-owned KiwiSaver and Managed Fund provider managing over $9 billion on behalf of more than 190,000 New Zealanders.
This article is intended for general information only and should not be considered financial advice. The views expressed are those of the author. All investments carry risk, and past performance is not indicative of future results.
To see Generate’s Financial Advice Provider Disclosure Statement or Product Disclosure Statement, go to www.generatewealth.co.nz/advertising-disclosures/. The issuer is Generate Investment Management Limited.