Liam Dann: Major KiwiSaver players on notice

There's a long-running debate in the industry about active versus passive funds. Photo / iStock

Too many New Zealanders pay no attention to their KiwiSaver set-up.

We'll put the time in for the best discount on a new TV or computer. Homeowners sweat and agonise over whether to fix or float their mortgage, knowing a small percentage gain translates to big savings over the years.

But KiwiSaver doesn't seem to get that level of attention even though we'll spend more on fees over a lifetime than almost anything else we pay for. So it will be interesting to see whether Sam Stubbs really can shake up the KiwiSaver market and bring down fees as he hopes to.

It's a big goal.

The quality of the team he has put together and his own track record bring weight and credibility to the launch of Simplicity. That and the connection with global giant Vanguard - which has pioneered cut-price retirement funds in the US and around the world - suggest the major players will have to take them seriously.

Fees are a contentious issue in the asset management business although strangely more so for providers than many investors - especially when it comes to KiwiSaver. As Brian Gaynor, who founded Milford Asset Management, pointed out in his column on Saturday, a large number of KiwiSaver members are receiving no advice or poor direction and are in the wrong funds.

Gaynor is a champion of active funds and Milford has some fantastic returns to back up his views.

There's a long-running debate in the industry about active versus passive funds. Active funds where stocks are traded naturally require more work and attract higher fees. Passive funds that track market indices cost less.

Simplicity's primary target is not the Milfords, or other boutique funds which actively manage investments to try to outperform the market.

It will be hoping to take a bite out of the big banks - and others like Stubbs' former employer Tower - which have a stranglehold on default KiwiSaver funds.

It remains to be seen whether the banks will respond and whether fees will fall. But anything that sparks debate on this topic and gets people thinking about their savings has to be good.

There are big gains for Kiwis and the country if we just start to pay more attention to our money.