Sam Stubbs of non-profit KiwiSaver provider Simplicity says proposed changes to fee disclosure will cause a "tectonic shift in how the industry organises itself".
"Few customers know what they're being charged in fees, and many of them will change providers when they find out," he said.
"People are being told their fees are significantly lower than what they actually are, they just don't know it."
The highest fees in KiwiSaver providers are eight times higher than those his firm charges, he said.
"There will be winners and losers in this. It's going to be a real wake-up call for the industry."
Stubbs said banks will find it difficult to maintain high commissions on people managing funds and the shake-up will change the way the industry operates.
"The industry will look dramatically different in five years time," he said.
It's a good day for New Zealanders, said Stubbs, when there is transparency and they can make informed decisions for themselves.
Stubbs' comments follow Commerce Minister Paul Goldsmith's reiteration this morning that transparency is on the way for KiwiSaver fees.
"Consultation with KiwiSaver scheme providers has begun to ensure fee transparency is done in a way that is simple for the consumer to understand and easy for providers to implement," Goldsmith said.
"It is my expectation that any regulatory change required will be in place for the next annual statements and that KiwiSaver providers will already be working towards providing their members with the total fees they are paying," he said.
The Herald recently revealed that many KiwiSavers are in the dark over the individual costs to manage their money because most providers don't give the full dollar figure in annual member statements.
Analysis of statements for the eight largest KiwiSaver providers show just three - Mercer, ASB and Kiwi Wealth - revealed the full dollar costs.
Goldsmith said this wasn't good enough.
The Ministry of Business, Innovation and Employment, the Commission for Financial Capability and the Financial Markets Authority, is currently reviewing the content of the annual statements KiwiSaver schemes must provide to their investors.
Separately, the FMA said in its KiwiSaver annual report today that for the first time the level of people transferring between schemes was higher than people joining KiwiSaver.
In the 12 months to March 2016, 175,000 members transferred to a different KiwiSaver provider.
This compared to 177,000 people switching schemes in the year to March 2015.
In the year to March 2016, 145,000 new members joined KiwiSaver, compared to 245,000 new members the year before.
That represents the lowest level of growth since reporting began in 2012, the FMA said.
"The number of [members in default schemes] continues to decline from its peak of 465,000 in 2013 to 445,000 in 2016, now representing 17% of the total members," the FMA said.