The Missing Ingredient In Your Retirement Plan / Rupert Carlyon

Neglecting financial advice can cost you a fortune in retirement; FSC study

Kōura’s Rupert Carlyon joins the NZ Everyday Investor to discuss the role of digital advice in helping give more Kiwi's a leg up with their investments, why it doesn’t mean traditional advice is done for, and look at the often neglected $20,000 and below Kiwisaver balance holder. 

While most people in the financial services industry can hand on heart tell you that their advice leads to better outcomes for their clients, it’s often more difficult to prove . Recent data from the Financial Services Council brought this idea from opinion, into the realm of hard fact. 

According to their research, based on more than 2,000 people across New Zealand, those that received financial advice had a 50% larger Kiwisaver balance. 

It’s an amazing statistic, but an unsurprising one for those working day to day in the industry. Still, the harsh reality is that often those who are 'already on their way', seem to be the recipients of good advice.

“It basically doesn’t make sense for a financial advisor to take on a client with lower savings,” says Rupert Carlyon.

Investment advisors often (but not always) earn revenue by the amount of assets under management. There aren’t sufficient market forces to make it worth the while for a high-street financial adviser therefore to take on a client with a small Kiwisaver balance. 

What is financial advice?

Advice, as Rupert understands it, can be divided into two separate parts. 

The first being the asking of questions. What is your specific financial situation? How much are you currently contributing to your investments, and what is your ultimate end game?

From there, an adviser has the foundations to give catered financial wisdom based on a client’s specific circumstance. 

For Rupert, who’d seen the rise of robo-advice overseas, he realised that going digital was the best way to capture the broad spectrum of the New Zealand public who were failing to get advice. 

Their digital tool is built on the same methodical steps that a human financial adviser would take when assessing a client’s financial situation, before generating a solution catered to them. For many, the realisation that they’re less prepared for the retirement that they had dreamed of ,has become a consistent come-to-Jesus moment.

“The biggest piece of feedback we get from people using our tool has been the surprise of seeing how much they’ll actually be getting on a weekly basis in retirement,” said Carlyon. 

Often we focus on the amount - $1m, $2m, $500k, $10m - everyone has an opinion on this but what does that lump sum of money actually mean for you?

Why digital advice could be a game changer for NZ’s under-advised.

Kiwisaver has been a wildly successful means to bring the broader spectrum of New Zealanders into the world of investment, but there has been some apathy in many people’s engagement with the retirement product. According to a September Westpac survey, only one in four people aged 18-24 know what type of KiwiSaver fund they are in.

“We’re hoping, with digital advice, we’re giving a whole new world of people advice they wouldn’t have otherwise had, which enables them to make better financial decisions,” said Rupert. 

While the show’s host may be a authorised financial adviser, does the advent of ‘digital advice’ make him and his colleagues in the industry want to run for the hills and become real estate agents with outgoing MP, Paula Bennett? Short (and long) answer, no. 

“In March when everybody is watching their investments drop 10’s of thousands of dollars,...