I Switched My KiwiSaver From Milford To Kernel

I switched my KiwiSaver!

Last year, I switched my KiwiSaver from Milford to Kernel.

It wasn’t because I suddenly thought Milford was a bad provider. My thinking around investing had simply changed. After spending years researching investing for the channel, I’d become much more convinced by low-cost passive investing.

The biggest factor for me was fees. I was paying around 1.25% a year in an actively managed fund, while Kernel’s High Growth Fund charges 0.25%. That 1% difference might not sound like much, but over a few decades it can add up to a pretty serious chunk of money.

• Lower fees mean more of my money stays invested.
• Passive funds don’t rely on picking the “right” fund manager or stocks.
• Kernel already fitted nicely with the way I invest outside KiwiSaver.

Why passive investing appealed to me

The usual argument for active funds is that you’re paying more for the chance of better performance. Fair enough. The issue is that those managers need to outperform by enough to cover their higher fees, and they need to keep doing consistently for years and years. According to S&P's SPIVA findings, especially for New Zealand, that's a rarity.

For me, that became the sticking point. I wasn’t confident I could reliably pick which active managers would still be outperforming 10, 20 or 30 years from now.

Why I ended up choosing Kernel

Kernel lined up pretty closely with what I wanted from a KiwiSaver provider: low fees, a great UI, simplicity and flexibility. I’d already been using Kernel for my other investments, so having everything sitting in the same place was handy too.

The actual switch was also surprisingly painless. No paperwork, no phone calls, no emails back and forth. It was pretty cruisy, actually.

1. I filled out Kernel's online application.
2. Kernel organised the transfer from Milford.
3. Around 13 days later, my KiwiSaver balance had moved across.

Should you switch your KiwiSaver too?

Not necessarily.

The right provider depends on your goals, risk tolerance and the type of investments you actually want. But if you haven’t looked at your KiwiSaver in a few years, it’s probably worth checking what fund you’re in, what you’re paying in fees, and whether it still suits you.

For something that could eventually become one of your biggest financial assets, a quick review every now and then isn’t a bad idea!

Many KiwiSaver providers offer free financial advice to help you work through your options. Naturally, they’ll probably be pretty keen for you to join them, so don’t feel like you need to sign up on the spot!

Otherwise, you can do a bit of homework yourself. A good place to start is:

1. Work out your time horizon and appetite for risk. Someone with 30 years until retirement may be comfortable taking more risk than someone planning to withdraw their KiwiSaver in the next few years.
2. Compare the different KiwiSaver providers. Search something like “Who are NZ’s KiwiSaver providers?” to get a feel for what’s out there.
3. Compare the funds themselves. Look at what they actually invest in, their level of risk, fees, diversification and investment approach.
4. Don’t choose based on recent returns alone. Last year’s best-performing fund won’t necessarily be next year’s winner.

You don’t need to become an investing expert. Even spending an hour understanding where your KiwiSaver is invested and why puts you ahead of simply leaving it untouched for the next 30 years.

All the best in your journey! This could be one of the most fruitful financial decisions you ever make.