Being in the wrong KiwiSaver fund cost him $120,000. No one told him until it was too late

Thursday, 14 May 2026

A conversation with his mates gave Simon* the first indication that something wasn’t quite right.

They were all at a similar life stage, but everyone in his circle had far higher balances than he did – despite the fact that he’d been contributing a solid 6% for as long as he could remember.

Something didn’t check out. And that concern would eventually lead him to MoneyGuide founder Rory Butterfield, who looked at the numbers.

“He had been in a conservative fund the whole time,” Butterfield tells me, pointing out that the provider never gave Simon a heads-up.

A simple back-of-the-envelope calculation painted a stark picture of Simon having missed out on more than $120,000 in potential earnings had he simply been advised into a growth fund.

“It would have only taken a 10-minute chat,” Butterfield says.

“The consequences of getting it wrong are huge, and, unfortunately, we deal with clients every day who are in this boat.”

Butterfield doesn’t use this anecdote to shame Simon, but rather to remind Kiwis there’s no guarantee a provider will step in to correct course if you’re making a mistake.

More often than not, the onus rests on the individual to make big decisions with long-term consequences.

But this is easier said than done.

Decision paralysis

Investigating the range of KiwiSaver options available today can feel a bit like scrolling through Netflix. All you have is a confronting wall of options with little indication of what would suit you right now.

Behavioural scientists refer to this as decision paralysis: the inability to choose because you’re overthinking the variables or fearing a wrong outcome.

Robyn Conway, the general manager of managed funds at Fisher Funds, says New Zealand today has 29 licensed KiwiSaver providers, all offering different funds.

“This is great for healthy competition, variety and innovation, but it can create complexity,” she says.

“For some, this can create analysis paralysis, but the number of options isn’t necessarily the issue. It’s more the financial confidence to navigate them.”

Butterfield agrees with this assessment, saying that financial education has never kept pace with the number of options we have today.

“Most people were never taught how to choose the right fund, assess risk, or manage long-term retirement savings,” Butterfield says.

“As a result, much of the responsibility and risk has been shifted onto individuals who often don’t have the knowledge or confidence to navigate these decisions properly – especially during times of uncertainty.”

Those fortunate enough to understand investing and make informed choices will ultimately retire in a stronger financial position than those who don’t.

“I don’t think that’s good enough,” says Butterfield.

“We are all working hard and deserve a good retirement at the end of it. That gap has created a growing inequality within KiwiSaver, where outcomes are increasingly determined by financial literacy rather than simply participation.”

What can we do about it?

The good news? Kiwis don’t have to do it all alone.

Fisher Funds’ Conway says decent KiwiSaver providers should offer regular updates and the tools to help you stay the course and maximise your investments. If they don’t offer any support of this nature, then there are other providers in the market that might be better suited to your needs.

Money and Wellbeing research from the Financial Services Commission in 2021 showed New Zealanders who received financial advice have an average of 3.7% more in their KiwiSaver accounts and were more likely to have diversified investment portfolios. This stretches as high as a 20% difference with a wider investment portfolio, and this will compound over time and become even more substantial as decades pass.

A good provider, says Conway, should proactively offer advice and education to ensure you are in the right fund for your goals and investment timeframe.

She further stresses that the priority should be on long-term returns rather than what a fund might have done in the last six or 12 months.

“You want a provider who focuses on long-term, risk-adjusted returns,” Conway says.

“Look at returns over a five- to 10-year timeframe, as this will give good insight into their capabilities and investment philosophy. This is far more important than short-term rankings or returns.”

A financial adviser’s checklist

Katie Wesney, the national coaching lead at Enable Me, regularly advises clients on choosing the best KiwiSaver fund and provider for their life stage.

She says these are the questions that really matter when choosing a fund:

How much time do you have?: How long your money has to recover from volatility matters more than how you feel when markets drop. They’re not the same thing.

What are the fees being charged? A 1% difference in annual fees sounds trivial. Over decades, it adds up. Being aware of the invisible impact of these fees can make a huge difference over time.

Do the funds offered match your life stage? Growth funds are often considered suitable when you have decades to go. Ensure you reassess as retirement approaches and the drawdown becomes real. You don’t want volatility to eat into the cash you need to buy groceries.

Does the provider have a good track record? Longer-term returns can tell you more than ten-month returns. Look out for a clear investment philosophy, not just a good recent story.

Will you be able to leave the fund alone? Even the best fund underperforms if you switch it out every time markets wobble. This comes down to your personal risk tolerance. You need a fund that will let you sleep at night, even if the markets do take a hit.

Informed financial decisions are always made by understanding your current circumstances and having a clear view of what you want in the future. Getting answers to these questions may take a bit of work. But it’s the kind of work that could pay off handsomely in decades to come.

*Disclaimer: The information below is of a general nature and is not intended to be personalised financial advice. It does not take into account your individual circumstances or financial goals. Simon is not the individual’s real name.

What are some of the big financial mistakes you’ve made? And how did you realise you were on the wrong track? Let us know in the comments section below.