Big Banks Lose Ground as KiwiSaver Members Move to Boutique Providers

Over the past year, a significant shift has been observed in the KiwiSaver landscape, with billions of dollars being moved from major banks to smaller, independent asset managers. This trend reflects a growing preference among KiwiSaver members for providers they perceive as more transparent, efficient, and aligned with their long-term financial goals.

Data from the Disclose register reveals that Milford Asset Management has emerged as the top beneficiary of this shift, with net inflows of nearly $1.5 billion. Other notable beneficiaries include Generate and Simplicity, while major banks like ANZ, ASB, and Westpac have experienced substantial outflows. Despite these losses, ANZ remains the largest provider by market share, though its dominance has waned significantly since 2015.

According to Morningstar’s latest survey, ANZ’s conservative and balanced funds have fared poorly over the past decade, contributing to its declining position in the market. In response, ANZ has emphasized its commitment to improving customer engagement and transparency, introducing tools such as the Fund Chooser Tool and government Contribution Tracker to help members manage their KiwiSaver investments more effectively.

Morningstar’s data director, Greg Bunkall, highlighted that Milford and Generate are the only providers with over $1 billion in net inflows, underscoring the importance of brand awareness, marketing, and consistent performance in attracting and retaining members. He noted that strong performance can drive significant switches, particularly when providers gain positive media coverage.

Milford’s head of KiwiSaver, Murray Harris, emphasized that the firm’s long-term returns are a key factor in attracting members. He also noted that increased market confidence following recent positive returns has encouraged more members to switch providers, particularly during periods when they are reminded to review their contributions and ensure they are maximizing government incentives.

Kernel founder Dean Anderson pointed out that growing awareness and education around KiwiSaver are shifting perceptions, with many members realizing that they don’t have to rely solely on traditional banks. However, he acknowledged that switching activity is still relatively low compared to other financial decisions, such as changing phone or electricity providers.

As the KiwiSaver scheme continues to evolve, the rise of smaller providers suggests a growing trust in the system and a willingness to explore alternatives that may offer better fees, service, or alignment with personal values. Harris advised potential switchers to focus on long-term performance rather than short-term gains, emphasizing the importance of consistency over time.

With billions of dollars now being reallocated across the KiwiSaver ecosystem, the shakeup is likely to continue, driven by consumer demand for more personalized and transparent investment options.