Goodreturns has this interesting article which highlights that holders of KiwiSaver that have a financial adviser are less likely to switch to a conservative fund following recent market instability than those that do not have an adviser – by a big margin. You can check out the full story at this Link.
This is important. It is all about the value of financial advice. Too often I have seen comparisons of ‘going direct’ particularly for investment advice, and working with a financial adviser, that ignore the question of performance, assume the same gain is available simply by investing in the index, and then focus on the higher cost of advice.
That is valid from one point of view, but what if the investor’s behaviour is different because of the lack of advice?
Investing for retirement is a long-term business and small differences can compound to very different outcomes. If you are alone in your decision-making and get spooked by a bit of a fall back in a market and at that moment switch to a conservative fund you may be moving out of equities and into cash at precisely the wrong time. Wait until the market picks up a bit and you may move into equities at or near the top, missing most of the gain. Repeat that several times over 30 years and you may have cost yourself a fortune.
Good advice may help.