Speaker 1: You're listening to the Weekend Collective podcast from News Talk
Speaker 1: sedb it.
Speaker 2: But it don't too far because you know it don't
Speaker 2: matter anyway, So money money won't get your no barget
Speaker 2: too far.
Speaker 3: To take.
Speaker 4: What is.
Speaker 5: This is on?
Speaker 3: I started talking before I was really ready. There, Welcome
Speaker 3: back to the Weekend Collective. This is smart Money. I'm
Speaker 3: Tim Beverage. And if you've missed any of the previous hours,
Speaker 3: we had Jude Walter in just now for the Health
Speaker 3: Up talking about keeping your brain active and fit and
Speaker 3: healthy and avoiding stress and just basically keeping your cognitive
Speaker 3: health on top. So if you want to listen to
Speaker 3: you that, go and check out the podcast. iHeartRadio, look
Speaker 3: for the Weekend Collective and for politics, we had an
Speaker 3: interview with well Shane Rettie was chatting about nitrous oxide
Speaker 3: and how they're clamping down on it. Every time I
Speaker 3: think not nutro soxide, I we think of Steve Martin
Speaker 3: and as the dentist in the Little Shop of Horrors.
Speaker 3: But anyway, the clamping down on nitrosoxide recreationally speaking. But
Speaker 3: also we had a chat with Simon Carter as the
Speaker 3: Poletry Undersecretary to the Ministry for rom Reform about basically
Speaker 3: they're throwing it out and they're going to start again.
Speaker 3: Well they have started, and yeah, rom Reform. If you
Speaker 3: want to check that out, listen to our podcast. So
Speaker 3: but right now it's time for smart money. And my
Speaker 3: guest is he's head of advice at Concilium. You can
Speaker 3: go and check out their their worker anytime Concilium dot
Speaker 3: co dot nz or the Kiwi save a funders Kiwi
Speaker 3: rap as in wrapping a present dot co dot nz.
Speaker 3: And he is Ben Brinkerhoff.
Speaker 5: Gid a Ben.
Speaker 3: How are you going good?
Speaker 6: Dan?
Speaker 3: How are you not too bad? Nice to thank you
Speaker 3: for coming into the studio.
Speaker 6: Good to see you. It's good to be here.
Speaker 5: What's been keeping you out of mischief.
Speaker 3: And the money scene?
Speaker 6: I mean, but it's a strange way to put a question.
Speaker 6: It sort of is.
Speaker 2: I think the best way to stay out of trouble
Speaker 2: is to read the newspaper as little as possible, right, Yeah.
Speaker 3: I might just get you to just pull your microphone
Speaker 3: just a little closer there, So there we go, there
Speaker 3: we go. We want to talk about key we saver
Speaker 3: a bit because for many people when it comes to
Speaker 3: the financial investment it's sort of a default thing where
Speaker 3: people they're investing in all sorts of things without knowing
Speaker 3: it and people, I mean, yeah, so if you've got look,
Speaker 3: we're going to talk about key we saver from a
Speaker 3: whole bunch of angles as to how often you should
Speaker 3: monitor the performance of your key we save it you
Speaker 3: just put it away and forget it does past performance?
Speaker 3: For instance, you look at someone and go, man, they
Speaker 3: have an amazing key we save a fund. Should I
Speaker 3: stick my money with them? All those sorts of things
Speaker 3: Key we saver it actually, ben how often do you
Speaker 3: think people actually look at the performance of their key
Speaker 3: we save or is it best? Is it best just
Speaker 3: to sort of put it in the bottom drawer and
Speaker 3: maybe look at it every so six months.
Speaker 2: We'll side that. That's a question with a couple of layers.
Speaker 2: But let me just peel back a couple.
Speaker 5: Yeah.
Speaker 2: There's an awesome paper written in the past called myopic
Speaker 2: lossid version, and my opic just means short.
Speaker 3: I'm going to write that down myopic myopic that's short
Speaker 3: loss a version, right, okay.
Speaker 2: And the premise of this paper was that basically people's
Speaker 2: point of view is very short sighted. That's what myopic
Speaker 2: means is short sighted. And the more short sighted your
Speaker 2: view of your performance is, the more likely you are
Speaker 2: to make bad decisions. And so I wrote a paper
Speaker 2: once called It's Okay to look Away, Yeah, and I
Speaker 2: wrote it during the COVID time period, where was pretty challenging.
Speaker 2: And the other waying premise was don't look at your
Speaker 2: account balance. You want to set things up to be
Speaker 2: done correctly. You should maybe review it once a year,
Speaker 2: and I think you should view with an advisor and
Speaker 2: determine if you're on track to achieve your goals or
Speaker 2: if your goals have changed, if your strategy needs to change.
Speaker 2: All that's good stuff, right, But looking at your key
Speaker 2: saver balance regularly is more likely to lead you to
Speaker 2: make a mistake.
Speaker 3: Well, it's like it's like, if you're buying and selling
Speaker 3: shares and it was your hobby to do your own
Speaker 3: make your own choices, probably following them every day wouldn't
Speaker 3: necessarily lead you to the right decisions. Of course, then again,
Speaker 3: if they suddenly went up in value a lot, it
Speaker 3: would have been useful to follow them. But that's not
Speaker 3: the game.
Speaker 2: Machan, the number one person that looks at car ads
Speaker 2: car sellers, people that just bought a car or really, yeah,
Speaker 2: so you just buy a car and you're looking at ads,
Speaker 2: why just to make sure you've got a good deal.
Speaker 2: I think when people make when they change their investments around,
Speaker 2: they're going to look at them a lot, decide to
Speaker 2: make a good choice and make a bad choice. I
Speaker 2: think it leads to a lot of people being unsettled overall.
Speaker 2: I don't think looking at your key saver balance that
Speaker 2: often no idea.
Speaker 3: Are there actually investments it does if you are taking
Speaker 3: hands on approach, are there investments where it does pay
Speaker 3: to keep a regular eye on them? Because of course,
Speaker 3: key that's the thing with key we Saver people aren't
Speaker 3: key we Saber managers because they're idiots. They are on
Speaker 3: the job for you all the time. But whereas I guess,
Speaker 3: if you are managing your own personal, individualized investments, then
Speaker 3: obviously you're you're going to keep an eye on that.
Speaker 3: For instance, if you're you're choosing your own stocks in
Speaker 3: the share market, you've got ten companies that you've invested in,
Speaker 3: you probably will monitor their performance more regularly. But that's
Speaker 3: a completely different game, isn't It's a.
Speaker 2: Completely different game. And by the way, don't don't don't
Speaker 2: do that. Don't don't that you're Key we saver balance
Speaker 2: on ten stocks.
Speaker 3: I No, I wasn't saying that. I'm just talking about
Speaker 3: different the reasons you might keep an eye on your
Speaker 3: investor totally.
Speaker 2: If you're in and yet and they're in that kind
Speaker 2: of situation and you are basically the manager of your
Speaker 2: own investments, yeah, then maybe maybe it makes sense, you know,
Speaker 2: But I just suggest that that the key Saver is
Speaker 2: one area where we're diversification and maybe taking a different approach.
Speaker 3: Piece are You've raised a couple of things there which
Speaker 3: I might I wouldn't mind digging into, because how many
Speaker 3: people do you think actually have a goal with the
Speaker 3: key we save it? And and the reason I asked
Speaker 3: that is because we generally have If you are an employee,
Speaker 3: your employer may put in I'm not sure what the
Speaker 3: rules are because I'm self employed, which is, let's not
Speaker 3: dig into that, but say three percent or something or
Speaker 3: two or three percent. And I wonder if people just
Speaker 3: sort of go, well, this is what Key we Saver
Speaker 3: it does, and I've got this amount, but they don't
Speaker 3: actually ever stop to think what the goal is. They
Speaker 3: just know that there's money going in that.
Speaker 2: Oh you've hit I don't know if you if you
Speaker 2: thought about that too much ahead of time, but you've
Speaker 2: actually completely hit on the issue is that with keysaver,
Speaker 2: you want to have, you want to be intentional, what
Speaker 2: do you actually want to achieve? And you think about
Speaker 2: you don't have a huge number of choices to make
Speaker 2: in kiv saver, but boy that it can be dramatic
Speaker 2: the impact of the choices that you make over maybe
Speaker 2: a twenty thirty, maybe a forty year time arise. And
Speaker 2: if you start when you're twenty five, you cash out
Speaker 2: when you're sixty five, that is a long time for
Speaker 2: those choices to compound. And I'm American, right, so, for
Speaker 2: for better or for worse, I tend to be overly
Speaker 2: friendly with people. And I'm on I'm on the airplane
Speaker 2: and I'm asking I ask people what they're doing in
Speaker 2: their kiwisaver, and they are you California?
Speaker 3: I am California because you can check out, but you
Speaker 3: can never leave.
Speaker 6: Exactly.
Speaker 2: Let's not get into the deep spiritual sense.
Speaker 5: That's on California.
Speaker 6: Yeah, yeah, yeah, okay, anyway.
Speaker 2: Carry on well, and you talk to people about kivsaver
Speaker 2: and you say, well, based on what you want to
Speaker 2: spend in your future, what amount of what you need
Speaker 2: is ever we're going to cover? You know, is it
Speaker 2: going to cover forty percent of what you need? Is
Speaker 2: it going to cover sixty percent of what you need?
Speaker 2: Is it going to cover everything that you need? And
Speaker 2: what's your plan to fund the difference?
Speaker 3: I reckon people find that, and I'm probably speaking personally
Speaker 3: as well, there's a part of I think there's a
Speaker 3: huge amount of I'm not sure if the word is
Speaker 3: procrastination or avoidance, because people don't want to know what
Speaker 3: that means when they set their goal this is what
Speaker 3: I want, It's like, well, this is how far away
Speaker 3: from that you are? How often do people avoid it
Speaker 3: because they just you know, we're living in high we've
Speaker 3: been living in under high inflation. The costs of buying
Speaker 3: a house is people who are pessimistic about a bunch
Speaker 3: of things. I reckon, a lot of people put that
Speaker 3: stuff in the bottom drawn. That's why they just leave
Speaker 3: it to the employer contribution and whatever they have to
Speaker 3: stick in and go to sleep.
Speaker 6: You know that's right, that's right.
Speaker 2: Well, listen, you know, if you don't have a plan,
Speaker 2: You'll get somewhere. It just may not be where you intended.
Speaker 3: Right, So sounds like that, it sounds like a lyric
Speaker 3: from that song again, But it's probably not.
Speaker 2: As long as that's an acceptable outcome, that you you
Speaker 2: end up where you ended up, and perhaps that's okay
Speaker 2: because you wouldn't have known the difference. But when you
Speaker 2: actually know where you want, or you have an idea
Speaker 2: of what you want. I talk to some people sometimes
Speaker 2: and they're just desperate because they think I'm not going
Speaker 2: to be successful. I've I've waited too long. It's it's
Speaker 2: it's passed me by. But but you can actually sit
Speaker 2: down and still form a strategy and people can go
Speaker 2: from maybe hopeless to go like, you know, this might
Speaker 2: actually work out.
Speaker 3: And I says something to be said for even if
Speaker 3: you know maybe it's not the answer you want, the
Speaker 3: fact of taking control of your finances, it's actually in
Speaker 3: its own right, no matter how good or bad the
Speaker 3: outcome is, there's something about it that is actually liberating
Speaker 3: because you're finally in control and you know what you're
Speaker 3: doing absolutely.
Speaker 2: You feel you feel like, well, this is where I'm
Speaker 2: at and I'm not in denial anymore, and I actually
Speaker 2: have a strategy to make the best out of the
Speaker 2: choices I have left.
Speaker 3: We Actually, i'd like to hear from you on this.
Speaker 3: I eight one hundred eighty t and eighty. Have you
Speaker 3: stopped to think of a particular financial goal or do
Speaker 3: you sort of just do different things, Like I'll stick
Speaker 3: a bit of extra money into ki we sab because
Speaker 3: I think I need to save some more, But you
Speaker 3: have no idea what that's going to amount to in
Speaker 3: the end. You just sort of think this is what
Speaker 3: I'm going to do because I think I should. It's
Speaker 3: but like people want to buy get into the residential
Speaker 3: property market, they may not have the actual financial goal
Speaker 3: in mind, but they'll go, well, apparently this is the
Speaker 3: place to be. So I'm going to stick some money
Speaker 3: in because I should. I'm actually quite curee I'll be
Speaker 3: cursed to know how many people actually have a goal.
Speaker 2: I ran the numbers recently, and well, if you took
Speaker 2: like a thirty year old and I know that this
Speaker 2: sounds like like a big salary, but I want to
Speaker 2: think about it from the sink of a professional, because
Speaker 2: that was the audience I was thinking about. A thirty
Speaker 2: year old who was on one hundred thousand dollars a
Speaker 2: year and just put in three percent. Poor, you're putting
Speaker 2: three percent and you know, saved age sixty five. That
Speaker 2: person ended up some way. If you look at the math,
Speaker 2: like at three hundred ffty thousand dollars balance, but at that.
Speaker 3: Same person's going to be bitter them that you just said,
Speaker 3: Actually I thought that was going to be I was
Speaker 3: surprised at what it was that much.
Speaker 2: Three and fifty thousand dollars balance. It isn't as much
Speaker 2: as it should be because you know that's that's three
Speaker 2: and fifty thousand and thirty five years from now. What's
Speaker 2: the purchasing power of that. It's not as great as
Speaker 2: it sounds. It's maybe half of what it is now.
Speaker 2: If that same person allocated into an aggressive portfolio and
Speaker 2: put in six percent, they'd end up with three or
Speaker 2: four times the balance. You know, that's that's a life
Speaker 2: altering difference to end up with three hundred thousand, to
Speaker 2: end up with one point two million, And those two
Speaker 2: outcomes are both possible for the thirty year old who's
Speaker 2: who's a high earner based on just increasing their personal
Speaker 2: contributions and allocating more aggressively, course, more aggressively. You allocied,
Speaker 2: there's gonna be ups and downs. We can talk about
Speaker 2: that later if you well, I'd love to talk about that. Actually,
Speaker 2: I would love to know what you wanted. Of course, Ben,
Speaker 2: he's got a few clues about investing. In fact, the
Speaker 2: last time I on the show, there are a couple
Speaker 2: of things that you said that really did stick with me.
Speaker 6: So you did well there.
Speaker 3: But Brent Ben Brenkerhoff is my guest. He's head of
Speaker 3: advice at Concilium. You can check out Concilium dot code
Speaker 3: on ZID. They also have their own Keiwi Saber Fund,
Speaker 3: which is key we rap as in wrapping a present
Speaker 3: dot code dot nz. We'd like to take your calls
Speaker 3: any questions you've got about Kiwi Saber and Ben and
Speaker 3: I have lots to talk about. So we'll be back
Speaker 3: in just a moment. It's so eighteen minutes past five
Speaker 3: news talks.
Speaker 6: He'd be and welcome back.
Speaker 3: My guest is Ben Bronkohoff, head of advice at Concilium.
Speaker 3: Actually I say Concilium, Ben, just quickly, what does Concilium do?
Speaker 5: What's your bag?
Speaker 6: Baby?
Speaker 2: So Concilium's job is basically to help independent advisors stay independent.
Speaker 2: So we provide a lot of the services, consulting, a
Speaker 2: lot of the research and software required for an independent advisor,
Speaker 2: not out to sell someone's stuff.
Speaker 6: So excellent.
Speaker 3: So, look, we've got a lot of questions about can
Speaker 3: we say we went to the break just with the
Speaker 3: questions around aggressive funds? And I mean there are generally
Speaker 3: three types of fund are there is three or four?
Speaker 3: There's conservative, balanced and aggressive and maybe there's somewhere but.
Speaker 2: There's there's some nuancewers there ten but you you can
Speaker 2: stick with those if you want.
Speaker 3: Okay, So aggressive, you were talking about over a you know,
Speaker 3: say a thirty year old decides they're going to stick
Speaker 3: a certain percentagen and the difference between being in a
Speaker 3: more conservative fund to aggressive and the potential money that
Speaker 3: they could end up having. I guess the first question
Speaker 3: would be over what time period? So aggressive? Obviously you
Speaker 3: are more susceptible to the rises and the falls in
Speaker 3: the market. So is there a time period where the
Speaker 3: risks of being in an aggressive fund are at at
Speaker 3: a point where you know what, you're okay, if you're
Speaker 3: in this for ten years, don't worry, or five years
Speaker 3: or what's the sort of minimum time to be in
Speaker 3: an aggressive fund. Yeah, so not spific.
Speaker 2: I think people that invest in keV saver mess this up,
Speaker 2: and I'll tell you how they mess it up because
Speaker 2: they think I'm going to reach sixty five and then oh,
Speaker 2: I got ten years until sixty five. Therefore my time
Speaker 2: arison is ten years. I'm fifty five. Well, no, when
Speaker 2: do you want to spend the money? Your time horizon
Speaker 2: is not based on when you reach the age of
Speaker 2: the that you can pull the money out. Your time
Speaker 2: horizon should be the time until you spend down the money,
Speaker 2: and if you have fifteen years, then you can then aggressive.
Speaker 2: An aggressive allocation is perfectly fine, but it's actually more
Speaker 2: nuanced of that. And let me explain this. When you
Speaker 2: are saving regularly right that means money's going in every
Speaker 2: couple of weeks right from your paycheck, then being in
Speaker 2: an aggressive allocation makes a lot of sense typically because
Speaker 2: if prices are down and you're a buyer, that's good. Yeah,
Speaker 2: so I want you. I want to give everyone in
Speaker 2: the mind if they're in KIV saver right now, they're
Speaker 2: regularly contributing.
Speaker 6: They're a buyer.
Speaker 2: If there was a recession and prices went down, they're
Speaker 2: not harmed because they're buying at low prices. Now who
Speaker 2: are they buying from. They're buying from people that are selling. Yeah, well,
Speaker 2: if if there's a recession of prices are down, you're
Speaker 2: a seller, that's a lot more harmful. So when you're
Speaker 2: become when you transition from becoming a buyer and you
Speaker 2: become a seller, you want to have some securities in
Speaker 2: your portfolio that you can sell that aren't very price sensitive,
Speaker 2: cash term deposits, fixed interest, things like this, so that
Speaker 2: when prices are down, you're not forced to sell at
Speaker 2: low prices. But if you're buying them, you're buying every
Speaker 2: couple of weeks and prices are low because of recession,
Speaker 2: the stock markets are down, and that doesn't harm you
Speaker 2: very much because you're buying at low prices.
Speaker 3: So what I'm hearing there is if I was what
Speaker 3: even my fund is, Let's let's pretend I'm in a
Speaker 3: conservative fund and we should aggressive, we should talk. I'm
Speaker 3: not in a concert fund, don't worry. I'm in balance.
Speaker 3: But I'm a bit passive on this because you know,
Speaker 3: mortgages and all sorts of cost of expence. So I
Speaker 3: haven't been a great contributor. I'm hearing that right now.
Speaker 3: The GDP data and all that sort of data data
Speaker 3: is we're not rocking and rolling as an economy at
Speaker 3: the moment. So intuitally, what I just heard you say
Speaker 3: is probably now is a good time to switch to
Speaker 3: an aggressive fund. Yeah, I believe I've got enough time.
Speaker 3: What is it fifteen years?
Speaker 6: You say?
Speaker 2: Yeah, I kind of think about fifteen years if you're
Speaker 2: an aggressive portfolio, that would be ninety percent or more
Speaker 2: in shares as opposed to cash and bonds and things.
Speaker 2: So if you have that kind of time horizon. Now,
Speaker 2: I think the idea of when you should be in
Speaker 2: and we should get out is really tricky because the
Speaker 2: share market is a prediction. It's a prediction of future prices,
Speaker 2: so it's really hard to know when to get in
Speaker 2: and when to get out.
Speaker 3: And you are reminding me of our earlier conversation as well,
Speaker 3: because it was about people watching the shear market and
Speaker 3: thinking when's a good time to buy, and you are like,
Speaker 3: the market is always going to be ahead of you.
Speaker 6: Buddy, That's exactly right.
Speaker 2: So I don't think that that's a good idea, but
Speaker 2: I do think that when people are regularly buying, they
Speaker 2: they're partially insulated from the effects of down markets because
Speaker 2: if the markets are down, then they can purchase at
Speaker 2: low prices and that helps to blunt the effect of
Speaker 2: those low prices.
Speaker 3: But if you're constantly buying, you're also buying when the
Speaker 3: market is inflated as well.
Speaker 2: That's right, but no one cares. When the market's in flavor,
Speaker 2: they're super happy because they look at their balance and
Speaker 2: there they're an aggressive allocation and it's it's done really well,
Speaker 2: So psychologically.
Speaker 6: They are they're happy.
Speaker 5: Now.
Speaker 2: The problem with us that with the idea of when
Speaker 2: the market's high is the market, over any length of
Speaker 2: time generally trends one direction, so it's always going to
Speaker 2: go get higher. So the idea when it's high, if
Speaker 2: it's at an all time high, does that mean it's
Speaker 2: going to fall? No, that doesn't mean that at all.
Speaker 2: It's very hard to know these things.
Speaker 6: Because the issue that you've.
Speaker 3: Maybe touched on is it's one thing to decide when
Speaker 3: you're going to get into an aggressive fund. And I
Speaker 3: guess the answer is as early as possible.
Speaker 6: That's the answer.
Speaker 3: Okay, as possible that that is the answer.
Speaker 6: You know, but of course I listen.
Speaker 2: This isn't advice and not if someone someone, if someone
Speaker 2: is has a has a frame of mind that when
Speaker 2: markets are volatile they really lose sleep and it's highly
Speaker 2: uncomfortable for them, then they should understand that that they
Speaker 2: can go more conservative to balance or a conservative but
Speaker 2: the implication of is that they will likely, over a
Speaker 2: long period of time end up with less money. So
Speaker 2: here's the tension.
Speaker 6: What is risk?
Speaker 2: Is risk the fear or the risk of prices going
Speaker 2: up and down a little bit or even a lot
Speaker 2: over a short term time period. Or is risk that
Speaker 2: I might not have as much money as I want
Speaker 2: when I want to spend it.
Speaker 3: You know that that is what is risk? Well, actually
Speaker 3: that is also inadvertently. There's another question that comes out
Speaker 3: of that is we all understand risk in our own
Speaker 3: lay person sort of way, like I might hear aggressive
Speaker 3: fund is more risky. But do I really have any
Speaker 3: idea what the actual risk is and what that means
Speaker 3: because we all just have our own subjective Because some
Speaker 3: of us I've got I mean, I've got a maide
Speaker 3: of mine who's I produce concerts from time to time,
Speaker 3: and I consider that pretty risky?
Speaker 5: What a mine?
Speaker 3: Who does it all the time? And he will have
Speaker 3: moments where he thinks, oh, that's not very risky. That
Speaker 3: would terrify someone else. So his perception of risk is
Speaker 3: completely different. So how can we, ever, as key we
Speaker 3: savor investors, which most of it many of us are,
Speaker 3: How can we really understand what the risk is because
Speaker 3: it's almost Some people might think, okay, you've got conservative.
Speaker 3: Let's just pretend there's three. We've got conservative, balanced and
Speaker 3: aggressive and aggressive. His picture is more risky and some
Speaker 3: people will see that as being that's a bit more risky,
Speaker 3: but what the hell other people be thinking it's a
Speaker 3: lot more risky.
Speaker 6: There's no way.
Speaker 3: So how do we under stand what risk is? And
Speaker 3: can we Saiva?
Speaker 2: Well, the number one thing I think you should do
Speaker 2: is get an advisor, right because the ultimately what you're
Speaker 2: trying to solve, the question you're trying to ask is
Speaker 2: is the two types of risk I'm trying to trade
Speaker 2: off is the risk of price movements to go up
Speaker 2: and down, and that makes me uncomfortable when so when
Speaker 2: markets go down, how much is my portfolio likely to
Speaker 2: go down?
Speaker 6: Or could it go down?
Speaker 2: But the other risk that no one ever talks about,
Speaker 2: or pays attention to, or knows intuitively, is what's the
Speaker 2: risk that I won't be able to spend what I
Speaker 2: want to spend when I want to spend it. And
Speaker 2: what's the risk that's actually the more salient risk of
Speaker 2: the two price movements? You know, does anyone care now
Speaker 2: what price movements were ten or twenty years ago? Yet
Speaker 2: your allocation to growth stocks ten or twenty years ago
Speaker 2: would have a big impact on how much money you
Speaker 2: have available today to spend if you want to start
Speaker 2: spending today.
Speaker 6: Okay, I will.
Speaker 3: Drill into one more question. I'm dying to ask that
Speaker 3: about that even the you've sort of probably answered a
Speaker 3: question if you know how with statistics there's a bell curve. Yeah,
Speaker 3: and at the fringes, you know, the majority of action
Speaker 3: takes place in the middle, sort of thirty forty percent
Speaker 3: or whatever. When it comes to key we savor portfolios
Speaker 3: are any of the risks at the extreme of the
Speaker 3: spectrum where they are either extremely conservative or extremely risky,
Speaker 3: or are they all sort of more within a narrower band.
Speaker 3: If you're talking about conservative, balanced growth, and aggressive.
Speaker 2: You absolutely can take a kV server allocation that can
Speaker 2: be at the ends of those those you can you
Speaker 2: can be virtually all in cash or you can be
Speaker 2: virtually all in just a few shares, depending on the
Speaker 2: keV server that you're thinking about. So yeah, there's a
Speaker 2: wide spectrum. But the question you should be asking yourself
Speaker 2: is does the allocation I'm in is it likely to
Speaker 2: achieve what I want?
Speaker 3: And how do you know?
Speaker 6: I think?
Speaker 2: I think, I think for most people they need to
Speaker 2: get advice. But if you don't want to get advice,
Speaker 2: you certainly avail yourself with the tools on sordid dot
Speaker 2: co dot nz and and take and take those sorts
Speaker 2: of tools available to you. But like on our website
Speaker 2: kivi RAP, we have a list of advisors you can
Speaker 2: go to. All these people give advice on retirement portfolios
Speaker 2: and it's good and those are the kind of people
Speaker 2: you might How does figure out what you want? Most
Speaker 2: people don't even know what they want, tim So it's
Speaker 2: like the question is very difficult to answer. They say, well, well,
Speaker 2: I have enough, Well I don't even know what I need.
Speaker 2: I don't I mean, how do I how do I
Speaker 2: even get to think about the question I I if
Speaker 2: I have enough? Or mine I'm going to be funded
Speaker 2: through Kiwisaver. There's so many questions you need to answer
Speaker 2: even before that, questions relevant how does it go.
Speaker 3: With Actually I've just gone on to your the Kiwi
Speaker 3: rap site that you guys have for your kiwisaver, and
Speaker 3: it says find an advisor And my head's spinning because
Speaker 3: there's a lot on there. So you know, how do
Speaker 3: you how do you make a choice there? And and
Speaker 3: how does it work with the funcial advisor? Because I
Speaker 3: have had people who are personal personal financial advisors who say,
Speaker 3: to be honest, it's expensive sometimes if you want to
Speaker 3: get personalized financial advice, how does it work?
Speaker 6: Well, I have a lot to say about that.
Speaker 3: Well that's good because we're here to talk.
Speaker 6: So see.
Speaker 2: You know, advice is not a commodity. It varies widely
Speaker 2: in quality, and I understand how intimidating that is. You know,
Speaker 2: so you you don't how do I know if I'm
Speaker 2: getting really really good advice? And how do I know
Speaker 2: if maybe I should switch an advisor. I think one
Speaker 2: of the first things you want to think about in
Speaker 2: terms of the quality advisor that you're with is whether
Speaker 2: they're independent. And what I mean by that is, do
Speaker 2: they have the ability to recommend to you whatever they
Speaker 2: think is in your interests or are they essentially working
Speaker 2: for a provider. They're working for a company that sells something,
Speaker 2: and no matter what your problem is, the answer is
Speaker 2: always going to be buy this thing. Most kiwis are
Speaker 2: not with an advisor that has the freedom to give
Speaker 2: them the best choice possible. Most kibis are with an
Speaker 2: advisor that maybe working at a financial institution and they'll
Speaker 2: sell you that institution's thing. So that is now, that's
Speaker 2: not exclusive. There's some people that they are in that
Speaker 2: space that do it really well. But that is one
Speaker 2: thing to pay attention to.
Speaker 3: H Okay, so how do you know that? Do you
Speaker 3: just say, do you have the questions you should ask
Speaker 3: a financial advisor?
Speaker 2: So I was recently, I advisor send me, you know,
Speaker 2: a blacked out version of someone's statement where all the
Speaker 2: personal informations blacked out, but I can see what they're
Speaker 2: invested in. This person has five million dollars invested, and
Speaker 2: every single thing they're invested in began with three letters
Speaker 2: because the three letters were the institution they were they
Speaker 2: had been working with. Yeah, so basically that institution had
Speaker 2: put them in their own solutions, their own products. If
Speaker 2: you're in that size situation, I would just suggest you
Speaker 2: that oftentimes there's better advice available to you. Here's the thing.
Speaker 3: See, I'm instantly just thinking, okay, how and where do
Speaker 3: I go? I mean, I would find that bewildering because yea,
Speaker 3: ideally what we all want is some magic guru mentor
Speaker 3: and I call them up and say, look, who's a
Speaker 3: good financial advisor? When they say this person is great
Speaker 3: because they're not tight and they give you their answer.
Speaker 3: But you have to do It's not that straightforward. Not
Speaker 3: many people have a financial risk.
Speaker 2: Question you're asking is a great one. How do I
Speaker 2: find an advisor? How do I find an advisor? And
Speaker 2: you know what, there isn't a great answer to that situation.
Speaker 2: I mean the best I can give you is look
Speaker 2: at our website right there, because all those people are
Speaker 2: great advisors, and so that is a great place to
Speaker 2: choose from. And they do talk about what location that
Speaker 2: they operate in, so you can always look at your
Speaker 2: geography as a way.
Speaker 3: Oh, in terms of people want to have face to
Speaker 3: face sort of advice, absolutely, yeah, now' it's I'm gonna
Speaker 3: have a look at people qirap dot, Curtin and Z
Speaker 3: because anything where you start making some exploration on this
Speaker 3: stuff is probably the step in the right direction. But
Speaker 3: is it important the individuals who are within a company
Speaker 3: as well? Because it's a bit like any organization. There'll
Speaker 3: be people who are absolutely rocking and rolling at what
Speaker 3: they do and the people who are maybe not so good.
Speaker 3: So an organization, well, is it about particular individuals or
Speaker 3: is it about the organization?
Speaker 2: Let me give you some intuition on this. If you
Speaker 2: go and you talk to an advisor and they spend
Speaker 2: a lot of time telling you about how they're their
Speaker 2: their investments that they use are amazing, and they spend
Speaker 2: a lot of time convincing you that they know how
Speaker 2: to pick the best investments, be very concerned because that
Speaker 2: sounds like a sale. Be very concerned. If you talk
Speaker 2: to an advisor and they spend a lot of time
Speaker 2: trying to understand you, what what are your what are
Speaker 2: your what are the things that that you're passionate? What
Speaker 2: are the things that you love? How do you want
Speaker 2: to spend your time? How do you want to allocate
Speaker 2: your resources? Then they can help you devise a st
Speaker 2: a financial strategy to achieve those things. So so just
Speaker 2: pay attention to this one thing. How often does the
Speaker 2: conversation go back to you and what you want and
Speaker 2: what matters to you and the financial resources you have
Speaker 2: to build that life. And how often instead does your
Speaker 2: your advisor spend talking about how wonderful their investment solutions are.
Speaker 2: I think that's a good sign if you're with a
Speaker 2: good advisor. The advice should be focused on you and
Speaker 2: your needs.
Speaker 3: So if they're trying to sell you something first time,
Speaker 3: first sign of trouble.
Speaker 2: That is a that is a sign of that is
Speaker 2: a sign of trouble.
Speaker 6: Yeah, look, we're gonna be back in just a moment.
Speaker 3: If you've got any questions for being Ben brink Off
Speaker 3: ahead of advice, it's going to sell him some great
Speaker 3: information and conversation. We're going to continue it in just
Speaker 3: a moment. It is twenty three minutes to six news talks.
Speaker 3: He'd be te.
Speaker 2: What's see what's the same name?
Speaker 4: And shine the pressure.
Speaker 3: A billion there and there's the theme for the show
Speaker 3: when I'm a billionaire. I'm not sure we're going to
Speaker 3: return into billionaires. It's a lot of money. By the way,
Speaker 3: when you think I'd like to be a billionaire. It's like,
Speaker 3: would you really ten million be enough? How much money
Speaker 3: would be enough that will save that for another show?
Speaker 3: How much money would be enough for you time? Make
Speaker 3: a note of that. I'm Tim Beverages, a smart money.
Speaker 3: We've got Ben Brinkoff, head of advice at Concilium in
Speaker 3: the in the studio with us. I've got a few
Speaker 3: texts for you.
Speaker 5: Ben.
Speaker 3: It if I take out Key WE Saver in a
Speaker 3: lump summit retirement, does it get taxed again? If it does,
Speaker 3: at what rate? Would it be better to stop putting
Speaker 3: in and put in savings account at some point to
Speaker 3: get some interest instead of penalty of tax taken off again?
Speaker 3: I think they mean does it keep getting taxed on
Speaker 3: the interest or something? Once it's I don't know what.
Speaker 2: When you're with draw key WE Serve, it's not taxed. No,
Speaker 2: it's taxed on the way through.
Speaker 5: Yeah.
Speaker 2: So whatever money you see in your kdcver account at
Speaker 2: sixty five, if you pull that money out, there's no
Speaker 2: tax do Yeah.
Speaker 3: But if you invest it in a savings account, then
Speaker 3: you will get taxed on the interest. Correct.
Speaker 2: Yeah, you're gonna get You're gonna get taxed on the
Speaker 2: interest in either account, so it's not that's not gonna.
Speaker 3: Yeah effect, no lump sums to worry about the account.
Speaker 3: And I think is the moral of the story with
Speaker 3: the American Fed cutting the interest rate, I was on
Speaker 3: the conservative and my keywi Saver, I'm now considering going
Speaker 3: to balance rather because people will now be investing in
Speaker 3: stocks rather than bonds. Is that a good idea from Sue?
Speaker 3: I think the way Sues expressed itself is the way
Speaker 3: a lot of people just think broadly. It's just like
Speaker 3: I reckon, this is down seul shoven in here and
Speaker 3: away we go. Not specific financial advice for you, Sue,
Speaker 3: but Ben's comments.
Speaker 2: Yes, Sue, So you know, when I think about a
Speaker 2: situation like this, I don't make any changes at all
Speaker 2: based on things like what the Fed does. And I'll
Speaker 2: tell you why, what do I know about what the
Speaker 2: Fed just did? Markets haven't already priced? Yeah, markets have
Speaker 2: already priced set information in. In order to actually get
Speaker 2: an advantage on the markets, you've got to know something
Speaker 2: the market doesn't know. And what the market knows more
Speaker 2: than anything is what the Fed does. They that is
Speaker 2: that information is already in prices. So there's not an
Speaker 2: advantage or disadvantage, but there is an advantage suit of this.
Speaker 2: If you go to balance, you'll have more growth assets
Speaker 2: in your portfolio. If you hold that for a long
Speaker 2: enough time, that is very likely, although not guaranteed, to
Speaker 2: leave you with more money at cash in hand in retirement.
Speaker 2: That is something you can you can count on. But
Speaker 2: trying to outwit the market in terms of what they've
Speaker 2: done with interest rate movements is something that it's very hot.
Speaker 2: You can't have an informational advantage there.
Speaker 3: Did the markets know that the feed was going to
Speaker 3: be dropped or was it by point fifty bases points
Speaker 3: or whatever? Did they know that or not?
Speaker 2: What the market will do is that people have differing opinions.
Speaker 2: That's why there's a buyer and seller right.
Speaker 3: So bleeding obviously, but it's good to remember.
Speaker 2: So so what happened is it will it will factor
Speaker 2: in a rate cut of some variety, and then when
Speaker 2: the and when the news becomes certain, then they'll have
Speaker 2: maybe a small correction right in that moment. But generally
Speaker 2: people have already anticipated these things before they happen.
Speaker 3: When those announcements are made, are they people sitting at
Speaker 3: computers ready ahead a button.
Speaker 2: Just like I mean, the fact that you say there's
Speaker 2: a person hitting a button is like it's it's it's
Speaker 2: it is an algorithm, my friend. Right, So for the
Speaker 2: for the most part, people have already factored these things in.
Speaker 2: It's already priced in. That's a very hard thing to understand,
Speaker 2: and I understand, I get why that's not intuitive.
Speaker 3: Actually it's funny. I think the moral of the story
Speaker 3: that you comes from last time. It's a people are
Speaker 3: and when we discussed about making your own investment choices,
Speaker 3: and the point you made quite well it's stuck with
Speaker 3: me was that unless you really, really really I fe
Speaker 3: with stocks and you're passionate about a particular investments, then
Speaker 3: you don't do your own investing because there's the market
Speaker 3: is always going to be ahead of you, unless you
Speaker 3: are just blind lucky like a lotto ticket.
Speaker 6: I guess that's absolutely right.
Speaker 2: So what am I? If I buy something, someone's got
Speaker 2: to sell it. Why does that person want to sell it?
Speaker 5: Yeah?
Speaker 2: What do I know that the seller doesn't know? What
Speaker 2: we both don't know is the news happening in the future, right,
Speaker 2: And the news will happen. It will be good or
Speaker 2: it will be bad and one of us will end
Speaker 2: up better off in the transaction.
Speaker 6: But if either of us or both of us.
Speaker 2: Knew that information, you know, we would factor that into
Speaker 2: prices and it would already we wouldn't neither of us
Speaker 2: would win.
Speaker 3: It does always fascinate me when things are really in
Speaker 3: a boom and people are thinking, well, I'm definitely going
Speaker 3: to sell because it's not going to go any further.
Speaker 3: But and the fact that there are still people to buy.
Speaker 3: But that's the whole supply and demand and just that.
Speaker 2: That's what makes the market such a beautiful thing, right,
Speaker 2: is that it's that information needs to be processed so
Speaker 2: that there's buyers and sellers, so that what you're left
Speaker 2: with is the buyer takes risk the reward for that,
Speaker 2: the seller takes cash and they're happy with that. And
Speaker 2: depending on how much uncertainty there isn't a price as
Speaker 2: how what someone buys when they buy, So the more uncertainty,
Speaker 2: generally speaking, the more return you have to offer me
Speaker 2: to take that on.
Speaker 3: Now, another question that's come through and from a few texts,
Speaker 3: is when is the time to take your money out
Speaker 3: of an aggressive fund? So you've decided you've had the
Speaker 3: window you've had fifteen years or twenty or thirty or whatever,
Speaker 3: and you're getting maybe a few years from retirement. There's
Speaker 3: a part of me that sort of thinks, well, look
Speaker 3: if i've been it for fifteen years and when I
Speaker 3: just hang on to it and take it when I
Speaker 3: need it. And that's my layperson sort of thing. Although
Speaker 3: the general conversation from most people is like, I'm going
Speaker 3: to need my money soon when I need to shift
Speaker 3: it to a conservative fund. So what window do you
Speaker 3: think people should think about it?
Speaker 2: It's a very individual question because it does depend on
Speaker 2: when you want to spend how much you want to spend.
Speaker 2: So again, these are things you sit down with someone
Speaker 2: and you you work all that out and you figure
Speaker 2: out what an allocation is appropriate. But when it's in
Speaker 2: your mind that you could spend some of that money,
Speaker 2: when you when there's when there's something on the horizon
Speaker 2: you can think of, Okay, you know, I could see
Speaker 2: I'm going to start to spend some of this money.
Speaker 2: You know, maybe it's a couple of years out then
Speaker 2: you should be thinking, maybe I want to start to
Speaker 2: dial down the amount of shares I have so I
Speaker 2: have some cash and bonds and something that's a little
Speaker 2: bit more price stable so that when I want to
Speaker 2: sell it's there to sell it. But that's very very general.
Speaker 2: Generally you want to sit down and with an advisor
Speaker 2: to determine is the amount I want to spend sustainable?
Speaker 2: If so, is the allocation I have going to support it?
Speaker 2: If not? What's the gap? And what do I need
Speaker 2: to do about it?
Speaker 3: Who decides when it comes to qcyber providers, Because you
Speaker 3: were saying that there is the complete spectrum. You can
Speaker 3: go incredibly conservative or you can go and credible aggressive.
Speaker 3: Absolutely Who decides the language to describe their funds?
Speaker 2: I know, right? Like it's it is so confusing. I
Speaker 2: hate the word aggressive. You wants to be aggressive? Most
Speaker 2: people think Americans are aggressive? Wow, you know, and and
Speaker 2: they do so in a in a fairly derogatory way.
Speaker 2: Right where the word growth that's or balanced. I want
Speaker 2: to be balanced. I'm much more balanced, right.
Speaker 3: Well balanced?
Speaker 2: It doesn't sounds good.
Speaker 3: That sounds a bout of a snooze though, does it?
Speaker 5: Okay?
Speaker 3: No, I mean it sounds it sounds like you're having
Speaker 3: a bubb each white.
Speaker 2: You know, there's a there's a study ones I love
Speaker 2: academic studies, and they they gave they gave these two
Speaker 2: different groups of people two different funds to choose from.
Speaker 2: They said, you got to make a portfolio from these
Speaker 2: two funds, right, and one of the in one case
Speaker 2: the fund was fifty fifty percent shares fifty percent bonds
Speaker 2: and the other and they had to balance that with
Speaker 2: someone that was one hundred percent shares. Well, do what
Speaker 2: they did.
Speaker 6: They just kind of took.
Speaker 2: Fifty percent of each and they got about seventy five
Speaker 2: percent shares. The other group they gave two funds, one
Speaker 2: was a hundred percent shares and what was one hundred
Speaker 2: percent bonds, and that group kind of just took fifty
Speaker 2: percent of each and end up with fifty percent shares.
Speaker 2: So what happens is people people when they don't know,
Speaker 2: they just kind of they kind of just take an
Speaker 2: advert on the.
Speaker 6: F So, but is that right for you?
Speaker 2: I feel like people are just feel like.
Speaker 6: Oh, that's the whole point.
Speaker 3: That's why I'm saying, it's even people's understanding of risk,
Speaker 3: mild risk or whatever.
Speaker 2: And so what happens is they take these these surveys
Speaker 2: of five or six questions and that it tells you oh,
Speaker 2: you should you should be in eighty percent shares, You
Speaker 2: should be in fifty percent shares, you should be in
Speaker 2: thirty percent shares. Five or six questions? Right, No one
Speaker 2: ever describes, Oh, by the way, in twenty years time,
Speaker 2: you're gonna have one hundred thousand dollars less because of
Speaker 2: that choice. Right, No one actually takes you through that logic.
Speaker 3: No, Right, We're gonna take another break, can come back?
Speaker 3: We got because time is flying. It's ten to six,
Speaker 3: but this is news talks. He'd be back, soone center.
Speaker 5: Welcome back to the weekend collective.
Speaker 3: Of course, if you do want to have a good retirement,
Speaker 3: write a song like Hotel California. And it's probably a
Speaker 3: license to print money, isn't it, Brand Brinkerhoff? So yeah,
Speaker 3: look are they just we've got about I've got three
Speaker 3: minutes left. But are there particular warning signs or signs
Speaker 3: that people should look out for that it might be
Speaker 3: time to change their advisor or their their plan.
Speaker 6: Yeah, there are.
Speaker 2: If you don't know what you need to do to
Speaker 2: have the retirement that you want, and if your advisor
Speaker 2: has in contacted you in the last year, then change
Speaker 2: very simple. Okay, if you know if good advice needs
Speaker 2: to be updated with changes of your circumstances. What you
Speaker 2: want and what your financial circumstances are, right, so you
Speaker 2: need a plan, need a strategy, And if you don't
Speaker 2: know what your strategy is, you don't know what the
Speaker 2: app is between what you want and where you're cruising,
Speaker 2: then that you need to make a change.
Speaker 3: What about your key we saber fund? Are there signs
Speaker 3: that you should reach?
Speaker 2: So if you don't know why you're in the key
Speaker 2: we severy you're in, then consider a change, or at
Speaker 2: least people why am I in? What am I? I
Speaker 2: guess I'm in at a fault or or I'm I
Speaker 2: went down to the bank and they signed me up
Speaker 2: with something I don't really know. Why consider a change?
Speaker 2: You're not there on purpose, are they?
Speaker 3: The sort of dot org dot nz website is one
Speaker 3: that gets referred to frequently?
Speaker 6: Does it?
Speaker 3: Is there any sort of external website and maybe that's
Speaker 3: the one that actually assesses the risk profiles sort of
Speaker 3: from a third party point of view of different funds,
Speaker 3: Like so because one one one funds aggressive fund maybe
Speaker 3: completely different in terms of risk profile to another.
Speaker 2: This is what we do. A Kiwi wrap is you
Speaker 2: work with an advisor. In the advisor actually as five
Speaker 2: hundred or more different options that they can use. So
Speaker 2: so the advisor sits there and looks at everything that's
Speaker 2: available to and then they determine what is the right
Speaker 2: mix of those things for you. And I think that
Speaker 2: that is because I think it is an overwhelming thing
Speaker 2: and likely to be something that people avoid because they
Speaker 2: feel uncomfortable with it.
Speaker 3: Hey, believe it or not, that brings the art or
Speaker 3: close that has flown by, hasn't it. Well, that's that's
Speaker 3: why I love about radio and having a good conversation. Hey,
Speaker 3: thanks so much for joining us, Ben. If people want
Speaker 3: to check out you want to check out Ben's company,
Speaker 3: here is what's what's your job description again?
Speaker 5: Financial head of.
Speaker 6: Advice at Concilium.
Speaker 3: There we go. It's a Concilium dot co dot NZ.
Speaker 3: That's c O N S I L I U E M.
Speaker 3: If you're curious about those pages I've referred to in
Speaker 3: our conversation, that's on the the key we sabor page.
Speaker 3: It's kiwi rap as and w A R sorry w
Speaker 3: R A P. And you can see the list of
Speaker 3: the drop down list of advice and a whole lot
Speaker 3: of an interesting information on there, which I couldn't begin
Speaker 3: to describe any further given we've only got thirty seconds left,
Speaker 3: so Ben, we'll catch you again. I hope we'll get
Speaker 3: you on the show again soon. Yeah, a great thanks
Speaker 3: to my producer, Tyra Roberts for her song choices. That's
Speaker 3: a sort of that's a mixed thanks because some of
Speaker 3: them are great and some of them just dreadful. But
Speaker 3: you know, as long as someone's happy, we're all happy.
Speaker 3: I'll look for to your company. I'm back filling in
Speaker 3: for afternoons for the next couple of weeks as well,
Speaker 3: So we'll catch you again, same time tomor not, same
Speaker 3: time right tomorrow, twelve o'clock tomorrow, and of course every
Speaker 3: weekend for the Weekend Collective at three o'clock. We'll catch
Speaker 3: you again soon every great evening.
Speaker 1: For more from the Weekend Collective, listen live to news
Speaker 1: talks he'd be weekends from three pm, or follow the
Speaker 1: podcast on iHeartRadio.