What's the business model?
BetterSaver is indeed a business, and for any business to succeed, it needs to make money at some point. However, you'll find that we don't typically charge customers a fee for our services. So how do we make money?
Selling your data to the highest bidder?
Hemorrhaging venture capital money and hoping to get acquired by a tech giant?
So where does our revenue come from then?
BetterSaver makes most of its money by charging an Advice Fee to KiwiSaver providers that we work with. We bring them customers, and they essentially pay us a small cut of the fees they'd already charge.
Aside from one exception, this means there's no extra cost to our customers to switch KiwiSaver funds with us. Most KiwiSaver providers already factor an advice fee into their fee structure, and will pocket the difference if you don't switch via an adviser.
So how does it all work?
We analyse data for 180+ KiwiSaver funds and figure out which ones we think are the cream-of-the-crop based on a number of different criteria (see our whitepaper for more info).
Based on our analysis, we approach several KiwiSaver providers and negotiate agreements with them to receive an advice fee if we refer new customers to them.
Our standard annual advice fee is 0.25%* (i.e. $2.50 per $1000) of the total funds under management that we've brought to the KiwiSaver provider.
If you sign up and decide to switch to the fund that we recommended to you, we become your KiwiSaver Adviser. We'll help you switch KiwiSaver fund, and going forward we receive an annual advice fee from your new provider.
It doesn't generally cost you any extra to switch with BetterSaver. You could switch directly with a KiwiSaver provider, and the fees would be the same*.
We make the same amount from each provider so there isn't really an incentive for us to recommend one fund over another.
* There's one small exception, Milford - they will only pay us 0.20% instead of 0.25% so we end up taking an extra 0.05% (i.e. 50c per $1000) from your KiwiSaver balance annually, just so that we're being fair and consistent with the amount we take, but we make this very clear and factor it in when giving a recommendation.
For more info, you can have a look at our whitepaper which explains in more detail how and why we do what we do.