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 have an adviser.
So how does it all work?
We analyse data for 240+ 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 that analysis, we approach several KiwiSaver providers and negotiate agreements to receive an advice fee if we bring 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 get a KiwiSaver fund recommendation from BetterSaver and choose to switch to it through us, we become your KiwiSaver Adviser. We'll help you switch + provide you with ongoing KiwiSaver advice, and in return your provider will pay us the advice fee annually.
We make the same amount from each provider so there isn't really an incentive for us to recommend one fund over another.
It doesn't generally cost you any extra to switch with BetterSaver. You would be charged the same fees* if you switched directly with a KiwiSaver provider.
* There's one small exception, Milford - they will only pay us 0.20% instead of 0.25% so we do take an extra 0.05% (i.e. 50c per $1000) from your KiwiSaver balance annually, just so that we're being fair and consistent across the board 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.