Among the Commission for Financial Capability’s release of its three-yearly review of retirement income policies was a data report which showed the commission's research had found performance was the main criterion for fund selection.

It was nominated as the main driver by more than 60% of those who had selected their own fund. Fees were the motivator for 36% and risk level for 31%.

Fees were more important for the 18 to 33-year-old age group.

David Beattie, a principal at Booster, said it was a major concern but not surprising, given that New Zealanders had demonstrated a propensity to chase returns. “Memories are short. Right back to the finance company days that was one of the key themes, people chasing the best return advertised in the newspaper.”

He said returns were easy to look at while other factors, such as risk, required more research.

“The risk indicators are not giving anything particularly valuable.”

He said it highlighted the magnitude of a potential problem created by a lack of advice. Seventy-five per cent of people said they had selected their own fund, and of that 60% said they had chosen it based on performance.

“Fifty per cent of people in KiwiSaver are in desperate need of some advice. If everyone was getting the right advice that should be 0%. There’s a major disaster coming if half of the people in KiwiSaver are in whatever fund they are in for the wrong reasons.”

But Fisher Funds chief executive Bruce McLachlan was less concerned. He said, the way the question was worded, people might have been responding in relation to how they chose the fund manager they were with – not which fund they were in within that manager’s selection.

FMA manager of investor capability Gillian Boyes said no one factor should be looked at in isolation.

"Performance on its own is not sufficient."

She said the FMA had an overall focus on the value for money from KiwiSaver and people should look for the right fund and risk profile for their circumstances, and then think about the best performance after fees.