The research, reported yesterday on Good Returns, found fewer than one in five KiwiSaver members had used the services of a financial adviser, with many opting instead for advice from friends and family, books or the internet.

The results of the survey aren't much of a surprise but they show some of the flaws in KiwiSaver's design, according to Institute of Financial Advisers president Nigel Tate.

"The simple answer is yes," he said when asked if the findings were expected.  "However, the reason for it is more important than the fact it is occuring. It's due to the fact the government didn't infuse in KiwiSaver any requirement to get advice. 

"I've been saying this for a while: when they incorporated it they should have said, instead of giving you $1000 up front [government kick-start] we're going to give you $500 up front and $500 to pay for some advice.

"A lot of people are in the wrong types of investment for their circumstances - they're doing it because they don't know any better."

Tate said although the opportunity with the kickstart has been and gone, the government could still use some of the money it spends each year on member tax credits to direct investors towards financial advice.

The members who are least likely to use advice are those who could benefit from it the most, he said.

"That's almost hand in glove- the ones that don't know they don't know, don't know what they don't know that they don't know."

One positive, he said, is that investors are likely to be take more interest in their investments and seek the help of advisers once their KiwiSaver funds reach a certain size.

"Studies internationally show that once they start hitting $10,000 to $20,000 people start taking notice of them.  However, if you're in the right fund you'll get to that point a lot more quickly.

"The difference between a growth fund and a cash fund could treble their returns, although at the moment it could halve their returns."