The 12-Month Tax Gambit: Labour's Calculated Risk

Announcing a major tax policy a year before an election isn't just unusual; it's almost unheard of.

Conventional political wisdom dictates you either implement unpopular measures early in your term, or promise them after securing victory. Labour's decision to foreground a 28% capital gains tax ‘CGT’ a full year out from polling day demands examination, particularly through the lens of economist Arthur Laffer. His insight cuts straight through political calculation: speeding fines are a tax. Governments use taxes to stop people doing things they don't want them to do. So why would you tax investment when the country desperately needs more of it?¹

The timing becomes immediately suspect. Labour sits in opposition facing a National-led government, and historically, opposition parties campaign on aspiration rather than taxation. Helen Clark's 2005 Labour government actively campaigned against CGT proposals, recognising the electoral toxicity.² Yet here we are in late 2025, with Labour essentially writing National's attack ads 12 months in advance.

The Political Theatre

The political play is obvious: announce now, let the controversy "settle," and by election day the CGT feels like old news rather than shocking revelation. Labour hopes voters will be desensitised to what might otherwise be campaign-ending policy. It's political inoculation through extended exposure, with the policy carefully designed as "CGT light" (exempting family homes, farms, KiwiSaver and shares) to avoid the comprehensive wealth taxation that spooked voters in previous attempts.²

Yet as business commentator Damien Grant observes, the policy amounts to "a marketing plan sketched on the back of a napkin that had been used to wipe the lipstick off a chardonnay glass after drinks at a Fabian Society soiree."⁶ The policy amounts to a few pages in a glossy press release with less substance than a frozen coke.

If you own property in July 2027 and sell it after that date, you pay 28% of any increase in value, with no allowance for inflation. Family homes are exempt. That's essentially it—the rest is left to imagination and future consultation.

Recent polling shows Labour's framing is working – 43% support versus 36% opposition.² The 12-month runway allows this narrative to solidify. Labour bets that sustained messaging about "fairness" will ultimately land better than National's "tax on ambition" counter-narrative.

Laffer Curve | Source: Norway's Wealth Tax Unchains a Capital Exodus

The Fine Fallacy

Laffer's analogy cuts through the fluff. When government fines speeding, fewer people speed – that's the point. When government taxes cigarettes heavily, fewer people smoke – that's the objective. These are taxes deliberately designed to discourage the behaviour.

Applied to investment taxes, the logic is inescapable. When government taxes investment gains at 28%, fewer people invest. Yet that's meant to be revenue-neutral economic policy rather than deliberate discouragement? You cannot fine an activity and simultaneously expect more of it.

The contradiction becomes starker considering New Zealand's actual needs. Treasury warns that 52% of total tax comes from personal income tax, and the group paying this tax is shrinking due to an ageing population.⁴

The country desperately needs productive investment in commercial property, business expansion, and capital formation. Yet Labour proposes taxing precisely these activities, at rates designed to be punitive enough to raise revenue.

This is the economic equivalent of installing speed cameras on the motorway while simultaneously complaining that traffic isn't moving fast enough. You cannot discourage and encourage the same behaviour simultaneously.

The Implementation Damage

The July 2027 implementation date provides convenient political distance: win in November 2026, govern for eight months, then introduce legislation.²

But here's where political cleverness creates economic damage - the announcement effect begins immediately. Why would a developer start a commercial property project in 2026 knowing that any gains realised in 2028 or 2029 will face 28% taxation? Investment decisions from now until 2027 will be distorted by anticipated future taxes, locking capital out of productive uses or sending it offshore.³

The economic damage begins not when the tax takes effect, but when it's announced. We're living through that damage period now. The speeding camera has been installed, and the signs are up; don't be surprised when drivers slow down.

The British Warning

Laffer's analysis of Gordon Brown's decision to raise Britain's top rate from 40% to 50% provides the cautionary tale. The UK Treasury's own "Laffer section" showed the increase "not only did not get more revenue, it got you a lot less prosperity. People left the country, people used tax shelters, dodges, loopholes, all that."¹ As Laffer emphasised, this wasn't his opinion imposing American economics on Britain—"This was Britain doing the Laffer curve."¹

As Laffer notes from decades of US tax data: "Every time we've raised the highest tax rate on the top 1% of income earners, three things have happened. The economy has underperformed, tax revenues from the rich have gone down, and the poor have been hammered."¹

Conversely: "Every single time we've lowered tax rates on the rich, the economy has outperformed. Tax revenues from the rich have gone up and the poor have had opportunities to earn a living, to live a better life."¹

The Practical Nightmares

The practical problems compound the economic ones. Grant notes that inflation has already created havoc in Australia, where properties often can't be sold “because almost all of the price is considered a capital gain. This will be worse on the Hipkins plan because there is no indexation.”⁶

Consider a property bought in 2015 for $500,000 is now worth $800,000. Under Labour's plan, the entire $300,000 gain faces 28% taxation – that’s $84,000. But how much of that gain is real appreciation versus inflation? Without indexation, investors pay tax on phantom gains that merely reflect currency debasement.

Meanwhile, definitional nightmares await. Australia's capital gains tax guide runs to 339 pages, with court judgements adding hundreds more.⁶ Is replacing a kitchen a capital improvement or maintenance? What about landscaping? A 2028 Fisher and Paykel dishwasher replacing a 1980s Westinghouse: expense, or capital upgrade? As Grant notes drily: "Tax lawyers and accountants will be kept busy."⁶

The Chartered Accountants Institute supports Labour's proposal – hardly surprising, given it guarantees full employment for their profession dealing with compliance complexity.

The Fiscal Illusion

Even Chartered Accountants acknowledge that CGTs "do not generate significant revenue in the short or even medium terms. Long term, however, they typically provide a steady revenue stream… Using them to cover a specific policy expense is unusual."⁴ Yet Labour wants to use this non-existent revenue immediately to subsidise doctor visits.

As Grant observes: "There is a cash shortfall on Labour's own analysis in the early years which, like everything else in this policy, the resolution is left to the imagination."⁶ Here's the speeding fine logic again: if you install cameras to generate revenue from fines, you're simultaneously reducing the very behaviour that generates the revenue.

Successful speed cameras mean less speeding, and therefore less revenue. A capital gains tax that successfully deters property speculation means less property investment, and again, less revenue.

The Historical Pattern

This is Labour's seventh CGT attempt since 1973.² Norman Kirk's first attempt taxed gains at up to 90%, a rate so confiscatory it was quickly abandoned. Phil Goff's 2011 version, David Cunliffe's 2014 proposal, and Jacinda Ardern's 2019 attempt all failed politically.

Each previous effort proved politically costly and economically counterproductive. Voters instinctively understand Laffer's speeding fine logic, even if they can't articulate the economics by name. They recognise taxing investment reduces investment, just as fining speeding reduces speeding. Winston Churchill’s timeless observation perfectly captures the impossibility of taxing your way to prosperity – you cannot stand in a bucket and lift yourself up by the handles.⁵

The Alternative Vision

Laffer's prescription for struggling economies is brutally simple: "You want a low-rate, broad-based flat tax, spending restraint, sound money, minimal regulations, and free trade. And then get the hell out of the way."¹ Labour offers the opposite with new taxes on capital, sketchy implementation details, and revenue projections that don't add up.

As Laffer puts it: "Poor people don't work to pay taxes. They work to get what they can after tax. It's that very personal and very private incentive that motivates them to work, to quit one job and go to another job, to get the education they need to do it."¹ Replace "poor people" with "investors" and the logic remains - capital seeks returns. Tax those returns heavily enough, and capital goes elsewhere.

Perhaps most revealing: if this policy were genuinely beneficial for economic growth, why the elaborate political choreography? The answer lies in Laffer's observation about lottery tickets: "Everyone—tall, short, skinny, fat, old, young—they all want to be rich. Why does your government then turn around and tax the living hell out of the rich?"¹

New Zealanders don't want to punish success; they want pathways to achieve it themselves. They buy lottery tickets hoping to strike it rich. The government encourages dreams of wealth while simultaneously taxing the achievement of wealth.

The Verdict

The election will shortly reveal whether Labour's calculated 12-month strategy succeeds politically. By announcing early, they've given the policy time to settle, given themselves something concrete to campaign on, and satisfied membership demands for action on wealth taxation.

But both Laffer's economic analysis and Grant's practical critique suggest that regardless of electoral outcome, the policy itself represents strategic error. It's economic theory ignored in favour of political positioning.

New Zealand has better options. Genuine broadening of the tax base, reform of property taxation to encourage productive use, addressing infrastructure bottlenecks, and creating conditions for productivity growth would all contribute more to long-term prosperity than taxing capital gains at 28%. But those approaches require the hard work of reform rather than the easy politics of taxing "wealthy property investors."

Is Labour's CGT announcement politically canny, or economically catastrophic? When you deliberately discourage an activity through taxation, you can’t be surprised when you get less of it.

Labour has installed the camera; investment will slow accordingly. Whether that's clever politics or economic self-harm depends entirely on whether you're focused on winning the next election or building the next generation's prosperity.

As Laffer would note, you cannot tax an economy into prosperity. And you most certainly cannot stand in a bucket and lift yourself up by the handles.

Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 433

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References

1. Simmons, M. (2024). Reality Check: Interview with Arthur Laffer. Times Radio.

2. Opes Partners (2025). 'Does New Zealand Have a Capital Gains Tax? [2025]'. Available at: https://www.opespartners.co.nz/tax/capital-gains-tax-nz

3. RNZ (2025). 'What you need to know: Seven questions about a capital gains tax'. Available at: https://www.rnz.co.nz/news/business/577065/what-you-need-to-know-seven-questions-about-a-capital-gains-tax

4. Chartered Accountants Australia and New Zealand (2025). 'Capital gains tax must be considered as part of tax reform'.

5. Churchill, W.S. (1906). For Free Trade. London: Arthur Humphreys.

6. Grant, D. (2025). 'Hipkins' capital gains tax policy leaves more questions than answers'. Stuff. Available at: https://www.stuff.co.nz/politics/360878756/damien-grant-hipkins-capital-gains-tax-policy-leaves-more-questions-answers

Not all that Glitters: A Hawke’s Bay Perspective on Investment Lures

Walking your dog along the banks of the Tuki Tuki River on a crisp Hawke's Bay morning, you might spot an angler casting their line into the current. If you look closely at the tackle box, you'll find an array of brightly coloured lures - fluorescent pinks that practically glow in daylight, electric greens that shimmer with an unnatural brilliance, shimmering silvers that catch every ray of sun. Each one is a masterpiece of design, engineered to trigger a response. They're designed to catch something, all right. But it's not always the fish.

Lures work because they exploit instinct. That flash of silver mimics a wounded baitfish. The vibrant pink stands out against murky water. The electric green triggers a predatory response. But here’s the thing - the lure doesn’t need to fool the fish to be successful. It only needs to fool the angler into buying it. The brightest, most eye-catching lures often sit in tackle boxes, never touching water, while experienced fishers reach for duller, more practical options that actually work.

Charlie Munger, the late investing legend and Warren Buffett’s long-time partner, once recounted a conversation that cuts to the heart of how financial products are really sold. He’d asked a fishing lure salesman whether fish actually bit on those garish purple and green contraptions. The man’s response was disarmingly honest: “Mister, I don’t sell to fish.” [1]

That simple line exposes an uncomfortable truth about the investment industry - one that’s struck particularly close to home here in Hawke’s Bay in recent times. In October 2025, the Financial Markets Authority issued a formal warning to Finbase (HP Capital Limited) over serious breaches relating to their Single Investment financial products - essentially property lending arrangements.[2] This is the same company that had been running full-page advertisements in the Hawke’s Bay Today, using search terms like “term deposit” and “low risk investment NZ” to attract investors.

But there’s more. Also in October, MyFarm Investments’ Rākete Orchards partnership, which grows Rockit apples across six Hawke’s Bay orchards valued at $17.4 million, entered voluntary administration. [3]  When launched in late 2017, the investment closed oversubscribed at $13 million, with forecasts of returns exceeding 50-55% per annum. [4]  Those shiny projections now look very different.

The irony is impossible to miss. Full-page ads in our local paper projecting stability and legitimacy - the investment equivalent of fluoro pink lures. Promises of safety using familiar terms like “term deposit” - the shimmering silver that mimics something trustworthy. Bold marketing campaigns featuring impressive return projections - the electric green designed to stand out from everything else. None of it was designed to catch fish. It was all designed to catch us.

The FMA found that Finbase’s advertising created a false impression that their investment products were comparable to term deposits when they differed significantly in nature and characteristics.[2] The use of familiar, reassuring terminology masked the real nature of the investment and its risks. Meanwhile, Rākete’s chair blamed low returns, noting that demand hadn’t grown sufficiently, and high costs meant returns were insufficient to support ongoing operations.[5]

Humans are predictable creatures, and decades of behavioural finance research has mapped our psychological vulnerabilities. We’re drawn to familiar-sounding terms because they trigger associations with safety and certainty. We’re attracted to branded agricultural products because they seem tangible, real, and connected to what we know. We trust advertisements in our local newspaper more than we probably should. The investment industry understands this intimately and constructs marketing designed to activate them, whether or not the product serves our actual interests.

Here in Hawke’s Bay, we pride ourselves on straight talk and honest work. Our regional economy is built on things you can touch and understand - orchards heavy with export-quality apples, vineyards producing wines that compete on world stages, farms raising premium livestock. There’s no mystery about how value is created in these industries. You plant, you tend carefully, you harvest, you continually improve your methods. Real results come from patience, expertise, and time.

Successful investing follows these same unglamorous principles. It’s buying quality businesses at reasonable prices and holding them through inevitable market cycles. It’s diversifying sensibly across different asset classes and geographies. It’s keeping costs and fees low. It’s maintaining emotional discipline when markets fluctuate. It’s resisting the powerful urge to chase whatever looks shiniest or promises the highest returns.

This approach doesn’t generate compelling marketing copy. It doesn’t require full-page advertisements. It doesn’t promise 50%+ annual returns that sound too good to be true. But that’s precisely why it’s harder to sell. Boring doesn’t capture attention. Prudent diversification doesn’t create excitement. Modest, realistic projected returns don’t make headlines.

When someone presents an investment opportunity backed by aggressive marketing - whether splashed across the Hawke’s Bay Today or promoted through carefully optimised online search terms - ask yourself fundamental questions: Is this designed to catch fish, or catch me? Why does something supposedly offering solid, legitimate returns need this level of promotional spending? What happens if rosy projections don’t materialise? What are the realistic worst-case scenarios?

This is where seeking wise counsel becomes essential. Look for advisers with rigorous due diligence processes and recognised certifications like CEFEX, which demonstrates commitment to fiduciary excellence and systematic client protection.[6] These aren’t shiny credentials designed to impress - they’re evidence of thorough, unglamorous processes that protect investors.

A good adviser asks uncomfortable questions about any investment: What are the real, not theoretical, risks? How dependent is success on optimistic assumptions about markets, demand, or costs? How liquid is this investment if circumstances change? Can you genuinely afford to lose this money? Most importantly, have similar investments really delivered returns as promised, or is there a pattern of disappointments?

Finbase exceeded regulatory limits and used advertising that misled potential investors about fundamental product characteristics.[2] With Rākete, even real orchards growing actual apples in Hawke’s Bay soil didn’t deliver the projected economics. Other Rockit growers reported returns well under the $1.10 per tube needed to break even, forcing difficult decisions about their orchard futures.[3]

The consequences of getting these decisions wrong aren’t abstract. They affect real people in our community - retirees who thought they were safely parking their retirement savings, families who believed they were making prudent decisions while supporting local agriculture, individuals who trusted that bold advertising in their trusted local newspaper meant something had been thoroughly vetted and deemed appropriate for ordinary investors.

The magpie, despite its considerable intelligence, can’t resist a shiny object. It’s hardwired evolutionary instinct. But we can do better.

Next time you’re walking your dog along the Tuki Tuki and see those bright lures glinting in an angler’s tackle box - let them serve as a useful reminder. The brightest lures are often the ones that never get wet. In fishing, as in investing, the flash and colour serve one primary purpose - to catch you, not the fish.

Because the question isn’t whether the lure looks attractive, uses comfortable terminology, appears in trusted publications, or involves tangible Hawke’s Bay assets. The question is simple and profound: who is it really designed to catch?

Your financial future deserves better than bright colours and borrowed credibility. It deserves honesty, transparency, realistic assumptions, thorough due diligence, and advice that genuinely serves your interests rather than someone else’s sales commission.

Unless you’re a magpie, you don’t have to take the bait.

Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

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References

1. Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger

2. Financial Markets Authority. (2025, October). "FMA issues warning to Finbase over serious disclosure and fair dealing breaches." Retrieved from https://www.fma.govt.nz/news/all-releases/media-releases/warning-to-finbase/

3. Farmers Weekly (2025, October 15). MyFarm’s Rockit partnership turns sour as Rākete orchard enters voluntary administration

4. Rural News Group. (2017, December 16). "A chance to pocket from Rockit." Retrieved from https://www.ruralnewsgroup.co.nz/rural-news/rural-agribusiness/a-chance-to-pocket-from-rockit

5. NZ Herald. (2025, October 28). "Rockit apple grower Rākete Orchards in voluntary administration." Retrieved from https://www.nzherald.co.nz/business/companies/agribusiness/rockit-apple-grower-rakete-orchards-in-voluntary-administration/PNH4JTBZHBHLTLPF7XAMS5U474/

6. Centre for Fiduciary Excellence (CEFEX). For more information on fiduciary certification standards, visit www.cefex.org

NZ's Economic Costume: Why Kiwis Feel Poor Despite Being "Rich"

Tonight is Halloween - a celebration of masks, illusions, and things that appear frightening but aren't real. How fitting, then, to discuss New Zealand's latest economic costume: the world's fifth-wealthiest country per capita, according to Allianz's latest Global Wealth Report.[1]

Each Kiwi is apparently worth $617,000 on average. Pop the champagne, right? Not quite.

The mask of prosperity doesn't quite match the face underneath. Most New Zealanders are too busy checking their bank balances and wincing at grocery receipts to celebrate this dubious honour.

At a recent conference abroad, colleagues from other nations questioned why New Zealanders exhibit such a "small dog complex" about our economy and stock market when we rank so highly in global wealth tables. "You must be a very wealthy nation," they observed, puzzled by our apparent lack of confidence. Their bewilderment was understandable—on paper, we look remarkably prosperous.

But the disconnect between this glowing statistic and daily financial reality reveals something troubling about how we measure prosperity - and exposes an uncomfortable truth about New Zealand's economic decline. Our "complex" isn't insecurity. It's realism.

A Nation of Landlords

Napoleon famously dismissed Britain as "a nation of shopkeepers"; a merchant class focused on trade rather than grand imperial pursuits.

If the French Emperor were observing New Zealand today, he might call us "a nation of residential landlords." We've become obsessed with buying and selling houses to one another. We treat property as our primary investment vehicle and wealth-creation strategy.

That impressive $617,000 wealth figure is overwhelmingly driven by this fixation: property values.[2] Housing represents approximately 50-58% of New Zealand household wealth.[3] Yet curiously, when the Herald reports that stripping out real estate sees us drop only to eighth place in net financial assets, something doesn't add up. If more than half our wealth is property, removing it should see us plummet far further down the rankings.

This data inconsistency itself reveals the problem: international wealth comparisons struggle to accurately capture economies where asset bubbles distort the picture. Regardless of the exact ranking, the core truth remains – housing wealth is fundamentally different from productive wealth.

If you own a $1.2 million house in Auckland, congratulations on being wealthy on paper. But alas, you can't pay for petrol with housing equity. That "wealth" is locked away, inaccessible unless you sell and move somewhere cheaper (which increasingly means moving south or to Australia[4]). Meanwhile, you're servicing a massive mortgage at interest rates that peaked above 7%.

For those who don't own property, the inflated housing market represents the opposite of wealth. It's a barrier that pushes homeownership further out of reach with each passing year.

We've become experts at shuffling residential properties between ourselves while creating little new productive value. The resulting "wealth" is a mirage. It makes the statistics look good while leaving people feeling financially squeezed.

The GDP Reality Check

Here's where the wealth ranking crumbles entirely. New Zealand's GDP per capita tells a completely different story. In the 1950s, New Zealand ranked third globally in GDP per capita. Today? We've plummeted to 37th.[5]

GDP per capita – which measures actual economic output and productivity – sits more than 20% below the OECD average. The Productivity Commission noted we should be 20% above that average given our policy settings, but we're achieving the exact opposite. As one economist bluntly put it: "We may be punching above our weight, but that's only because we are in the wrong weight division."[6]

In 2024's economic performance rankings, New Zealand placed 33rd out of 37 OECD countries.[7] We beat only Finland, Latvia, Turkey, and Estonia. Per capita output has been declining since December 2022.[5]

These are not the statistics of a wealthy, thriving nation.

When you lay bare these numbers, Kiwis' so-called "small nation complex" makes perfect sense. We're not suffering from false modesty; we're experiencing economic reality the wealth rankings fail to capture.

The Debt Burden

The wealth figures also conveniently ignore what we owe. New Zealand and Australia have seen their debt ratios surge by 15.2 percentage points to reach 113% of GDP.[1] High asset values paired with equally high debt levels mean many households are drowning in mortgage payments, leaving little for savings or discretionary spending.

The Reserve Bank was among the world's most aggressive in raising interest rates, and the economy has faltered accordingly.[5] Per capita output has contracted while unemployment climbs. Firms are downsizing. This is the lived experience behind the statistics—and it bears no resemblance to the fifth-wealthiest nation on earth.

Sixty Years of Relative Decline

The long view is sobering. New Zealand has been growing significantly slower than other OECD countries for six decades.[6] We've dropped from elite economic status to below-average performer. Our isolation, small market size, and weak productivity growth have compounded into structural disadvantages that successive governments have failed to overcome.

The wealth ranking actually highlights our problem. We've substituted asset appreciation for genuine economic growth. Rather than building productive capacity, improving wages, or fostering innovation, we've watched house prices soar and called it prosperity.

Napoleon's shopkeepers at least sold goods to customers beyond their own shores. Our landlords primarily rent to each other.

The Need for Fiduciary Advice

For individuals navigating this challenging economic landscape, the disconnect between headline wealth and financial reality makes professional guidance more critical than ever. Understanding the difference between illiquid property wealth and accessible financial assets, managing debt strategically in a high-interest environment, and building genuine financial resilience requires expertise beyond newspaper headlines.

Working with a qualified financial adviser who operates under fiduciary duty – i.e. is legally obligated to act in your best interests – can help cut through the noise. Whether you're trying to balance mortgage stress with retirement savings, questioning if your "wealth" is working effectively, or simply wondering why the statistics don't match your bank account, professional advice tailored to your specific circumstances is invaluable.

The gap between perception and reality has never been wider. Kiwis understand what the statistics obscure: you can't eat your house equity, and paper wealth means nothing when your purchasing power is eroding. What my international colleagues mistook for a national inferiority complex is actually clear-eyed recognition of our economic challenges. In uncertain times, sage financial counsel from a trusted fiduciary adviser isn't a luxury. It's essential for turning illusion into genuine security.

Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 431

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References

[1] Allianz Global Wealth Report 2025. Available at: https://www.allianz.com/en/economic_research/publications/specials_fmo/global-wealth-report.html

[2] New Zealand Herald (October 2024). "New Zealand ranks among world's top five wealthiest countries per capita in rich list report." Available at: https://www.nzherald.co.nz/business/new-zealand-ranks-among-worlds-top-five-wealthiest-countries-per-capita-in-rich-list-report/MX2QDDZWXFBBNF3NT5734XTW3E/

[3] New Zealand Treasury (2023). "Estimating the Distribution of Wealth in New Zealand." Working Paper 23/01. Available at: https://www.treasury.govt.nz/sites/default/files/2023-04/twp23-01.pdf

[4] Statistics New Zealand (July 2025). "Net migration loss to Australia in 2024." New Zealand recorded a net migration loss of 30,000 people to Australia in 2024, the largest calendar-year loss since 2012. The South Island's population grew at 1.4% annually (faster than the North Island's 1.3%), with Canterbury's Selwyn District and Queenstown-Lakes experiencing the fastest growth rates. Available at: https://www.stats.govt.nz/news/net-migration-loss-to-australia-in-2024/

[5] RNZ News (December 18, 2024). "NZ ranks low in global economic comparison for 2024." Available at: https://www.rnz.co.nz/news/business/537075/nz-ranks-low-in-global-economic-comparison-for-2024

[6] New Zealand Productivity Commission. "Economic Performance and Productivity Analysis." Referenced in Economy of New Zealand, Wikipedia. Available at: https://en.wikipedia.org/wiki/Economy_of_New_Zealand

[7] The Economist (December 2024). "OECD Economic Performance Rankings 2024."

The Price of Wisdom: What Financial Advice Is Really Worth

Russell Investments has done something rather brave: it has attempted to reduce the value of financial advice to a single number. That number, for 2025, is 4.52%.

The precision is almost comical. Not 4.5%, not "around 4 or 5%", but 4.52% – calculated to two decimal places, as if this were physics rather than the messy business of helping people not wreck their retirements. But even if the decimal places are a bit of theatre, the exercise forces an uncomfortable question into the open: what exactly are financial advisers selling, and is it worth the fee?

Investment Lessons from 1987 and 2021

New Zealanders have long memories when it comes to financial disasters. However, we seem doomed to repeat them in different asset classes.

The 1987 sharemarket crash created a generation-long aversion to equities that arguably cost Kiwi investors more than the crash itself. Those who fled shares and never returned missed decades of recovery and growth. Fast forward to the 2020s, and the only real change was the flavour of asset class in question. Property replaced shares as the "safe" investment – the thing that "always goes up." Except… it didn't.

The residential property market's dramatic decline from its 2021 peak caught out a generation of leveraged investors who'd been assured that bricks and mortar were different. Investors who'd borrowed heavily to accumulate multiple properties found themselves drowning as interest rates climbed and property values plummeted.

Russell's data shows that investors who stayed invested in the New Zealand sharemarket over the past decade outperformed those who missed just the 10 best trading days by 3.57% annually. Miss the 40 best days, and you're 60% worse off.

The expensive lesson: panic is usually more costly than the crisis that triggered it. As is the herd mentality that drives people into overvalued assets for fear of missing out.

What You're Actually Paying for with Professional Advice

The Russell report is admirably blunt about what advisers actually do.

Strip away the corporate language about "behavioural coaching" and the message is clear: advisers are worth paying primarily because they stop you from doing something catastrophic – whether that's panic-selling during downturns or panic-buying during manias.

That 4.52% breaks down like this:

• 3.57% comes from preventing fear-based or greed-based decisions

• 0.2% from helping choose appropriate risk levels

• 0.75% from customising wealth plans.

The rest – the "emotional and technical expertise" of seasoned advisers – is declared "priceless."

What you're paying for isn't genius stock-picking or property market timing. You're paying someone to tell you uncomfortable truths – like that property yields in 2021 didn't justify the prices, that borrowing heavily into an overheated market was dangerous, and that diversification matters even when one asset class seems invincible.

What Russell Misses Entirely

But here's what Russell's tidy arithmetic utterly fails to capture: the value of comprehensive financial planning that extends well beyond investment returns.

1.Tax efficiency

This alone can dwarf that 4.52% in any given year. The difference between holding investments in the wrong structure versus the right one – PIE funds versus direct holdings, trusts versus personal ownership, the timing of realisations – can mean tens of thousands of dollars in a single tax year for even moderately wealthy families.

2. Asset protection

What's the percentage value of having your wealth properly structured so that a lawsuit, business failure, or relationship breakdown doesn't wipe out everything you've built? If disaster occurs, the value is effectively infinite.

3. Succession planning

This is even harder to reduce to basis points. What's it worth to ensure your estate passes efficiently to your children rather than being carved up by lawyers and the IRD? What's it worth to avoid family disputes over inheritances or ensure your business survives your death?

4. Risk management

Risk management extends beyond investment volatility. Adequate insurance coverage, appropriate policy structures, regular reviews as circumstances change – the value becomes apparent only in catastrophe but is no less real.

Support for The Goals That Matter

Perhaps most importantly, Russell's framework completely ignores what might be the highest value proposition: helping clients achieve what they really want from their wealth.

Financial plans aren't spreadsheet exercises. They're roadmaps to specific life goals – retiring early, funding children's education without debt, buying that bach, leaving a meaningful legacy, or achieving financial independence that allows career changes.

Consider these two real examples:

Example 1: Diversifying Portfolios for Property Accumulators

A professional couple in their early fifties came to us convinced they'd need to work until 65. They'd accumulated three rental properties during the boom years – two still carrying significant mortgages. They were stressed and beginning to resent the properties that were supposed to secure their future.

After comprehensive analysis, we restructured their affairs entirely. We helped them sell two properties, eliminated all personal debt, and repositioned their investments into a properly diversified portfolio with appropriate tax efficiency. The result? They retired at 58 with more financial security and significantly less stress. The value wasn't in the 4.52% – it was in getting seven extra years of freedom.

Example 2: Strategic Phased Retirement with Increased Tax Efficiency

A business owner approaching a potential sale came to us six months before signing a term sheet. Through careful structuring involving family trusts, timing of the sale, and strategic use of tax vehicles, we reduced his tax liability by over $300,000 – money that remained with his family rather than going to the IRD. More importantly, we helped him structure the proceeds to support a phased retirement that included funding his children's business ventures and establishing a charitable legacy.

These kinds of results don't show up in Russell's investment-centric quantification. But they're often what clients value most.

The Fiduciary Difference in Financial Advice

This is where the fee-only, fiduciary model becomes essential. When your adviser is paid solely by you – not by product commissions, not by mortgage brokers' referral fees, not by insurance kickbacks – all of these dimensions of advice become trustworthy.

Consider the property boom of the late 2010s and early 2020s. How many advisers benefited indirectly from encouraging clients toward leveraged property investment? A fee-only fiduciary has no such conflicts. Their only incentive is your long-term financial health.

A fiduciary investment adviser operating under frameworks like CEFEX certification isn't only preventing you from panic-selling equities; they're providing the disciplined portfolio construction and advice that can prevent over-concentration of one asset class in the first place.

The leveraged property investors of 2021 needed someone to tell them they were being greedy and foolish. Most didn't have that person. Or worse, they had advisers whose business models depended on encouraging behaviours that would later prove ruinous.

Investors need someone – a real person, with your best interest at heart – in their corner. An algorithm can rebalance a portfolio, but it can't talk someone out of borrowing a million dollars to buy their third rental property when yields don't justify prices. It certainly can't design a comprehensive wealth structure that addresses tax, protection, succession, and life goals simultaneously while adapting to changing circumstances over decades.

What Advice is Really Worth

The real value of fee-only fiduciary advice encompasses dimensions Russell doesn't even attempt to measure.

Behavioural coaching has genuine value. But reducing comprehensive financial advice to a single percentage derived from mainly investment considerations is like judging a surgeon's worth solely by their suturing speed rather than successful procedures.

The real value isn't in any spreadsheet. It's in the confidence of knowing someone is watching your back without any hidden agenda, the relief of having comprehensive planning that addresses tax, protection, and succession alongside investments, and the profound satisfaction of achieving what you set out to do with strategic wealth management.

It’s Time for a Different Conversation

If you're tired of product pitches masquerading as advice, or if you've outgrown the traditional model of financial guidance, perhaps it's time to try a different conversation – and we’re always happy to talk.

As a fee-only, CEFEX-certified fiduciary adviser, Stewart Group is legally and ethically bound to put your interests first – always. We don't receive investment commissions, referral fees, or any form of conflicted remuneration. Our only incentive is your success across all dimensions of your financial life.

Whether you're navigating a business sale, restructuring an investment portfolio that's grown unwieldy, planning for retirement that's closer than you'd like to admit, or simply wondering if there's a better way to structure your wealth – comprehensive fiduciary advice might serve you well.

The first conversation costs nothing but time. Why not contact us today, to arrange a confidential discussion about your financial circumstances and goals.

Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 430

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References

• Russell Investments (2025). The Value of an Adviser: New Zealand Edition. Russell Investments.

• Brokers Ireland (2025). The Value of Advice: A Whitepaper. Brokers Ireland.

• Chaplin, D. (2025, October 14). "The value of financial advice (to two decimal points)". BusinessDesk.

Navigating New Zealand’s Economic Crossroads - A Canny View

The Rate Cut Reality Check: Too Little, Too Late

Next Wednesday's anticipated 25 basis point cut to 3%[i] represents more than monetary policy adjustment—it's an admission of New Zealand's economic fragility, yet likely inadequate given our challenges. While markets celebrate cheaper money, this modest response highlights policy inertia.

The Reserve Bank's hand has been forced by unemployment climbing to 5.2%—the highest since 2016—and wage growth softening to its slowest pace in years. Private sector wages have decelerated to just 2.2% annually, whilst underutilisation has surged to 12.8%[ii]. Yet the expected quarter-point response appears tepid when economic data screams for decisive action.

As former Finance Minister Ruth Richardson commented, Treasury's warnings about New Zealand's fiscal sustainability aren't mere technical observations—they're alarm bells signalling "greater pressure on the fiscal position than we have in the last 20 years"[iii].

Higher starting debt, unfavourable interest rates, adverse growth trends, and long-term pressures from aging and climate change are converging into a perfect storm. Despite claims of $44 billion in savings, government has reallocated spending rather than shrinking it [iii].

It's hard for hope not to fade when our government appears to lack the mettle to take the bull by the horns. The "price of butter" facade may have fooled some, but not many. Butter is a product that hasn't changed in eons—full cream milk, add salt and churn. No smoke and mirrors or PR spin, just butter. Yet politicians obsess over its retail pricing whilst avoiding hard decisions on fiscal consolidation that might actually address underlying inflation pressures. 

The Great Capital Migration

Capital flows as freely as people in an interconnected world. Just as 230,000 Kiwis have voted with their feet over two years seeking better opportunities offshore[iv], smart money increasingly looks beyond our borders for superior returns.

The recent emigration shows a damning verdict on New Zealand's economic trajectory. These are productive citizens, who see limited prospects in a country determined to tax productivity whilst subsidising speculation. Human capital flight and financial capital mobility share parallels—both respond to incentives and seek the best risk-adjusted returns.

Housing Market Dysfunction Remains

Our housing market remains in purgatory, with prices stubbornly elevated while transaction volumes are sluggish. Latest data shows ‘days to sell’ extending and prices slipping nationally for six of the past seven months[v]. Wednesday's modest rate cut is unlikely to break this deadlock.

Young Kiwis are emigrating, recognising their homeownership prospects have been systematically destroyed by policies prioritising incumbent wealth over economic dynamism. The social contract promising hard work would lead to homeownership has been broken: 72% of Kiwis without a home believe buying a property is beyond their reach[vi]. Yet, many Kiwis remain dangerously over-exposed to residential real estate.

Rethinking Investment

The traditional Kiwi approach of leveraging into property and hoping for the best is dangerous where house prices may stagnate whilst debt service costs remain higher.

Global equity markets continue to climb, with the S&P 500 delivering 5-year annualised returns of 15.71%. Meanwhile, New Zealand's NZX50 has delivered a dismal 1.8% annualised return over the same period [vii].

The performance gap is devastating. A $100,000 investment in the S&P 500 over five years would have grown to $208,000, versus approximately $109,000 in the NZX50. This $99,000 difference[vii] is a documented reality for investors who remained domestically focused while global opportunities compounded wealth at dramatically higher rates.

Complexity extends beyond simple asset allocation. Tax implications vary dramatically between domestic and international investments. Currency hedging decisions can make or break returns. Liquidity needs must account for potential emigration scenarios—a consideration rational investors now embrace.

A skilled financial adviser becomes essential for protecting and growing wealth whilst navigating emotional challenges of investing against your home country's prospects.

Economic Crossroads Ahead

New Zealand stands at an economic crossroads between fiscal irresponsibility leading to Japanese-style stagnation, or making hard decisions to restore economic dynamism. Next Wednesday's timid rate cut suggests we're choosing the former.

For investors, the message is clear: adapt or suffer consequences. Capital, like talent, flows to where it's best treated. The 230,000 Kiwis who've recognised this reality are canaries in the coal mine. Smart investors should ensure their wealth enjoys the same mobility their fellow citizens have embraced.

The coming rate cut won't be cause for celebration—it will be a symptom of deeper malaise and policy impotence facing structural decline.

[i] https://www.interest.co.nz/economy/134636/kiwibank-economists-say-all-key-data-released-ahead-reserve-banks-official-cash-rate

[ii] Statistics New Zealand - Labour Force Report, June 2025 quarter https://www.stats.govt.nz/information-releases/labour-market-statistics-june-2025-quarter/

[iii] Newstalk ZB Radio Interview - Ruth Richardson (Former Finance Minister, Chair of Taxpayers Union) interviewed by Heather du Plessis-Allan, 8th August 2025 https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/ruth-richardson-former-finance-minister-says-nicola-willis-needs-to-face-up-to-the-latest-treasury-report/

[iv] Statistics New Zealand - International Travel and Migration Statistics, Monthly releases 2023-2025: Net permanent and long-term migration data showing departures of New Zealand citizens seeking opportunities offshore.

[v] Craig's Investment Partners - "Onboard" podcast, Episode 291, August 10th, 2025: Mark Lister, Investment Director, discussing OCR expectations, labour market data, global equity performance, dairy prices, currency movements, and central bank policy decisions.

[vi] MPA Mag – “Most Kiwis Say Homeownership is Out of Reach” https://www.mpamag.com/nz/news/general/most-kiwis-say-homeownership-is-out-of-reach-report/545632
Good Returns – “Gloomy Home Ownership Results” https://www.goodreturns.co.nz/article/976524736/gloomy-home-ownership-results.html

[vii] S&P Dow Jones Indices - S&P/NZX 50 Index factsheet, July 31, 2025: 5-year annualized total return data. State Street S&P 500 Index fund performance data showing 5-year annualised returns for comparative analysis. Calculation: $100,000 invested at 15.71% annually over 5 years = $208,000 (S&P 500) vs $100,000 invested at 1.8% annually over 5 years = $109,000 (NZX50). Performance gap: $99,000.

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Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 420