The Co-operative Bank is to start distributing Fisher Funds’ KiwiSaver products even though rival bank TSB is a shareholder in the fund manager.
The Co-oeprative Bank chief executive Bruce McLachlan says KiwiSaver is now a core banking product that had to be added to its offering to customers.
After looking at the various offerings in the market Fisher Funds was selected for a number of reasons. One of the key areas it differentiated itself in the market was its abilities around distribution. Fisher Funds already has agreements with its shareholder TSB as well as the Association of Credit Unions. (Coincidentlly The Co-operative Bank recently accussed the association of trying to hi-jack its brand – story here).
“Fisher was the right partner for us,” he said. “It was an easy decision to select them.”
While it may saeem odd that the bank should do a deal like this with an organisation owned by a competitor McLachlan said not to read anything into it. “No, no, no. YOu can read absolutely nothing into it.”
He said the bank has relationships with other competitors including BNZ, Kiwibank and Westpac.
McLachlan said it is a function of a small market place, and the bank had to be realistic about options.
He also said the bank had “reasonable protection” if TSB makes changes in its ownership of Fisher Funds.
The Co-operative Bank has 132,000 customers and it will be active seeking to engage with them and getting them to take up its KiwiSaver offering. McLachlan says many people are in inappropriate funds for their risk profile and need to shift.
Since The Co-operative Bank doesn’t have any AFAs it will be working on a class-advice model and referring customers bank to Fisher Funds if they want personal advice.
The Co-operative Bank is paid a referral fee for all customers it signs up to Fisher Funds. McLachlan says the bank has “reasonably high expecations” on the number of its customers it can proactively get into its KiwiSaver offering.