KiwiSaver

Two of the newer KiwiSaver schemes chalked up larger losses in their latest financial year.

But while Sharesies KiwiSaver scheme had about 5,000 members at March 31, it has since reached about 8,000 members and needs about another 5,000 to join to allow it to break even, according to Sharesies co-founder and chief executive Leighton Roberts.

Roberts says his company only went public with its KiwiSaver offer in December last year, suggesting momentum towards break even is on its side.

The KiwiSaver vehicle, Sharesies Investment Management, reported a net loss of just over $1 million for the year ended March, up from the previous year's $331,000 loss, according to accounts published with the Companies Office.

While the accounts show net equity at balance date of $123,000, suggesting the company will need more capital in a hurry, Roberts says the parent company will tip in further equity as needed.

The KiwiSaver company's revenue climbed from just $1,000 in the year ended March 2023 to $534,00 in the year ended March this year.

Sharesies currently has about 700,000 members using its share trading platform, up from nearly 600,000 this time last year, providing it with an audience for its KiwiSaver offering.

Koura Wealth, which allows its KiwiSaver investors to choose between nine different funds, one of which is a bitcoin-based fund, filed accounts with the Companies Office showing it lost $1.7 million in the year ended March, up from the near $1.5 million net loss the previous year.

The accounts show its equity holders contributed another $1.2 million during the latest year, bringing their total contributions to $6.1 million.

After accumulated losses of just over $6 million, Koura Wealth had equity of $107,000 at March 31.

But it does appear Koura is making progress, with revenue rising to $655,000 in the latest year from $305,000 the previous year.

The accounts note that Koura has a related-party relationship with Hobson Wealth, which stock broking firm Forsyth Barr bought late last year for an undisclosed sum.

Hobson Wealth former principal Warren Couillaut's Audrey Investments owns 14.8% of Koura, according to Companies Office records.

Hobson provided Koura with brokerage, execution and accounting services during the year and Koura was also a sub-tenant of a property owned by Hobson.

The accounts show key management personel were paid $378,000 in the year ended March, up from $268,000 the previous year.

ASB CEO Vittoria Shortt would like to see change when it comes to KiwiSaver policy and is interested in developing the product.

Shortt says she’s very happy with the scheme and the bank's strategic partnership with Blackrock as underlying asset manager has yielded pleasing results which will be evident when it puts out its investing climate report.

This year ASB KiwiSaver members have made $1.7 billion in contributions and investment returns have seen the fund grow by $1.5b, she says.

On the policy front she would like to see KiwiSaver made compulsory and changes to contribution rates. She says both of these have made a massive impact in Australia and I think New Zealand could do the same.

From a provider perspective, it will be interesting to see what different investment categories will open up at scale, as in Australia.

“We want to make sure KiwiSaver conversations are as simple and easy as possible so we are removing barriers from people thinking about saving for their future, because it's not easy… it's not always front of mind for people.

“When they want a home, people are really clear that they want a home. But trying to convince people to think about their retirement when they're 20 is more challenging.”

Hence ASB is focused on helping people make small, everyday steps with their KiwiSaver. 

As for private equity allocation in KiwiSaver, she is interested although it’s not something ASB has executed so far.

“I am genuinely interested in the development of KiwiSaver. And I guess, you just have to look across to Australia to see the ways that the big super funds are participating there. I'm interested in understanding what it takes to, in an appropriate way, participate in supporting the country, so yes although we haven’t done anything specific.”

Currently ASB is neck and neck with Fisher Funds in the battle for KiwiSaver market share. Morningstar’s KiwiSaver report for the second quarter of this year put ASB in third place, just behind Fisher, both with 15.1% of the market and assets of $16.8b each.

Fisher outdid ASB for fee revenue with $160.1m compared to ASB’s $100.3m.

Quotemonster's owner, Quality Product Research, is teaming up with financial research company Morningstar to start offering advisers information on all the various KiwiSaver products now available.

Kiwimonster will offer similar information on the different products in much the same way that Quotemonster provides advisers with information on life insurance and associated products, director Russell Hutchinson told a Quotemonster event in Lower Hutt earlier this week.

His company has decided to start offering the KiwiSaver service because KiwiSaver is now life insurance advisers' second most-offered service, Hutchinson said.

“Our whole business model is about supporting you, but you're the ones giving advice,” he said.

The new service will allow advisers to compare the different characteristics of each KiwiSaver offering as well as allowing them to create statements of service documents for their records so they can show why they recommended a particular product.

The company also wants advisers to provide feedback so that it can collate information on adviser preferences and their perceptions of the service offered to them by the KiwiSaver providers they deal with, Hutchinson said.

Advisers will be able to record things such as their client's risk tolerance, how much gains or losses the client would be comfortable with and they will be able to show how a client's existing KiwiSaver product compares with others.

Generate business development manager Paula Damen told advisers that KiwiSaver has grown to $108 billion in assets under management with 3.2 million people signed up and most of them are under the age of 45.

About 41% are in growth funds, 23% in balanced funds and 22% in conservative funds, but 324,689 haven't made an active choice of fund.

But Generate, one of the KiwiSaver providers, has seen more and more members making an active choice.

“We believe in advisers and we believe in advice and we believe every KiwiSaver member should get advice,” Damen said.

“More and more are moving into growth funds – if you're not advising them, someone else is,” she said.

Damen noted that Australia's superannuation scheme now has A$3.5 trillion in assets under management and that compulsory employer contributions have gone from 3% in 1992 to 11.5% now and that's due to go to 12% from July 1 next year.

“In NZ, we're seeing a lot more discussion about making 3% compulsory,” she said.

More KiwiSaver members are realising that “banks are not the place to save money,” and are moving their accounts to independent fund managers such as Generate, she said.

Putting clients into KiwiSaver can mean additional income for advisers – Generate pays an up front commission of $300 but it also pays a 0.25% trail commission.

Most KiwiSaver providers have filed their first-ever climate reports which detail the emissions from their investments.

Most KiwiSaver have now submitted their KiwiSaver climate reports with the bulk lodged with the Companies Office on July 31.

The Financial Markets Authority says it is working its way through and will report its observations on how the process has gone by the end of November.

Statements have been prepared for each fund in each scheme.

Investment scheme managers with assets under management of more than $1 billion are required to do climate reporting under the Financial Markets Conduct Act.

On July 31, around 35 investment scheme providers and 16 KiwiSaver providers uploaded their reports.

Under the climate financial disclosure framework, reporting entities have to meet three climate standards set by the External Reporting Board (XRB). NZ CS 1 requires climate related disclosure requirements across four thematic areas – governance, strategy, risk management, metrics and assurance requirements for GHG disclosures.

NZ CS 2 has seven provisions which entities adopt, exempting them from having to include current financial impacts, anticipated financial impacts, transition planning, and scope 3 GHG emissions in their first year of reporting. The third standard contains general requirements, principles and underlying concepts such as materiality.

Financial Markets Authority head of audit, financial reporting and climate related disclosure Jacco Moison says; “We’ll then see how far they were able to comply with all the requirements, for example, if they have used some of those early adoption provisions to relieve some of the pressure of the first year of reporting.” At first glance it appears many have chosen to do so.

“Some may have done all the work to disclose it but decided not to disclose but most have had to look at it and think about what they will need to do next year.”

He says while some investment managers indicated in the past that they struggled to get data, all had reported on time.

“With the new lot of managed investments schemes it will be interesting to see because of the vast amount of data required to make their disclosures.

“Looking at underlying managers, if you go to countries that don’t yet have that information available, there will be more uncertainty and assumptions and estimates that have to be made on these sorts of disclosures.”

A team of six FMA staff is collating data and will have some early observations to discuss by the end of the month. Moison says in some cases the FMA may contact reporting entities with direct feedback on improvements.

“Also if we have some indication that something is wrong, we want people with 30th of June or September year-ends to take that into account.

“We have a broadly educated and constructive approach. In a lot of cases, we'll tell people where we believe they haven't complied and set some expectations on what we would like to see going forward.

“We might have picked up some technical issue where, for example, an entity forgot to include a link to the climate statements in their annual report. So these are some of the technical requirements or that you have to date a climate statement and they haven't dated it.”

The FMA is aiming to produce a findings report towards the end of November so that entities with a December year-end reporting period can take that feedback into account.

“It will be mainly based on the reports filed from April to August. We want to provide some observations to the market so people can start thinking about where they are in the process for the next round of climate reports.”

He says with most of the requirements becoming mandatory in the second year the FMA’s focus will be monitoring those new disclosures; current and anticipated financial impacts, transition planning and scope 3 GHG emissions.

“So rather than reviewing whole climate statements, we might be more targeted.”

Although some regulators, such as the UK’s Financial Reporting Council, have reviewed climate disclosures made on a voluntary basis, the FMA is the first regulator to look at climate statements required by law.

“We have a whole framework that people have to comply with, and regulatory tools that we can use, for example, to direct people to make changes or if they don't file on time infringe them.

“We talk to other regulators although mandates sit with different regulators in different countries. So it's not necessarily the same structure as New Zealand where it sits with the security regulator. Sometimes it's with a financial reporting regulator or an audit regulator.

“We have close contact with Australia and Singapore, because they're quite far in implementing their regime as well.”