KiwiSaver

NZ Funds announced today that its top rated KiwiSaver Scheme received an allocation of Lyft shares which listed on the Nasdaq on Friday 29 March 2019 and traded at a 21% premium to its issue price.

NZ Funds is thrilled to announce that investors in our KiwiSaver Scheme ¹, Superannuation Scheme and certain Managed Portfolio Service growth orientated portfolios received an allocation to Lyft at the issue price. 

NZ Funds believes that over the next ten years car ownership and transport will undergo a structural change because of transportation-as-a-service and that this may leave Uber, Didi and Lyft as three of the most valuable companies on the planet.

“If we told our clients twenty years ago that newspaper and television stations would become almost worthless, there would be a digital form of the yellow pages (Google) and that the company that enables people to trade photos of their grandchildren would be one of the most valuable in the world (Facebook), no one would have believed you” says Michael Lang, NZ Funds’ CEO.

“We think transport-as-a-service is a similar idea. Lyft started as a way for college students to share rides, while Uber was designed to enable people to rent an expensive “black car” and driver for a night. But the idea has now gone well beyond that. Last year in New Zealand alone, Uber completed 83 million transport kilometers, equivalent to travelling to the moon and back 108 times.” 

“When you factor in that the cost of car ownership, insurance, parking, fuel, environmental harm and congestion are all rising while the cost of transport-as-a-service is falling, you get a very profitable formula. We think it won’t be too long before families and individuals living in cities question why they need to pay so much to own two or three cars, especially as the average car is only used for around one hour a day, or 4% of the time.”

NZ Funds was able to research the ride share theme and secure shares in the Lyft IPO (which was significantly oversubscribed making it unavailable to many other investors) because of NZ Funds’ long-standing relationship with New York-based hedge fund billionaire, John Paulson.

“Twenty years ago, NZ Funds decided that despite having an award-winning track record in New Zealand equities ², we would build an expertise in global financial markets because we believed that the most reliable way to build and retain wealth over the long term was to invest both locally and internationally. Lyft is a great example of how our global expertise is benefiting our New Zealand clients twenty years later” Lang says.

NZ Funds is one of New Zealand’s longest-standing wealth management specialists, with a 30-year investment track record. NZ Funds works with over 100 independent financial advisers throughout New Zealand from seven nationwide locations. It offers advisers and clients market-leading services in KiwiSaver, UK Pension transfer, cash management and cashflow planned retirement portfolios. Independent financial advisers who work with NZ Funds recently gave NZ Funds a net promoter score of +48. NZ Funds is dedicated to helping New Zealanders make better financial decisions and leaving the world a better place.

 

1 – Top rated by Commission for Financial Capability for service on website Sorted with score of 99%.
2 – FundSource ranked NZ Funds, New Zealand Equity Income Trust top performing New Zealand equity manager 1998, 1999 and 2000.
 

Is regulated financial advice of value?

In 1989, to keep me out of trouble, my parents sent me to school in Berlin. To their horror, shortly after I arrived, the Berlin Wall fell. One of my more vivid memories is of visiting my first East German supermarket with only one brand of anything on the shelf. One brand of baked beans, one brand of soap, no shampoo.

One of the great things about a free market, is choice.

The choice of organic beans, budget beans, New Zealand beans or imported beans. Of course no one wants to eat poisoned beans, or expired beans, so rules and regulation are essential. The system breaks down when the choice and preferences of any one group are imposed on many.

Many New Zealanders do not realise that they have a choice between two fundamentally different types of KiwiSaver schemes: those that come with advice and those that do not. In general, those that provide more charge more and those that provide less, well, charge less.

Who can be an adviser?

Anyone can call themselves an adviser, but when it comes to giving KiwiSaver advice you must be either a Registered Financial Adviser (RFA) or an Authorised Financial Adviser (AFA). Both require training and are subject to regulatory oversight. RFAs may give class advice, akin to general information about a product, while AFAs are able to take a client’s personal circumstances into account and customise their recommendations.

What constitutes advice?

At one end of the spectrum advice helps educate investors about the benefits of KiwiSaver, such as how to access the annual member tax credit of $521 or how to take a contribution holiday. All schemes provide this information, but how it is delivered varies widely from scheme to scheme.

Moving along the advice spectrum at one end, is advice from RFAs which can help match clients with an investment which is appropriate to their age and stage. At the other end, AFAs alone are able to help clients tackle more challenging questions such as: What are the options for my retirement? How much of that will be met through home equity and how much through KiwiSaver and what contribution rate is therefore required?

What is the value of advice?

Unfortunately, due to the relatively late adoption of a universal retirement savings scheme, research on the benefits of advice in New Zealand is scarce. However, in more mature markets such as the United States there is a wealth of knowledge based on over a generation of experience in saving for retirement.

These studies have found, amongst other things, that unadvised clients are likely to be overinvested in a single asset (undiversified) or not invested in growth assets at all (non-participating) (Calvet; Campbell and Sodini, 2007).

Advised clients, on the other hand, earn higher returns after fees mainly because their asset allocation is better over the investment lifetime (Foerster, Linnainmaa, Melzer, Previtero, 2014).

As a consequence, research shows financially planned clients accumulate nearly 250% more retirement savings than those without a financial plan (“The Future of Retirement” HSBC 2011). Little wonder then that a survey in 2014 by IRI, which was also written up in Forbes Magazine on 28 August 2014, noted that baby boomers with a financial adviser are twice as likely to be confident about their retirement than those without an adviser.

How are advisers remunerated?

10 of the 27 KiwiSaver schemes in New Zealand (37%), are structured for advisers to be able to work with scheme members, either through an upfront planning payment, or through an annual payment, or both.

In most cases the cost of advice is funded by the manager out of its management revenues. Through facilitating advice to accompany their product, these schemes offer a fundamentally different service.

There is of course no value in clients paying for something they do not want, or worse, want but do not receive. Unfortunately there are examples of both in our small market. It would however be helpful for both the Commission for Financial Capability and FMA to distinguish between “advised” and “non-advised” schemes when categorising the options available for New Zealanders in online tools like Sorted and the “KiwiSaver Tracker”.

KiwiSaver provider AMP says its latest marketing campaign has encouraged more than 100,000 customers in its default fund to make an active choice about their investments.

The Is it Me campaign has reached 86% of its goal for AMP customer switches.

“By switching our customers into a potentially higher returning fund, we can make their money work harder for them,” says AMP general manager, product and marketing, Jeff Ruscoe.

“While we wanted to directly speak to AMP customers in the AMP default fund, we also wanted to encourage all New Zealanders to look at their KiwiSaver accounts to make sure they’re making the right choice for them.”

AMP has more than 224,000 members in its KiwiSaver funds.

The campaign addresses people via radio, outdoor and digital ads with questions such as “650 people in Auckland Central could be missing out, are you one of them? Visit isitme.co.nz to find out”, referring to the missing out on potentially higher returns in a more active fund.

Those people that confirm they are AMP customers are then redirected to an online form at amp.co.nz, enabling them to find out if they are in the AMP default fund, get a recommendation and make the switch.

No elements of the campaign are AMP-branded, which Ruscoe said led thousands of people to look online, no matter their provider, to discover if they were missing out.

Kiwi Wealth is reducing its annual management fee for its conservative KiwiSaver fund from 1% to 0.83%.

The move is one of several changes to Kiwi Wealth’s fee structure for its KiwiSaver cash, conservative, balanced and growth funds. 

The fee reductions will result in estimated cumulative savings of approximately $2.5 million per year for the majority of Kiwi Wealth’s KiwiSaver Scheme members.

Joe Bishop, Kiwi Wealth general manager customer, product and innovation, said it was the right thing to do.

“The fees charged for our conservative fund hadn’t changed since Gareth Morgan Investments was originally acquired in 2012.  With sufficient scale and with greater efficiencies, the time was right to reduce our fees.

“In addition to a good rate of return, our members get to enjoy the benefits of the Kiwi Wealth KiwiSaver Scheme, which include their money being responsibly invested, access to quality financial advice and our industry-leading retirement incoming planning tools.

“We will be assessing the fee structure for every fund, every year.  Our promise to our members is that we will only charge a fair fee for managing their money and maximising potential returns.”

Fees overall have also been reduced for Kiwi Wealth’s growth, balanced and conservative funds by 0.02, 0.06 and 0.18 percentage points respectively.  The annual minimum fee of $50 has been reduced to $40 across all KiwiSaver funds managed by Kiwi Wealth.