KiwiSaver

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.

 

Advisers can use new behavioural research to glean tips on how to drive new connections with clients and deepen existing ones, the Financial Markets Authority says.

It has released the results of the second phase of its KiwiSaver trial, run in conjunction with the Ministry of Business, Innovation and Employment and ANZ.

It focused on getting action from KiwiSaver members who were turning 56 and in the ANZ Lifetimes KiwiSaver fund.

The aim was to see if behavioural prompts would make them more likely to take financial advice, make an active choice and which fund they were in, or increase their contributions.

The trial had two phases, from June to October 2017 and January to July 2018.

The second phase found that a revised version of a letter sent in the first trial made members more likely to use online tools – but still no one contacted the advice service.

Follow-up phone calls were more successful, encouraging members to talk to an adviser.

Scott McMurray, FMA acting director of external communications and investor capability said there were clear messages for financial advisers from the research.

"A few simple things can make a reasonable difference."

While many AFAs saw KiwiSaver as a challenge, there was a big opportunity that would increase with time.

Making it easy for people to access information and advice would make them more likely to engage, he said.

If they could click on an emailed link they were more likely to follow through than if they were required to take part in a more complicated process.

But he said something as simple as picking up the phone at the right time in a client's life could help.

People seemed more open to advice conversations around significant milestone birthdays.

McMurray said a theme from the research was that people felt they lacked the time to talk to an adviser, they worried they would not be confident in the conversation, and were not sure of the value that would be offered.

But those who did get financial advice were much more confident about their financial prospects and had better outcomes.

McMurray said advisers needed to clearly demonstrate the value they could bring.

There would always be demand for advice, he said.

The Tax Working Group’s recommended tweaks to KiwiSaver are proof that any capital gains tax shouldn’t touch shares, retirement policy researchers say.

The group released its final report last week, recommending a broad capital gains tax across all investment assets, including shares and business IP.

It would mean fund managers would have to apply a capital gains tax to Australasian shares bought and sold by their funds.

The group tried to offset the impact of that by making KiwiSaver more appealing to low-income people – suggesting a refund of the employer contribution tax credit for low-income earners, a reduction in the two lowest KiwiSaver PIE rates and increasing the rate at which the $520 member tax credit is earnt.

But Susan St John, director of the Retirement Policy Research Centre, said the group  should not recommend tinkering with retirement savings policies to solve the problems a CGT might create.

She said it indicated that there were reasons to doubt the wisdom of any CGT regime that included shares.

St John said there were issues with all the suggestions, but the worst was the tax rate adjustments for the KiwiSaver PIE rates.

It would be a great pity to introduce these selective tax incentives with no analysis as to their impact or effect. One obvious problem is that to constrain the lower PIE rates to KiwiSaver alone would mean that people would potentially have two PIE rates. There would be inevitable pressure to extend the favourable treatment to all PIE schemes which would be very expensive and compound the inequity between PIE and non-PIE saving.

“None of these suggestions has been analysed for its distributional or gender effects. Retirement income policy should be left to the experts in retirement income policy,” said Claire Dale, research fellow at the centre.