KiwiSaver

Performance fees have helped to lift the fee revenue claimed by fund managers Milford and Fisher Funds.

Companies Office figures show Milford reported fee revenue of $46.5 million for the year to March.

That is up 21% on the previous year.

Of that, $35.1m was management fees and $11.4m performance fees.

Milford has near $4 billion in retail funds, with more than $800m in its KiwiSaver funds. 

For the same period, Fisher had fee revenue of $69.1m, up 3%.

That was made up of $60.8m in management fees and $3.3m in performance fees, which was a drop compared to the year before.

Carmel and Hugh Fisher, founders of Fisher Funds, were named on this year’s NBR Rich List, with wealth of $55 million.

Fisher Funds is now the country’s fifth-largest fund manager, with more than 255,000 clients and $7 billion under management.

Fisher stepped down from her role as managing director last year.

KiwiSaver firm Booster has made a direct investment of capital into a wine company.

The investment in Awatere River Wine Company is the first injection of KiwiSaver funds into the wine industry.

Awatere River Wine Company founder and winemaker Louis Vavasour said it was a vote of confidence in the buoyant New Zealand wine industry.

The Vavasour family retains principle ownership of Awatere River Wine Company with the Booster Tahi Limited Partnership (Booster’s investment vehicle for its KiwiSaver funds) taking a significant minority stake. The Booster Tahi Limited Partnership will own 100% of Waimea Estates with Vavasour the chief executive of the overarching venture.

The Booster Tahi Limited Partnership was established to help Kiwis grow their businesses and manage their wealth. 

The Booster investment also includes the purchase of additional vineyards in Marlborough and Nelson which will contribute to future company growth and return for investors.

ANZ is launching a new system through which it hopes to hold on to more of its KiwiSaver members.

Ana-Marie Lockyer. ANZ’s general manager of wealth, said the bank was planning to send letters to rwho have signalled their intention to transfer out of its OneAnswer KiwiSaver Scheme.

She said the bank would still process the request within the agreed timeframes – the bank will process all requests within 10 business days of receipt.

“The FMA has previously expressed concern about the amount of switching going on between KiwiSaver schemes and we want to ensure customers are switching for the right reasons,” she said.

“We want to take the opportunity to remind customers of what our scheme has delivered and the benefits of staying with OAKS and ANZ Investments and include a form they can complete if they want to remain in our scheme.

“If the customer has an adviser, the adviser will also receive a notification of the transfer. Some customers may switch schemes without consultation with their adviser, so this gives the adviser the opportunity to get in touch.

“The final letters that will commence being sent next week will also encourage customers to talk to their adviser about this knowing the value they add to the relationship.”

The letter sent to clients will also include a product disclosure statement and an application form for them to complete and return if they wanted to remain with the scheme.

To ensure you have a chance to retain your clients, you are currently receiving a notification from us when your client chooses to transfer their OneAnswer KiwiSaver account to another scheme.

The initiative goes live on July 17.

It is the only one of the big banks employing such a method.

ASB, BNZ, ANZ and Westpac said they did not have any systems to retain KiwiSaver members.

ASB general manager wealth Jonathan Beale said: “As a default provider, we have responsibilities to act on a member’s request within a prompt fashion. This is currently to process any transfer within 10 working days of the new provider confirming acceptance of the transfer. Although this service agreement is limited to default members, we extend this level of service to all ASB KiwiSaver Scheme members,” he said.

“ASB is proud of the service we offer our KiwiSaver Scheme members and we continuously look for ways to improve. We currently have various initiatives underway to increase member engagement with their KiwiSaver account and better assist the individual’s goals.”

KiwiSaver may have played a key part in saving an ailing advice industry, claims one industry commentator. But another says it may give advisers false hope of big money in the future.

Ten years on from the introduction of the scheme, most industry commentators said it had been a positive development for financial advisers.

David Boyle, who is now at the Commission for Financial Capability but was working as head of KiwiSaver distribution at ING when the scheme launched, said his team spent a lot of time upskilling advisers at the beginning.

If the retirement savings scheme had not entered the market when it had, the outlook for advisers could have been quite different, he said.

“Before KiwiSaver managed funds were looking pretty dire. We went through bad times through the credit crunch but then KiwiSaver came on and it saved the managed fund industry. It was a door for advisers to build a customer base to get them started.”

He said there was now a group of advisers who had started up relationships with employers and taken on their employees as clients. They were able to build a good core business from that work, he said.

“A good number of advisers looked at is as a long-term opportunity and a good way to get started.”

He said it was true that most advisers did not make much money from advising on the scheme yet.

But he said as balances grew and more people reached the stage where they wanted to get an income from it, there would be more need for advice. It was a good “door-opener” to introduce people to the concept of contributing small amounts over time to a growing savings pot, he said.

Fred Dodds, chief executive of the IFA, agreed. “I do think KiwiSaver has been good for those advisers who have been prepared to do the work.”

He said his first encounter with KiwiSaver was while working with Tower, which was an early default provider.

He said whether advisers were working in insurance or investment, it made sense to have KiwiSaver as part of the conversation.

“Why on earth would you not have them as a KiwiSaver client? It’s a locked-in financial services product that will live with people for decades. Forget the trail on the money, that might vanish as years go down the track, but it’s one of the main contact points [to check in regularly with clients] how good is that?”

Rod Severn, chief executive of the PAA, agreed KiwiSaver was rewarding to advisers as part of an overall proposition.  

He said every adviser who was capable of offering financial advice on KiwiSaver should be able to do so.

But adviser Liz Koh was less sure. She said a trail commission of 0.2% would not pay much to the advisers who dealt with it, and it required a lot of upfront work to set people up with the right fund.

She said advisers who were hoping to put in hard work now for a payoff in future might be disappointed. Many people opted to leave their money in KiwiSaver when they retired, she said.

“There are some advisers who say ‘take your money out and give it to me to invest’, so they can make fees out of them but I have an ethical problem with that. Some people, especially if their balances are small, are better to leave it in KiwiSaver.”