KiwiSaver

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.”

Financial advisers play an important role in helping people on lower incomes navigate retirement savings, AMP’s general manager in New Zealand says.

Blair Vernon said KiwiSaver could be improved to better cater for those who were not high earners.

He said he regularly spoke to people earning about $50,000 or less a year, who were facing enough of a financial challenge that it was not feasible to save for retirement. 

He said, while it was easy for the financial services sector to say that it should be possible for everyone to save 3% of their incomes, in some cases that was a significant amount and not the right decision to make.

Vernon said it was worth considering whether those earners should be given the option of saving 1% or 2% of their income, too.

“We need to be realistic about that.”

He said thought should also be given to whether the member tax credit should be reduced for higher-income earners, to allow more of that incentive money to be given to low-income KiwiSaver members.  Each KiwiSaver member can receive up to $521 a year from the Government if they contribute $1042. The Government used to match it dollar-for-dollar.

“The changes made to water down the member tax credit have a much bigger impact on people with that level of earning,” Vernon said.

He said sharing out the incentives in favour of low-income earners would make KiwiSaver more compelling for those earning less and would have an impact on their long-term outcomes.

It would probably be missed less by those earning more, he said.

“If you’re earning more than $2000 a week and you didn’t get that $521 form the Government but you knew it was going to someone on a more moderate income, would that be a tragedy?”

He said there was also a challenge among middle-income earners who could afford to save but chose not to because they prioritised other spending. “They’re making a conscious choice to consumer today veruss looking after tomorrow. Sometimes they’re not thinking all that through.”

That was where advisers could help, he said.

“Advice is code for a bit of coaching. Sometime you need that to get perspective.”

He said advisers could help not just with the technicalities of KiwiSaver but helping people understand what they were doing with their money and what they could do better.

Vernon said financial capability was a sliding scale and some people would be more capable while others were less, but they would all benefit from coaching.  “Advice and the role of advisers is fundamental.”