MAY 26 2018 LISTENER 17
LINDSAY KEATS; CHRIS PARKERKEEPING TRACK
If you’ve lost the thread by now, don’t
be ashamed: you’re not alone. Confusion
over the blizzard of fee and performance
measures is one of the driving forces behind
the Financial Markets Authority’s require-
ment for simpler disclosure to individual
account-holders.
Starting this year, the annual accountsummary that every KiwiSaver member
must receive will be required to include a
dollar figure showing the total fees their pro-
vider charged, displayed in a way that lets
them see how much those fees represent as
a proportion of their funds’ growth.
“In a long-term retirement planningproduct like KiwiSaver, making good deci-
sions early on makes a massive difference
to what you get at the end,” says FMA
chief executive Rob Everett, whose job is to
chivvy KiwiSaver providers into providing
clear information to New Zealanders with
limited understanding of their investment.
“Lots of people [in KiwiSaver schemes]don’t feel like or really regard themselves as
investors, and they’re not engaged. Some-
times, in a regulator’s world, you can get
obsessed with driving into some spaces
where in reality there are very few inves-
tors, and they’re all ultra-high net worth
and probably all capable of getting advice
and looking after themselves.
“KiwiSaver is where our mandate hitsthe mass market.” It is “critical because it
reaches your average New Zealander”.
Which is all very well, except for onething: everyone, including Everett, acknowl-
edges that fees are not the only, or even the
most important, factor to consider when
it comes to choosing the right KiwiSaver
scheme.
“I think it’s a great first step, providing
dollar figures for fees on annual member
statements, but it’s only a first step,” says
Bishop. KiwiWealth already publishessuch figures monthly. “A lot of people in
KiwiSaver have never really had investments
before and wealth feels very exclusionary to
them. ‘Wealth is for the wealthy’ is some-
thing we hear a lot,” he says. Not only is the
“archetypal financial adviser in a pin-striped
suit with a briefcase” an unapproachable
alien, but “some people don’t even know
what questions to ask.”
To deal with that, KiwiWealth this week
became the first KiwiSaver provider to be
granted an exemption by the FMA allowing
it to deliver so-called “robo-advice” – per-
sonalised investment advice generated by
computer – rather than via a human being,
as the law requires.
Others will quickly follow, includingglobal funds manager Nikko Asset Manage-
ment, which became the latest entrant into
the KiwiSaver market last month, offering a
no-management-fee deal until March next
year.
The rise of robo-advice represents a new
way for people with limited financial lit-
eracy or a preference for Google over a warm
body to “start to get a sense of how investing
differs from saving and understanding terms
that mean nothing to them”, says Bishop.
The FMA’s next most likely move will be
to require KiwiSaver funds to project the
future value of an individual’s fund when
they reach retirement, based on their cur-
rent balance and the type of fund they’ve
chosen to be in.
“It was due to be coming in at the same
time as the dollar fees but has been pushed
back a year,” says Bishop.
The rise of “big data” and artificial intel-
ligence is a major factor in this process.
Says the ANZ Bank’s chief executive,
David Hisco: “We know a lot about our cus-
tomers’ own lives through seeing everything
that goes through their bank account. We
are now harnessing the power of that data
to give information back to those customers,
saying, ‘Actually, now that we can analyse
the data in real time and really get some
insights into it, we can see that there is a
better product for you’, for example.”
If that all sounds a bit too much like“‘Wealth is for the
wealthy’ is something
we hear a lot.”
Understanding your investment: from left, Massey University business school’s Claire Matthews,
KiwiWealth’s Joe Bishop, AMP’s Grant Hassell.