MAY 26 2018 LISTENER 19
customers being stitched up to take
KiwiSaver products from their main bank,
Matthews points to the emergence offshore
of “open banking” to spur competition.
That’s where individuals can see all their
accounts in one place online, even if they’re
with different banks and financial service
providers.
Open banking would help break down
the tendency for banks to get KiwiSaver
members by default, thanks to their custom-
ers liking to check their KiwiSaver balance
when doing their banking. “That’s not good,
by the way, even though it’s what people
like,” says Matthews of constantly moni-
toring the balance in your KiwiSaver fund.
“If you’re looking at it all the time andseeing it going up and down as the market
fluctuates, it could drive inappropriate
behaviour. The reality is that a lot of Kiwis
don’t have a good level of financial literacy,
so they don’t have a good understanding of
those fluctuations.”THE TREND IS YOUR FRIEND
Sudden changes in investment-market con-
ditions could prompt panicky novices to
change funds if they see the value of their
investments falling.
That’s all the more likely because, for 10
of the 11 years since the KiwiSaver scheme
was implemented, global financial markets
have been an almost one-way bet, with only
occasional blips like the one in February.
Brian Gaynor, a founder at one of New
Zealand’s best-performing KiwiSaver pro-
viders, Milford Asset Management, readily
concedes that, “Obviously, after 10 years,
you’re getting closer to the end of it. Noth-
ing stays good forever.”
But he says he’s “cautiously optimistic,
and I mean cautious more than optimistic”,
about the investment outlook for the next
couple of years.
“We watch it very carefully and the signs
are still pretty okay,” he says. The world
economy is growing quite strongly and
worldwide company profitability is “as good
as it’s been for a long time”.“We know a lot about our
customers’ lives through
seeing everything
that goes through
their bank account.”
Liked by under-
40s: Sharesies’
Sonya Williams.
Launched in March last year, it has $
million in funds under management for
some 6500 investors and allows investors
to switch money between more than 80
local and global ETFs.
Regular investors can put in as little as
$50 at a time, and the minimum one-off
investment is $250.
“So, for $50, someone can access
funds that would normally cost $10,000,
$50,000 or $100,000 as a retail investor
to get into,” says Heath. He takes as an
example the funds offered by global fund
manager Vanguard, which KiwiSaver
provider Simplicity uses because of its
low fees.
“It charges a 20-basis point [0.2%]
management fee. But if you fronted
up to Vanguard in person, you’d have
to come with half a million dollars to
get into that fund.”
Heath expects more competitors
to emerge, but it won’t be overnight.
Most traditional funds management
businesses don’t know how to be
retailers, and the compliance costs of
offering such products are substantial.
InvestNow manages that because it’s
a subsidiary of the forgettably named
and invisible wholesale funds manage-
ment firm Implemented Investment
Solutions, which already had the
necessary regulatory and back-office
systems in place.
“Those compliance costs are a big
barrier to entry,” says Heath.For $50, someone can
access funds that would
normally cost $10,000,
$50,000 or $100,000.