Fast-growing and youthful advisory firm, Aurora Financial Group, has yet to register many concerns from KiwiSaver clients in the wake of a regulatory knuckle-rap, according to founder, Simon Rolland.
Rolland said just one KiwiSaver client had contacted the business following the Financial Markets Authority (FMA) ‘censure’ last week over poor disclosure practices.
“We had one call from a client who wanted to make sure his money hadn’t disappeared,” he said.
However, Rolland said the FMA warning for “misleading existing and potential clients about KiwiSaver returns” was a wake-up call to closely monitor compliance details.
“We could’ve made the disclosure clearer,” he said.
According to the FMA, Aurora did not adequately disclose that cited investment returns used in more than 4,000 one-on-one advice sessions between September 2021 and May 2022 referred to the historical performance of underlying funds rather than the KiwiSaver versions.
The Aurora scheme was licensed in July 2021 and went live a month or so later in a flying start: of the 4,051 clients presented with the KiwiSaver sales pitch over September 2021 to May the following year more than 60 per cent (2,474) converted.
Ditching the FMA-censured fund returns data last May does not appear to have slowed the Aurora KiwiSaver trajectory.
As reported previously, Aurora has seen the fastest from-scratch growth of any start-up KiwiSaver, hitting $100 million and more than 5,000 members as at the end of last year.
In a formal statement, Aurora took the FMA warning on the chin, owning up to “not being clearer that the genuine historical returns in the written Statement of Advice (SOA) were achieved by the underlying funds and for not updating the return information in a timelier manner”.
However, the regulator later took exception to Aurora comments that the now-discarded return information had not “impacted any of our clients”.
The FMA argued that the quoted fund returns – regardless of their accuracy – may have swayed clients to join the Aurora KiwiSaver, creating a “significant element of opportunity cost because members cannot invest in more than one scheme”.
Aurora KiwiSaver investors “would have been impacted by what they chose, and what they therefore did not choose, potentially over long periods”, the regulator said in a statement.
Despite the infraction, the FMA has not set down any action plan or fine for Aurora.
And the group is poised to move to a multi-manager model for its now $135 million KiwiSaver scheme, Rolland said.
“We’re looking at making some changes in a couple of months now we have the scale,” he said.
The scheme, which has appointed the associated Aurora Capital (run by former AMP Capital head of multi-asset, Sean Henaghan) as investment manager, currently uses Mint Asset Management and BlackRock iShares products as underlying funds.
Founded by Rolland in 2016 as a life insurance and later added mortgage advisory operation, Aurora has grown rapidly to become one of the largest financial advice providers in the country.
The group has 76 advisers on its books, according to the Financial Services Providers Register.
“The average age of our advisers is 28 and 37 for our clients,” Rolland said.
Prior to launching its own scheme in 2021, Aurora recommended KiwiSaver products from the likes of Generate and NZ Funds.