In a product-dominated world, selling the benefits of an “integrated” KiwiSaver advice model has not been an easy road for Consilium since launching its open platform scheme late in 2020.
As at the end of March this year the Consilium-owned KiwiWRAP reported just 277 members and $36 million under management.
But Consilium chief, Scott Alman, said momentum is starting to build for the slow-burn KiwiSaver scheme as more advisers and members seek greater investment flexibility for ever-increasing account balances.
Since the end of March, KiwiWRAP has seen another 80 or so members join and funds under management kick over the $50 million mark.
And while the growth has been slower than Alman anticipated at the outset, the Consilium scheme does have the distinction of holding the highest average per member account balance of about $140,000.
Uniquely in the KiwiSaver universe, KiwiWRAP sets a $50,000 minimum for entry, which is exclusively via financial advisers rather than the hurly-burly of direct big-brand marketing.
“It will take a bit of time… to change the mentality of thinking of KiwiSaver as a product,” Alman said, rather than an investment strategy that should be considered in the context of an overall financial plan.
“Why treat KiwiSaver any different than your other investments?” he said.
KiwiWRAP likely offers the largest underlying investment menu of all providers in a list spanning managed funds, direct equities and debt securities. Only Craigs Investment Partners provides a similar breadth of choice in its self-select KiwiSaver.
Like Craigs, KiwiWRAP is structured as a superannuation scheme (rather than a multi-rate PIE), which imposes a flat 28 per cent tax rate on members – limiting its appeal somewhat, albeit that all those earning over $48,000 would hit the top 28 per cent rate.
Craigs launched its self-select scheme in 2007 at the birth of KiwiSaver, garnering 7,280 members and just over $500 million by the end of March this year.
By contrast, InvestNow, which trades on offering members wide fund choice (although not direct securities), grew to more than 3,165 members and $145 million in less than two years after launching.
The debut of the Sharesies KiwiSaver – yet to unveil its full direct equities options – this year will also test the demand for the self-select model.
However, Alman said advice will be critical in ensuring KiwiSaver members make good long-term choices.
“KiwiSaver is easily portable but as most members don’t seek advice on switching they are vulnerable to self-harm,” he said.
But KiwiWRAP is also vying for adviser attention in a highly competitive field where upfront and ongoing remuneration deals hold sway.
Alman said, however, that good advice transcends simply “picking the blue one or the red one”.
Under the KiwiWRAP system, Consilium charges a platform administration fee of 0.29 per cent with member portfolio costs varying according to investment choices and advice fees (administered by the scheme but negotiated individually between clients and advisers up to a limit).
While the KiwiWRAP first year wasn’t helped by technical glitches in the underlying FNZ system, Alman said the issues have been resolved.
He said Consilium has also been improving the KiwiSaver platform to “smooth the experience” for advisers and members with better client onboarding, for example.
The group also plans add-on an environmental, social and governance reporting tool.
Alman said integrating KiwiSaver with broader client financial planning also has longer-term payoffs for the value of advice businesses.
Despite the slow uptake for KiwiWRAP to date, he said Consilium can be patient: the wider platform boasts assets under management of $7.1 billion.