The new discretionary investment service (DIMS) offered by SBS-owned wealth arm Funds Administration NZ (FANZ) has been doing brisk business since inception, according to executive director, Graham Duston.
Duston said the Synergy Investment Programme, a DIMS joint venture operation with financial advisory services firm Consilium, has pulled in over $1 million each week following its official launch this October.
“It’s only early days but we’re delighted with the uptake,” he said.
Synergy offers nine portfolios which range in allocation to growth assets from 20 per cent to 98 per cent with US-based passive-style manager Dimensional Fund Advisors taking on the majority of background investment duties.
As well as Dimensional, Synergy includes two BlackRock index funds and the NZX SmartFonz exchange-traded fund. Harbour Asset Management and AMP Capital share the NZ fixed income responsibilities.
“When deciding which investments to include in your portfolio, FANZ will rely upon the research undertaken by Consilium,” the Synergy disclosure statement says.
Duston said the Synergy investment proposition sits well under the ‘smart beta’ umbrella, with active strategies are packaged up in index formats.
“The most recent surveys in the US show that a lot of the money flowing into exchange-traded funds is not going into cap-weighted funds but into smart beta products,” he said. “I can see that the active management space could one day be split into ‘index unaware’ managers – who can take concentrated positions – and ‘smart beta’ products.”
While Synergy offers scaled pricing, a portfolio of up to $500,000 would set investors back about 2 per cent per annum, comprising: a 55 basis points admin fee; up to 1 per cent adviser fee; and, underlying investment management fees ranging from 11-60 basis points.
Advisers can also charge a one-off “implementation fee of up to 2.5 per cent of the total amount invested”, the Synergy disclosure document says.
“Under the DIMS rules there is full disclosure,” Duston said. “Investors get a much more transparent offering. They can see exactly what its costs.”
He said Synergy has also been designed with adviser compliance and work-flow practices in mind.
“One of the interesting aspects of Synergy is that it has made the ‘fulfillment process’ much easier for advisers,” Duston said.
He said “leveraging off the technology” to integrate adviser tasks with the investment system has sped up the client “onboarding” process.
As well as Consilium-affiliated advisers and those in the FANZ/SBS network, Duston said Synergy was available for other advisory firms with a number of talks currently underway
The Synergy adviser software component is an upgraded version of NZ-based financial planning system, Omnimax. FNZ Custodians provides custody services to the Synergy portfolios.