NZ Funds has cut-and-pasted its KiwiSaver offering to create a new unlocked product suite.
The NZ Funds WealthBuilder range is an exact replica of the Auckland boutique’s KiwiSaver products “down to the last basis point of fees”, according to chief executive, Michael Lang.
Lang said the new set of funds, which officially launch on November 25, provide a retirement savings booster option but without the KiwiSaver lock-in limit.
He said research suggests that on average people need to set aside at least 9 per cent of their income each year to maintain their lifestyles in retirement.
“Most KiwiSaver members are just putting in the statutory minimum, which adds up to about 6 per cent,” Lang said. “But there’s no advantage in putting in the extra 3 per cent people need to save in an account that’s locked-in until the age of pension eligibility.”
Like the $240 million plus NZ Funds KiwiSaver scheme, WealthBuilder features three risk-weighted portfolios targeting inflation protection, income and growth, along with three life-cycle products that invest into a mix of the core funds.
As well as the pre-set lifecycle asset allocations, investors can mix-and-match the WealthBuilder inflation, income and growth portfolios to their own specifications.
The WealthBuilder fees range from an estimated all-in 1.12 per cent for the income strategy to 1.65 per cent for the growth portfolio.
Investors would pay the same going direct or through an adviser, with the latter the preferred NZ Funds model.
And in what has been a bumper year for the long-established local wealth management house, Land said the number of adviser relationships with NZ Funds had more than doubled.
He said the group now dealt with about 360 advisers compared to just 155 about 12 months previously.
“About two-thirds of those are RFAs [registered financial advisers] but more than half of those are on track to get level 5 qualifications,” Lang said.
Under the incoming Financial Services Legislation Amendment Act (FSLAA) regime, all advisers – including RFAs and authorised financial advisers (who already operate under higher standards) – must meet minimum educational benchmarks and belong to a Financial Advice Provider (FAP).
FAPs will be the basic legal unit under FSLAA (due to open for transitional licensing on November 25), with NZ Funds planning to offer various options to help advisers into the new regime.
“We will have a FAP-in-a-box solution for advisers who want to operate in their own business,” Lang said. “Or we will support them if the choose to join a larger FAP.”
NZ Funds would also transition its current in-house private wealth advice arm to the FSLAA environment.
Lang said the adviser offers and new product lines such as WealthBuilder were part of NZ Funds’ “foundation” strategy to set it up for growth over the next three to five years.
He said the business was based around three fundamental “limbs”: the value of personal financial advice; a focus on optimising asset allocation; and, using technology to enhance long-term outcomes for clients and advisers.
“We will never be the cheapest on fees but we believe over the long-term people will be much better off with financial advice even after costs,” Lang said.
The group has a number of other changes in the pipeline including a new “profit partnership” program due to take effect next year. According to Lang, the profit partnership arrangement will see advisers more fairly remunerated based on actual services they provide to clients.
“With technology we can ensure that clients are really get the services that advisers should deliver,” he said.
The NZ Funds WealthPlan technology also offered a fully-digital solution for advisers and clients to create, monitor and change their financial plans, Lang said.
Over the last 12 months NZ Funds asset under management has increased by 20 per cent to reach about $1.3 billion. The growth has been spurred in part by the NZ Funds UK pension ‘zero transfer fee’ service launched late last year, which is on the way to about $100 million, Lang said. As at September this year, the NZ Funds UK pension vehicle managed over $45 million.
He said the firm had also engaged Auckland investment governance and researcher, MyFiduciary, to provide and independent view of its investment offerings.
The business has just hired a UK-based pension transfer specialist – one of four new recent appointments. Last week, NZ Funds confirmed to internal promotions to newly-created roles, naming Stephan Clark as chief client officer role while and Geoff Motion as chief operating officer distribution.
Clark was NZ Funds head of risk since 2016 following a string of compliance roles with firms including Goldman Sachs and Kiwi Wealth. Meanwhile, Motion – a longtime NZ Funds principal – will assume responsibility for the firm’s relationships with independent financial advisers. He will also retain his current job as head of the NZ Funds KiwiSaver services team.
In September, long-time NZ Funds principal and head of wealth management, David van Schaardenberg, crossed the road to a similar role with Australasian financial services conglomerate, Findex.