Kiwi Wealth has outsourced most of its remaining in-house-managed administration duties to MMC ahead of moving to the new default KiwiSaver arrangements later this year.
In a deal confirmed today (September 20), MMC will take over registry, unit pricing and fund accounting for the $6 billion plus Kiwi Wealth KiwiSaver scheme – services it already supplies to the government-owned group’s managed fund products.
After winning reappointment as a default KiwiSaver provider in May, Kiwi Wealth announced plans to shift the scheme to daily unit pricing (currently valued on a weekly schedule) – understood to be a prerequisite for default status.
Post-implementation of the new KiwiSaver back-office, the MMC systems will see almost the last vestiges of the bespoke Gareth Morgan-built internal fund administration operations disappear. Kiwibank bought the Gareth Morgan investment business (comprising the KiwiSaver scheme, superannuation fund and private wealth) in 2012 for about $50 million, inheriting an admin system that eschewed unit-pricing with assets valued at first on a monthly basis.
“Once the KiwiSaver transition is completed, it is envisaged that Kiwi Wealth’s remaining products, such as its Private Portfolio Service, will follow,” MMC says in a release. “MMC’s acquisition of Aegis in December 2019 means it can offer a holistic investment administration solution that spans both fund and wealth administration services.”
MMC has administered the Kiwi Wealth retail managed funds since the products launced in 2018. Kiwi Wealth also began a major back-office overhaul in the same year, naming BNP Paribas Securities Services as custodian.
Craig Ward, Kiwi Wealth chief technology officer, said in the statement that bringing the group’s KiwiSaver into line with its managed funds would bring “operating synergies, agility and reduced operational risk”.
“We are also excited about MMC’s vision and technology roadmap,” Ward said. “Through outsourcing our investment administration to a trusted partner, our investment and operational teams will be freed up to focus on what we do best; creating better financial futures for Kiwi by helping people get informed about how they can grow their wealth.”
Kiwi Wealth KiwiSaver would benefit from the full MMC registry and fund administration services, the release says, as well as the firm’s set of APIs (application programming interface) designed to speed up transfers and enhance investor engagement.
Vedran Babic, MMC chief, said in the statement: “We look forward to continuing to work with the team at Kiwi Wealth to deliver economies of scale and innovation while also shaping best practice experiences to enhance processes and reduce operational risk.”
The Kiwi Wealth win follows a similar service expansion agreement inked between BNZ and MMC in May this year. Last week BNZ also announced further fee reductions on its KiwiSaver and YouWealth retail managed funds. BNZ KiwiSaver fund fees dropped from between 0.5-0.58 per cent to a flat 0.45 per cent (except the cash option that held at 0.3 per cent) while the bank’s new default balanced fund will cost 0.35 per cent once it launches on December 1.
In a statement, BNZ says the YouWealth changes are “particularly significant, with a fee reduction of more than 40 per cent”.
Along with the fee cuts, BNZ also introduced a raft of underlying manager changes.