Trail commissions could soon be at the end of the road in NZ despite the government shying away from an outright ban, according to Nikko Asset Management NZ chief, George Carter.
Carter said while the incoming financial adviser law and mooted conduct regulations fall short of banning commissions, NZ would ultimately follow global trends toward less-conflicted adviser remuneration models.
“There’s still a push to remove trails and other adviser commissions in NZ – it’s just going to be at a slower pace than many thought,” he said.
Last month the Ministry of Business, Innovation and Employment (MBIE) argued against a commission ban in its options paper developed in the wake of the recent regulatory conduct review of NZ banks and insurers.
“A ban on commissions would be likely to make financial advice more expensive and difficult to obtain for the average consumer, as it would probably require consumers to pay upfront fees to obtain advice,” the MBIE paper says.
Carter said in the long run the industry would have to develop better remuneration models rather than accept that conflicted advice is better than nothing.
Nikko, meanwhile, was looking to grow in both the advised and direct retail markets, he said, without compromising its core institutional client base.
Last week Nikko hired a new business development manager, Sam Belton, to support those growth ambitions. Belton, previously with Auckland-based alternatives manager NZAM, will work alongside Sam Bryden, who joined Nikko last year from Aegis as senior relationship manager.
Belton would focus more on the institutional market while Bryden played to his retail strengths but the pair would have “overlapping” duties across both sectors, Carter said.
Nikko NZ has almost $6 billion under management, most of which is sourced from institutional and wholesale investors. In a tilt at the direct retail market, the group launched a KiwiSaver scheme last year followed by the release of the complementary ‘GoalsGetter’ robo-advice service this March.
According to Carter, GoalsGetter has attracted a reasonable number of users since launch but they were “looking rather transacting”.
“Moving a $50,000 KiwiSaver account is rightly a big deal for most people and they need to know it is going to a competent provider,” he said.
Nikko was finding its way in engaging with retail investors, Carter said.
“We probably still communicate in an institutional way,” he said. “We need to find better ways to talk to individual investors and build our brand awareness.”
The Nikko KiwiSaver scheme has garnered about $8 million and under 80 members since launch.
However, Carter said total Nikko funds under management has grown steadily to tip above $5.9 billion.
Outside the core investment team, which has remained mainly stable for several years, Nikko has seen some staff changes of late. As well as Bryden and Belton, Nikko named Simon Haines as legal counsel in March to replace Hayley Cassidy, who moved to a similar role at BNZ.
Nikko is on the look-out, too, for a new risk and compliance operations manager following the recent resignation of incumbent, Meena Singh, who heads to Heritage Trustees.
The Auckland-based manager is also moving offices over the next couple of weeks, rising up from its long-time HQ at floor nine in Vero Centre to the 17th level of the same Shortland St building.
Nikko’s floor nine days formally end on May 24 with the new level 17 era kicking off on May 27.