Mercer is weighing up both “organic and inorganic” growth options in New Zealand with retail partnerships a possibility, according to local chief, Martin Lewington.
Lewington said Mercer NZ, which last week reported funds under management (FUM) above $5 billion for the first time, could follow its Australian counterpart by forming relationships with “complementary” retail businesses.
Last year Mercer Australia landed two important deals in the retail space to provide its investment and admin services to listed robo-advice firm, Decimal, as well as the rebooted Virgin Money superannuation fund.
After securing the Virgin Money contract last May, Mercer managing director and market leader Pacific, said the group had “significantly invested in our business to challenge the traditional role of a superannuation partner”.
“We’re implementing a new registry system, the world’s leading customer relationship management system in salesforce.com and automated sales and marketing tools and analytics,” Walsh said at the time.
Apart from a brief stint as investment provider to the original KiwiBank KiwiSaver scheme, Mercer has had a relatively low profile in the retail market.
However, Lewington said Mercer was open to forming NZ partnerships similar to the Virgin Money Australia deal if an appropriate opportunity arose.
But as well as looking for growth options outside its traditional stomping ground he said the group was solidifying its place in the KiwiSaver and employer super markets.
In a release last week, Mercer said funds under management across all its investment products were up almost 20 per cent over the last 12 months, tipping the business over the $5 billion mark (just a week after Nikko Asset Management NZ reported the same landmark figure).
According to Lewington, net flows contributed about 75 per cent of Mercer’s annual FUM growth with the remainder due to investment performance.
As at the end of March, the Mercer KiwiSaver scheme (which absorbed the now-closed Mercer Super Trust KiwiSaver product last year) reported about $1.4 billion under management – the country’s seventh-largest, according to Plan for Life figures.
Lewington said the KiwiSaver scheme has gradually increased market share over the last few quarters as solid investment performance combined with better member retention.
Mercer has been a default KiwiSaver provider since day one but – like most other default schemes – has struggled to hold on to auto-enrolled members.
“We’re doing a much better job of retaining default members,” he said, with improved member communication and education playing a part.
The group was also “hitting budget” on its Mercer Protect product, which offers KiwiSaver contribution insurance to members, Lewington said.
“Surprisingly, the higher cost [Protect] option is proving to be the most popular,” he said.
Aside from growing its own scheme, Mercer also scored a big win last year as the provider to the newly-launched New Zealand Defence Force (NZDF) KiwiSaver scheme.
Lewington said the NZDF KiwiSaver had already clocked above 1,000 members. As well as providing the architecture for the new KiwiSaver scheme, Mercer took over management for the $340 million NZDF employer super fund (now closed to new members).
Mercer also took on a number of new wholesale clients including the Rotorua Trust and the Alliance Group Superannuation Scheme during the last year.
“We had a bit of purple patch in 2015,” Lewington said. “Of 12 RFPs we won all of them, except two that deferred their decisions.”
Mercer’s single biggest client is the Police Superannuation Scheme, which reported FUM of almost $1.7 billion as at last June.