Kiwi Wealth is to move to daily unit pricing later this year in a “transformational” back-office move that will see the last of the Gareth Morgan legacy administration system switched off.
Melissa Vasta, Kiwi Wealth head of retail and product, said the business would transition to daily pricing in December with an outsourced retail registry provider replacing the current in-house service.
“This is a major transition,” Vasta said. “It will be the most transformational change for the Kiwi Wealth retail business to date, affecting our more than 200,000 investors.”
In 2012 Kiwibank paid about $50 million to purchase the Gareth Morgan Investments (GMI) business, including the-then $1 billion or so KiwiSaver scheme. Ultimately, the GMI business fell under the aegis of Kiwi Wealth, established as separate entity from Kiwibank, that saw assets under management swell to over $6 billion today – mostly in the KiwiSaver scheme.
Kiwi Wealth initially retained the GMI admin system, which carried out most functions in-house with a bespoke non-unitised monthly pricing model (later upgrading to weekly pricing).
However, in 2018 the group appointed BNP Paribas Securities Services NZ to supply fund administration and custody while sticking with the in-house weekly pricing and retail registry.
The Kiwi Wealth retail registry has been out to tender with Trustees Executors, Adminis and MMC likely in the frame – the latter as front-runner, according to industry sources.
Vasta said Kiwi Wealth had yet to formally ink a contract with an outsourced provider as at last week but the firm was aiming to implement the new system by December in line with launching its revised default KiwiSaver fund.
As reported elsewhere this week, the government-owned Kiwi Wealth retained its default status following the latest seven-yearly statutory review of the system.
Kiwi Wealth was first appointed a default provider in the 2014 round that upped the number of catch-all KiwiSaver schemes from the previous five to nine. The government slashed the default scheme population to six in the most recent review, axing five incumbents and adding two new providers, Simplicity and Smartshares, both primarily index investors.
Vasta said the Kiwi Wealth, which generally favours active management, would also adopt a passive investment style (either in-house or outsourced) for the new default fund, which moves from a conservative to balanced risk setting come December.
“We will have daily unit pricing live in December ready for the roll-out of the new default fund,” she said.