Another KiwiSaver provider is poised to enter the fray this week, bringing the population up to 35 schemes.
To be offered via the Select Wealth brand, part of the Investment Services Group (ISG) family, the new scheme, however, will be issued under the NZX-owned Smartshares managed investment scheme (MIS) licence – a first-of-its-kind ‘hosting’ arrangement in the KiwiSaver market.
The Select scheme will primarily be distributed through financial advisers, according to group chief, Richard O’Brien.
“We’re big believers in the value of financial advice, and we’re of the view that this is becoming increasingly relevant for KiwiSaver as member balances continue to grow,” O’Brien said. “As such, our primary focus for the scheme will be on working with advisers to promote the benefits of financial advice for KiwiSaver members. Select Wealth will be responsible for these relationships with advisers, in very similar fashion to the way the current Select Wealth service operates.”
ISG subsidiary JMIS, now JMI Wealth, bought the Select discretionary investment management service (DIMS) off the ASB-owned Sovereign in 2015. Select operates as a wrap platform, built on MMC Wealth (formerly Aegis) technology, offering advisers a range of pre-fabricated portfolios and/or the ability to construct bespoke strategies from a long list of underlying approved products.
O’Brien said the new KiwiSaver scheme would initially include just conservative, balanced and growth options based on underlying investments selected by JMI Wealth.
“The set of fund managers used will be familiar to current users of the Select Wealth service, and will include names such as Nikko Asset Management, Magellan, Devon Funds, Smartshares and Milford,” he said. “As the scheme grows, we’ve very much of the view that we’ll seek to introduce more flexibility in terms of the fund types and the number of managers members can elect to use.”
The Select KiwiSaver fund charges range from 1.1 to 1.29 per cent plus a $3 monthly membership fee.
According to O’Brien, the KiwiSaver launch was a “significant milestone” for Select Wealth, marking a new phase of growth for the popular platform.
He said the business “has now grown to over $800mn, and we’ve had a lot of adviser demand for a KiwiSaver offering to complement the current Select Wealth service offering”.
“With the investment we’re also making in new digital functionality through Salesforce, we’re confident that Select Wealth is well placed to meet the growing needs of advisers and investors alike,” O’Brien said.
In June this year Debbie Tuddenham, previously head operations for the group, was promoted to the newly created role as head of Select Wealth.
As well as Select and JMI Wealth, ISG houses Devon Funds and Clarity Funds Management.
Select is the second new KiwiSaver provider to launch this year, following hard on the heels of the InvestNow direct-to-consumer scheme, which went live in October. Scheme numbers should tip up to 36 by year-end with the Consilium KiwiSaver in train – although it could miss a 2020 launch date.
The FNZ technology-based Consilium scheme, to be distributed only through advisers, will target higher value KiwiSaver members (with account balances of at least $50,000). Consilium also plans to offer KiwiSaver members a wide investment selection.
As at the end of September, total KiwiSaver funds under management rose above $70 billion, of which just under 70 per cent is controlled by the five largest providers. KiwiSaver scheme numbers peaked about 50 soon after the regime launched in 2007 before falling to low of 29 in 2017.