Kiwi Wealth has dropped the act, confirming Rhiannon McKinnon in the lead role last week just as the $9.3 billion manager cued-up its new default KiwiSaver scheme for release.
Celebrated in the same press statement, the two events are likely related: McKinnon was named ‘acting’ Kiwi Wealth chief executive this February, amid a frantic effort behind the scenes to bring the government-owned KiwiSaver scheme up to spec for the imminent new default provider regime.
First appointed as a default scheme in the 2014 round, Kiwi Wealth made it through the latest audition process this May along with five other providers.
But winner’s relief also came with some performance anxiety at Kiwi Wealth, which faced a significant technical challenge to re-engineer its back-office to meet the incoming default standards – in particular, upgrading from weekly to daily unit-pricing.
“I was appointed as acting CEO in February and by May we knew there was a December 1 deadline to get ready,” McKinnon said.
While Kiwi Wealth had been on a long journey to replace the outdated wiring installed during the original Gareth Morgan Investments (GMI) era, the default appointment added some urgency to the project.
Ultimately, Kiwi Wealth hired MMC for the job with specialist consultancy firm, Mosaic Financial Services Infrastructure, advising on the transition.
In a statement, Kiwi Wealth chief technology officer, Craig Ward, said: “Our recent transformation outsourcing our KiwiSaver registry, unit pricing and fund accounting functions – in partnership with MMC and Mosaic – has allowed us to significantly simplify the administrative aspects of the business and focus more on customer outcomes.
“Making significant changes to operating models is always challenging, even more so when faced with the pressure of the enhanced default requirements coming into effect in December 2021. This challenge was successfully overcome thanks to having in-house expertise, and an enthusiasm to make Kiwi Wealth a better company.”
According to McKinnon, completing the back-office re-do in time for the default switch-over date was an “enormous achievement”.
On December 1, she said Kiwi Wealth transferred about $110 million into the new default balanced fund from its existing conservative option: another $330 million plus should be flowing in over the next couple of months as the scheme receives its share of members reallocated from the five fired providers.
As reported last week, the new Kiwi Wealth default balanced fund has a distinctly passive flavour that contrasts with the generally active investment style of the group.
McKinnon said Kiwi Wealth would continue to focus on active management across most of its portfolios.
“We’ve had great performance and we’ve got a talented investment team,” she said.
However, Kiwi Wealth has seen the exodus of several senior investment staff this year including CIO, Simon O’Grady, and head of wholesale, Peter Verhaart.
O’Grady’s interim replacement and GMI veteran, Susan Easton, also resigned in October, remaining in an acting capacity until recently.
Steffan Berridge, Kiwi Wealth quantitative and responsible investments strategist, stepped into the CIO role last week – again in acting status for now.
“We are recruiting for a permanent CIO but the process has been complicated by the COVID lockdowns,” McKinnon said.
The Wellington-headquartered business has seen the departure of other senior staff, too, since she took over the top job from Ian Burns earlier this year, including head of retail, Melissa Vasta, and head of wholesale sales, Matthew Laing.
Over the last month or two, Kiwi Wealth has also discarded a couple of extraneous business units – life insurance and US stock-trading platform, Hatch – as part of its ‘simplification’ process.
The group netted about $45 million after selling the life insurance arm to health insurer, nib, in October, and probably a similar figure for Hatch (sold to FNZ).
Hatch formally ended its brief, but stellar, run at Kiwi Wealth last week, taking approximately 50 staff around the corner from Featherston Street to the FNZ HQ in Brandon Street.
“Kiwi Wealth has about 200 staff now,” McKinnon said.
She said the wealth manager would concentrate on its three main business lines: the $6.5 billion KiwiSaver scheme; the Private Portfolio Service for direct clients; and, the nascent retail managed funds offering (currently, sitting at $250 million).
After a 21-year run under various casts, the Kiwi Wealth show goes on.