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Kiwi Saver Fees-Sam says big companies are ripping you

Sam Stubbs says the biggest Kiwi Saver managers are ripping Kiwis after FMA reveals how much they have been paid by Kiwi Saver scheme providers over the past year.

Friday, October 1, 2021 6:00 AM

Matthew Martin

Earlier this week, the Financial Markets Authority (FMA) Kiwi Saver Annual Report Total assets under management for the year ended March 2021 reached $ 81.6 billion, double the $ 40.8 billion in 2017.

However, in a LinkedIn post, Simplicity Sam Stubbs’ candid managing director said that Kiwi Saver providers’ total commission revenue of $ 650.3 million (up 20.7% from the same period last year) is “pure cream.” I am.

“FMA uses more polite language, but I don’t.

“The biggest Kiwi Saver managers are greedy and haven’t inherited the big benefits yet,” says Stubbs.

“Ironically, many have scaled up by being appointed as the default provider. So how do you rip your customers to reward them?

“New Zealand fees are very high by global standards and managers no longer have small excuses.

“And to discourage dissatisfaction with the need for shareholder returns, the capital required to become a Kiwi Saver manager is virtually zero. Their fees and profits are pure cream.”

Stubbs has some support from FMA’s director of investment management, Paul Gregory, but David Boyle of Mint Asset Management says fees are only part of Kiwi Saver and will drop over time as funds grow. ..

Just yesterday, ANZ announced that it will eliminate the $ 18 annual membership fee from the ANZ KiwiSaver scheme, the ANZ Default KiwiSaver scheme, and the OneAnswer KiwiSaver scheme.

“We also reduced management fees for conservative funds (excluding default funds) and conservative balance funds by 0.22% and 0.15%, respectively,” said Stewart Taylor, managing director of fund management at ANZ.

“As we achieve economies of scale, we regularly review our pricing. This latest change is especially beneficial for low-balanced and newcomers,” Taylor says.

According to Gregory, one of the main focus of this year’s FMA is monetary value, and the rate of increase in total fee income is a function of percentage-based investment management fees that providers take as a reduction in member balances. Indicates that the charges charged are increasing.

But overall, he says, “… KiwiSaver providers don’t convey the value of the money they receive through fees.”

“These active funds still need to be tweaked,” he says.

“The status of the default provider is privileged and remains privileged … and there are many scales towards those new default providers, but not soon.

“This kind of move will appear in the next annual Kiwi Saver report and we expect it to flatten as the industry grows. With our money value guidance, what they charge and how We believe we can see if we are offering the best value, and the precedent is set by other providers on the market. “

According to Gregory, some Kiwi Saver schemes have reduced or changed the structure, resulting in a 4.8% reduction in fixed or administrative fees to approximately $ 80.8 million.

“These charges were only intended to help providers cover the initial costs of Kiwi Saver, so this is appropriate,” says Gregory.

Boyle said commission revenues increased simply because the stock market was booming, and the fees charged by providers were not exceeded.

“As the size of the fund grows, so does the cost, and we need to find a happy medium.

“As an industry, we need to be fairly transparent and our customers can clearly see what the actual charges are.”

tag: David Boyle price FMA Kiwi Saver Paul gregory Sam Stubs

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Kiwi Saver Fees-Sam says big companies are ripping you

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