While the savings regime opens up a vast potential client base, now surpassing 3.2 million members, the tight legal constraints established at the inception of KiwiSaver in 2007 were never particularly conducive to financial advice.
Historically, advisers have offered bespoke KiwiSaver support to wealthier clients but either turned away lower-balance members or partnered with one of a handful of providers offering product-based remuneration to solve the conundrum.
With regulators increasingly putting pressure on schemes to justify fees, the struggle to provide KiwiSaver advice is potentially only getting harder.
The InvestNow KiwiSaver Scheme solves this dilemma for advisers, offering a wide range of manager choice that can add an additional layer of diversification as well as a transparent fee-charging mechanism.
Launched in 2020, the InvestNow KiwiSaver Scheme provides 38 investment options across 15 leading local and international managers – all in one easy-to-use platform – including diversified, single sector, ethical, active and passive solutions with many of these being unique to the scheme.
Feedback suggests that advisers fully appreciate the value-add service for their clients by unlocking the benefits of manager diversification within the InvestNow KiwiSaver Scheme.
“Advisers have really latched on to the power of “and” says Jason Choy, InvestNow Senior Portfolio Manager. “Their customers can now have investments from multiple managers in their KiwiSaver portfolio – for example Milford and Fisher and Pathfinder. There is no longer the need to have all their eggs in one basket, hoping to have selected the single-best manager for their needs”.
The InvestNow KiwiSaver Scheme also empowers advisers to better-tailor investment strategies based on specific client needs such as adding active or ethical satellite exposures to a core passive portfolio.
Given the broad, and growing, investment choice, financial advisers can adapt to changing client preferences over time within the same InvestNow KiwiSaver Scheme environment – instead of embarking on the administratively laborious, and sometimes risky, effort of changing providers.
The scheme flexibility has proven popular with both advisers and end-investors alike with the InvestNow KiwiSaver Scheme more than doubling in size over the last 12 months alone. Many KiwiSaver member balances are now hitting critical mass as the regime enters year 16, which may increasingly prompt members to seek advice or consider different asset mixes for their growing nest egg.
Importantly, the wide investment choice and flexibility of the InvestNow KiwiSaver Scheme is provided at no extra cost to members.
Unlike other KiwiSaver wrap solutions – which largely incur significant administration and transaction-based costs or require substantial minimum balances to join – InvestNow offers a comprehensive menu of investments at zero additional cost and no account size threshold.
Instead, members simply pay the headline fees of their selected funds – with investment options like the low-cost Foundation Series Funds offering some of the most competitive fees in the market. Additional platform fees can significantly erode returns, particularly for longer- term propositions like KiwiSaver, which highlights why InvestNow has been laser-focused on keeping costs to a minimum.
The InvestNow KiwiSaver Scheme was also designed to be adviser-friendly with a simple and transparent client fee-charging mechanism. Advisers can charge annual KiwiSaver fees of up to 50 basis points, which are negotiated directly with clients and administered by InvestNow to ensure they are tax deductible for clients, administratively simple for advisers, and regulatory-compliant.
The InvestNow KiwiSaver Scheme, too, takes care of all the compliance and disclosure duties, freeing up advisers from regulatory paperwork to spend more time on what they do best – solving their clients’ individual financial problems.
FundRock NZ Ltd is the issuer of the InvestNow KiwiSaver Scheme and Foundation Series Funds. Product Disclosure Statements are available at www.investnow.co.nz
