ASSET Winter 2022

An unusual combination of factors

Shape up or ship our CEO says

How you can meet the regulator's deadlines

unintended consequences with trusts

Contents | ASSET Winter

15

Recession not imminent but risks rising Bevan Graham explains why.

18A cold shower for the valuation-phobic

UP FRONT EDITORIAL

Philip Macalister gives an update on happenings at ASSET and Good Returns

NEWS

The big winners from the Ethical Investment awards; Counting the numbers at FNZ; New Code Committee members revealed – Finally.

PEOPLE

Ignite’s new leader, Former ANZ Investment head jumps to advice, Flint Wealth gets its first CEO. Plus, Obituaries to Brian Gaynor and Roger Moses.

GRTV

Partners Life chief executive Naomi Ballantyne discusses what’s happening in adviser land.

OPINION

Avoiding the unintended consequences of inheritance law changes.

FEATURES 12 PROFILE

Richard Thomas. He might have a lifetime achievement award, but retirement is not on the cards.

20 INSURANCE

A blunt message to advisers.

22 PRACTICE MANAGEMENT

Your guide to meeting new compliance requirements.

24 INSURANCE ADVISER PROFILE

A passion to get to the summit.

REGULARS

26 PRACTICE MANAGEMENT

Russell Hutchinson. Telling the truth on proposal forms.

30 INVESTMENT COMMENTARY

David van Schaaardenburg discusses the importance of style.

32 MORNINGSTAR

The latest fund returns from Morningstar.

Long time between drinks

It’s been a long time between drinks and in this case issues of ASSET Magazine. The whys and wherefores are many and quite varied. Rather than dwell on the past it is more useful to look to the future.

Due to many factors our plan is to produce ASSET on a quarterly basis for the foreseeable future.

While we are scaling back the frequency of the ASSET we have also been putting significant energy into rebuilding Good Returns. The site was built more than 20 years ago and in that time technology has changed.

Instead of fixing up old pieces, the site is getting a total rebuild. While much of this work is behind the scenes and won’t be visible to readers, there will be a new design.

It’s an exciting project and will let us provide even more news and content to financial advisers.

The financial services industry seems to be in an interesting space at the moment.

On the funds management side everyone from managers to investors and advisers are grappling with massively changed markets. Negative returns, rising interest rates, geopolitical issues and of course the regulator.

On the latter point many should be concerned about the Financial Markets Authority’s “Value for Money” report.

There are some good things in it particularly around benchmarks being used by fund managers.

However, its position on fees, especially trail commission paid to advisers offering KiwiSaver should be ringing alarm bells.

Many managers, including Generate, Booster, AMP and NZ Funds have actively worked in this area.

The FMA’s fixation on fees seems to ignore the value of advice. If an adviser ensures a KiwiSaver members is in the correct fund rather than loitering in a default fund, then that has to be a good client outcome which the adviser should be paid for?

In our news section we have a piece on

the winners of this year’s Mindful Money Ethical Investment Awards. Good Returns is proud to be a partner to these awards.

Our next issue will focus on responsible investing. While there is good progress in developing new fund offerings it seems the advice sector is lacking in its growth in this area.

This is despite a growing demand from investors.

One thing we have noticed over the years is that responsible investing stories we run now are far more widely read than, say, five years ago.

It really is time that financial advisers become more active in this area. Clients are demanding changes and the managers are responding by providing a greater offering.

Philip Macalister Publisher

ASSET

Contributors

Subscriptions

Moved offices?

SIFA takes new approach to adviser conference

Adviser association, SIFA, has decided to open up its conference to non-members this year.

Traditionally SIFA ran two conferences annually, but this year it has decided to trial a new format of a two-day conference and to open it up to non-members.

SIFA was established in 1994 and has built its membership around collegiality with members openly sharing deas.

“SIFA has always viewed itself as a ‘society’ where members can freely contact each other to exchange ideas, provide assistance and encouragement in a nonjudgemental environment,” chairman Ross Sheerin says.

“SIFA is quite deliberately not a ‘mass member’ organisation. It’s membership numbers have generally ranged between 45 and 85. Not being large provides scope to get to know other members and makes conferences less formal, less of a crowd event and easier paced.

He says membership has traditionally been drawn from owners or associates in smaller advice practices that are not owned by product providers or who do not manufacture product themselves.

“Members being able to offer impartial financial advice has always been a key tenet.”

Indeed the group’s original name was the Society for Independent Financial Advisers, but changed to SIFA after the Financial Advisers Act included a definition of the word

‘independent’ as it applied to the provision of financial advice.

Sheerin says while the name has changed its mission has not to assist members “to provide the public with impartial financial advice while upholding the highest professional and ethical standards”.

SIFA has been active for many years in being an advocate for the ‘small end of town’ when it comes to forming regulation of the financial advice profession.

In particular, former members Murray Weatherston and Robert Oddy spent countless hours poring over consultation papers, forming and promoting views about what sort of regulatory environment we could sustain while allowing advisers to still be able to run a profitable advisory business at a reasonable cost to clients; plus, meetings with industry participants; meetings with regulators; writing submissions; presenting at select committees and advocating in industry forums.

This year non-members are being given the opportunity to attend a SIFA Conference.

Pathfinder big winner

Pathfinder Asset Management won, for the second year running, the Most Ethical KiwiSaver provider and Best Retail investment provider.

Mindful Money founder Barry Coates says Pathfinder continues to push the boundaries of good practice. “The judges were impressed by the way that ethical/ responsible investment is at the core of Pathfinder’s business model, and investment policies and practices are aligned with that approach.”

“Their positive impact approach includes investment in sustainable themes, private equity, venture capital and support for social enterprises.”

The Best Ethical Financial Adviser went to Peter Lee’s Ethical Investing NZ business with former winner Rodger Spiller of Money Matters being Highly Commended.

Despite not winning the judges praised Spiller and were were “impressed at the way that Money Matters continues to innovate, providing high-quality bespoke

solutions for clients.”

“Rodger Spiller continues to provide thought leadership on financial advice, including a deep exploration of ethical values. His engagement and influence extend far beyond his client base, providing leadership on ethical issues across the financial advice sector.”

With regards to Lee’s business the judges “were impressed by the way that ethical approaches had been used as a basis for their client-centred approach. Ethical Investing Group provides in-depth information to clients accompanied by support to enhance their understanding of ethical and financial choices.”

“There is a high standard of transparency, particularly around fees, so that clients are given full information about costs at the start of engagements.”

The Best New Ethical Fund award was awarded to Devon’s Global Sustainability Fund. This new global equity fund launched into the New Zealand market recently, with a strong track record of

ethical practice. There are a number of welcome features to the fund, such as the inclusion of emerging market investments, strong stewardship systems, and alignment to EU reporting standards.

The Best Overseas Fund award was a new addition to the Mindful Money Awards. The judges were looking for overseas investment funds, actively marketed within New Zealand, which are able to demonstrate the best ethical investment outcomes. The award went to Pengana WHEB Sustainable Impact Fund.

The judges were impressed by the thought leadership that Pengana WHEB has shown over many years. They recognised that the fund looks beyond investments in companies that create positive impact to also seek out companies that can catalyse change. The judges also commended the WHEB fund on its strong analytical approach to engagement and voting, along with excellent communications to financial advisers and clients.

FNZ numbers revealed

Price FNZ paid for Hatch revealed along with funds under administration numbers.

Accounts filed in the Companies Office reveal that investment platform FNZ Holdings (NZ) Ltd paid $40.1 million to acquire Hatch Invest from Kiwi Wealth in November last year.

The deal included $10.5 million of net assets and $29.5 million of goodwill.

Hatch, a direct-to-consumer digital investment platform that gives New Zealanders cheap and easy access to US listed shares and more than 50 ETFs, was launched in 2018 and since then has attracted more than 130,000 investors.

Rather than offering managed funds, Hatch users manage their own investments (in a similar way to

Sharesies and Stake).

When the FNZ acquisition was announced (for an undisclosed price) last year, Hatch said it now had the back-end capability and global reach to upscale its business. For its part, FNZ said the Hatch purchase gave it direct entry into the New Zealand retail market.

FNZ provides backend systems for banks, insurers and asset managers globally. In the notes to its accounts last week, FNZ said it had the resources, appetite and global footprint “to take Hatch to the next level” and would prioritise expansion in the New Zealand market.

For the year ending 31 December 2021, assets under administration increased by $3.94 billion. Net profit for the

year was $0.20 million, slightly down on the previous year’s $0.25million.

FNZ attributes the flat result in part to significant investment in technology.

FNZ was founded in Wellington in the early 2000s.  In 2005 it expanded to the UK, initially partnering with Standard Life Aberdeen and setting up shop in Edinburgh. It became the top technology platform by market share, with clients such as Barclays, Generali, HSBC, Lloyd’s Bank, Mercer and UBS.

On 2018 FNZ was acquired by a joint venture between Generation Investment Management, owned by former US vice president and environment activist Al Gore, and Canadian asset manager CDPQ. The deal was worth US$2.16 billion.

New Code Committee members finally revealed

The financial advice Code Committee, which has been operating in breach of its enabling legislation with insufficient members, now has a full complement of members.

According to Commerce and Affairs Minister David Clark, the appointments were made in mid-April, after the committee had been operating unlawfully for almost a year with less than the statutory minimum number of members. However, the names were only revealed and the code website updated in June, after numerous enquiries from Good

Returns and financial adviser.

The minister is required by law to appoint new members when their number falls below seven. Since July last year, the committee has been operating with only six.

The two new members are Karen Coutts and Erin Jurgeleit.

Coutts is one of two consumer affairs representatives on the committee. She is experienced in iwi and pan-Maori governance with a special interest in Maori economic development. Coutts affiliates to Ngai Tahu and Te Aitanga-a-Mahaki.

Jurgeleit is a product development, risk management and regulatory compliance consultant. She was previously head of insurance product at Next Insurance and was a senior leader in Pay Pal’s product engineering team.

Their terms expire in April 2025.

Clark, however, has another problem on his hands. While the committee now has eight members, the terms of three of them expire at the end of next month. So, to maintain the statutory minimum, Clark has just over a month to find and appoint two new members.

Why rapid advances in medicine and technology are pushing up premiums for life and health cover

Major advances in medical technology and therapeutics over the past 20 years are impacting on life and health insurers, with underwriters struggling to keep pace with the speed of change.

AIA New Zealand chief underwriter, Stephen Potter, says it’s an issue right across the business, from needing to rethink product design and underwriting guidelines to claims management philosophy and pricing.

And because consumers now have access to information and treatment options on an unprecedented level, insurers need to meet community expectations around products and services, Potter said.

“With all that information comes an expectation from people who purchase our products and services that we do more and do better while trying to keep the price relatively stable. That community expectation, and what is demanded of us, is increasing.”

For example, community expectation, along with more advanced treatments, forced AIA to update its definition of a heart attack. The old definition required

a full blockage of the coronary artery, leading to disputes between insurers, policyholders and cardiologists as the insurance definition differed from the medical definition.

“From a product perspective, in an effort to meet community expectations and in an effort to remove what was at the time a lot of disagreement around a doctor telling person he’d had heart attack and the insurer saying it wasn’t severe enough, we’ve altered the definition,” Potter says.

AIA now pays for a partial blockage of the main artery or a full blockage of a minor artery.

“But the law of unintended consequences [means] we’re paying fairly high sums assured in some areas for events that are no longer as severe as they were historically,” Potter says.

“So, the severity of the heart attack is less, the length of time in hospital is less but the financial reward for being there, when trauma in this market [is] funded up to $2 million, has not changed. So, we have this mismatch which is putting enormous pressure on trauma rates right

across the industry.”

Nobody wants to put premiums up, Potter says, “but the pace of change and the unintended consequences of the pace of medical advances have led to these sorts of issues”.

Another bone of contention is PSA screening for prostate cancer. Despite increased testing, mortality has decreased only marginally, Potter says. While men with a level above 4 “probably do need some sort of urological review”, in his view screening should begin no earlier than 50 and stop at 75, although family history and other genetic predispositions need to be considered.

Because an elevated PSA is common, dealing with it poses a big question for underwriters.

For those with trauma cover, and the expectation that a raised PSA could lead to cancer, “maybe we’ve got to exclude prostate cancer from the contract, notwithstanding that there is no formal diagnosis.

“All we’ve got is the elevation which could be something else. A

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Financial Advice NZ appoints professional development boss

Financial Advice New Zealand has created a new role of Professional Development, Standards and Policy Manager.

Leigh Hodgetts has been appointed to the role. She has many years of experience in professional development.

Most recently she was head of compliance and new mortgage dealer

group, Kiwi Advice Network. Prior to that she has held roles with Kepa, Astute, ANZ and the Financial Markets Authority.

"We are excited to have Leigh Hodgetts join the team at Financial Advice NZ," chief executive Katrina Shanks says.

"Leigh brings significant knowledge to the team from her experience at KAN,

Kepa, Astute and the FMA. In addition to this Leigh has been a financial adviser and holds a CFP. Leigh has a passion for professional development, lifting sector standards and ensuring financial advisers provide quality financial advice which can transform New Zealanders financial health, wealth and wellbeing."

Former ANZ Investments MD now heads up advice firm

The former managing director at ANZ Wealth and Private banking is now the chief executive of an Auckland based financial advice group.

Craig Mulholland has been appointed as the chief executive of Apex Advice.

Mulholland has more than 30 years experience in legal and commercial roles in large listed and private companies

Ignite finds replacement for Fred Dodds

The Ignite adviser group has appointed a new chief executive to replace the late Fred Dodds.

Ignite, which is the former TOWER Financial Advisory Group, has appointed David van Schaardenburg as its new chief executive.

He takes over the role after the death of Fred Dodds last year. While Dodds was strong in the distribution space, van Schaaardenburg's background and experience is largely in the investment area.

Ignite chairman James King says the group is now largely made up of investment specialists.

van Schaardenburg previously ran IPAC investment research, now known as FundSource, spent time at NZ Funds Management and more recently was with Findex.

Ignite has around 35 members and operates as a collective with each adviser or firm looking to get their own Financial Advice Provider licence.

across a range of industries in New Zealand and overseas and was most recently he was the managing director of ANZ New Zealand Wealth and Private Bank business.

Apex was founded by Andrew Hay 30 years ago. Currently it is looking to grow its adviser numbers.

Mulholland was at ANZ for 10 years

Flint Wealth unveils its first chief executive

Flint Wealth, which is going headto-head with InvestNow and other platforms, has appointed Angela Vale as its chief executive.

Flint, which is owned by Research IP, Harbour Asset Management and Trustees Executors, launched in January and gives investors access to more than 100 managed funds, along with research and insights.

Vale is described as "a vocal advocate on issues of financial wellbeing and wealth." She has nearly two decades of experience in digital financial services and business innovation. Most recently she served as the chief executive of Footprint, a start-up in the digital estate planning and financial services sector.

Flint Wealth chairman Ryan Bessemer says, “We firmly believe the way investors consume investment services will change dramatically over the coming decade, and traditional service models –currently run by static industry stalwarts – will be significantly disrupted. With her depth and breadth of experience, we know Angela will drive the growth and customer-centric model of Flint Wealth forward.”

She joins Stuart Auld and Jonno O'Grady as part of the on-the-ground New Zealand team at Flint.

and left last June.

Under a new structure, that Mulholland helped create, private bank will in future report to ANZ personal banking and the wealth business is to be renamed Funds Management which is headed by Fiona McKenzie.

JMI Wealth and Select expand

The former chairman of the Lifetime Group’s investment committee joins JMI.

Joe Byrne has joined JMI Wealth's investment advisory team.

Byrne will be based on the Kapiti Coast and service the Wellington region. He was previously a financial adviser and chairman of the Investment Committee for Lifetime Group.

He was also head of investment solutions at Grosvenor Financial Services (now Booster) from December 2012 to May 2014.

JMI Wealth manage more than $2.5 billion of financial assets on behalf of clients, ranging from high net worth individuals and family offices to charities, corporate pension funds and iwi.

Meanwhile, sister company Select Wealth Management has appointed a new business development manager.

Stephen Hill has more than 20 years’ experience working in the financial services industry in both New Zealand and South Africa. Over the last five years in New Zealand, Hill has led workplace and corporate sales functions at AMP and Southern Cross Health Society.

Hill will work alongside senior business development manager Helen Robertson.

Head of Select Wealth Debbie Tuddenham says “he brings with him a strong history of working with financial advisers to help them support their clients and grow their businesses.”

Brian Gaynor

One of the titans of New Zealand's capital markets, Brian Gaynor, passed away last month after a brief illness.

Gaynor co-founded Milford Asset Management which has grown into one of New Zealand’s most successful investment houses, with $15 billion under management.

Among many accolades, Gaynor was twice awarded the NZ Shareholders Association Beacon Award in 2020 and 2006. His distinguished career included roles as a partner and head of

Roger Moses

Roger Moses is remembered as a pioneering financial adviser, but also as a jailed finance company director.

Moses, 80, died at the end of last month.

He was undoubtedly a pioneer of financial advice and worked tirelessly to develop professional standards for the industry.

Fellow industry stalwart Graham Rich said that Moses was one of the founding members of what was called

Obituaries

research at Jarden, chairman of the New Zealand Society of Investment Analysts and chairman of the Asian Securities Analysts Council.

The NZX paid tribute to Gaynor, acknowledging his immense contribution to capital markets over nearly five decades.

“As one of the country’s leading investment analysts, Brian was a titan of New Zealand’s capital markets,” NZX chairman James Miller says.

“Brian would be one of most influential people in the 150-year history of New

the International Association of Financial Planning, the IAFP. Over the years this association has morphed into various entities and now is called Financial Advice New Zealad.

“He spent hundreds, probably thousands of hours, pro bono, helping to establish the financial planning profession,” Rich said.

Mose, Rich says, “was a bloke who was incredibly generous of spirit, time and money.”

Zealand’s capital markets and the NZX.”

“He had an amazing career from equity analyst to entrepreneurial fund manager, while also being a leading business commentator.

“Brian was a highly visible leader with a first-class intellect who was passionate about capital markets and the role they played in the wider economy.

“One of his great strengths was his willingness to foster debate by openly and courageously sharing his views. He had incredible market knowledge, history and insights.”

“Suffice it to say that without Roger Moses and others, quality investment advice and financial planning would not have become established and recognised in anything like the way that it did in the early 1980s.”

Moses became a household name when he was taken to court in 2011 after the company he was a director of, Nathans Finance, collapsed.

Moses was jailed along with a fellow director while a third received a lesser sentence.

Naomi Ballantyne

The lay of the land

Good Returns TV sat down with Naomi Ballantyne, well-known founder of Partners Life, to get her take on what’s happening in adviser land.

Ι I’d like your picture in terms of what you see happening in adviser land. At the moment, it seems there's a lot of advisers leaving the market. And if we look across at Australia, it seems like an industry in turmoil.

It's interesting, isn't it? Lots of unintended consequences, I think, happening in Australia.

I'm pretty sure that when they set out to change commissions, respond to the Trowbridge report and regulate advisers, it wasn't anyone's view that there'd be mass exodus and consumers left with no advice.

But that's what is playing out.

Ι What's your take on things here in New Zealand?

The same thing will play out in New Zealand as well if we if we're not careful.

So far the regulations as they stand haven't done that, which I think is testament to New Zealand actually seeing what's happened in Australia and considering it, but we haven't reached full licensing yet.

The industry certainly threw a lot of money and effort and time into trying to get advisers through the

provisional licensing piece, to at least think about what their options might be, and to consider how they might play in the new world.

However, I think we are starting to see people going, “Thanks for getting me through that. But that was the easy part and the rest of it is too big, too hard.”

Especially if they were already nearing retirement age, they’re thinking, “Maybe now's the time to go.” So there is a concern.

Ι What are you seeing at your own company?

At Partner's Life, we’re not seeing large numbers of our advisers [leave], but we've always represented a younger demographic - largely because we brought a lot of new advisers into the industry through our training programmes. That brings fresh blood.

We also have our fair share of women advisers, who tend to be younger, probably because it’s a company led by a woman, so we haven't really seen much of an exodus.

You know, there's always been people in our industry who retire,

and there's always been people who pass away while they're in the job! That hasn't changed.

You can feel very heightened because of the environment we’re in, but that's been life the whole time I've been in it.

I am concerned about two things when we get to full licensing: you'll see some people exit, but you'll also see a lot more people consolidated within larger FAPs.

From a cost and process point of view, you then have a completely different risk than when you have a whole lot of individual advisers.

‘I am concerned about two things when we get to full licensing: you'll see some people exit, but you'll also see a lot more people consolidated within larger FAPs’

Ι What is that ‘different risk’?

It's concentration risk: the decisions are made at the corporate level, rather than individual advisers making their own decisions in terms of what they want to see.

It's not necessarily a bad thing, but from a product-provider's point of view, it puts leverage in the hands of a few instead of the many. And they might make decisions that say, “Partners Life's not right.” So we lose distribution.

Ι Do you think that the FAPs in the future, and for licensing, will have more sway? More pressure to bear on insurance companies and other providers?

I don't know. We've always had a degree of sway. And without regulations, the pressure comes from what I would maybe consider something of an unreasonable position.

It’s just volume-based – “got to use this volume to leverage stuff out of you” - which I don't think is going to happen with the new regulations.

But you still run the risk that you end up not being on the preferred-

product-providers list.

And then it's not two or three advisers that you potentially are cut out from. in terms of distribution, it's all of them. So that's a different kind of risk.

Ι I guess the FAPs are going to be different to those dealer groups we had in the past though; a lot of those groups aren't around anymore. Is that a plus?

I think it's positive. Not that those groups are just not around, they’re not around because they didn't adapt to the new environment.

So the ones that have morphed have changed their businesses completely, in recognition of what is required of a corporate FAP. The risk and the liabilities that they have now didn't exist in the old dealer-group space.

Ι There's probably not the same old baggage either - “we lost out and are still grumpy about that” and so on. That's going to come into play, isn't it?

That's true. But remuneration is always going to be an issue.

New Zealand is a small market, and New Zealanders don't go

seeking this stuff. So that cost balance is still there: you have to spend a lot, and invest a lot, before you make a dollar.

So those dollars that you make, when you make them, need to be big enough to compensate for that.

That's the risk to them: that the remuneration structure reflects the cost of doing business.

Ι Do you think that most of the advisers who come into full licensing will be sitting within bigger FAPs rather than having the current …….?

I'm not sure if it'll happen exactly when full licensing comes, but I think it will evolve over time.

Ι So that's probably not good. That's what happened in Australia, and now they've gone to unwind it all. Surely that can't be a good outcome?

Yeah, I would never think too much concentration is a good idea.

And New Zealand is a small market, so you have even more concentration than you want in a bigger market. We have more FAPs.

It's going to be interesting to see how it plays out. A

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Many hands make lifetime award

Working hard and surrounding yourself with good people are the keys to Richard Thomas’ success.

BY MATTHEW MARTIN

You could be forgiven for thinking retirement would be on the cards after receiving a lifetime achievement award, but there are some good reasons why Richard Thomas won't be going anywhere for the time being.

The first, and probably most important reason, is that his wife won't let him. Secondly, while he’s been in the insurance and financial services industry for 40 years, he’s only 56. He joined Commercial Union as a fire and general insurer at the age of just 17.

As the 2021 recipient of the Financial Services New Zealand Lifetime Achievement Award, Thomas says he's humbled and honoured to have been recognised by his peers. The judges' comments were glowing. Thomas, they noted, has gone above and beyond to champion the profession.

“Doing the right things by his customers, peers and this industry is pretty much wired into his DNA.

"He was a fervent advocate for a constructive collaboration between the advisers and product providers to focus on the needs of his customers…

and his technical knowledge of financial solutions across the board is second to none. [Thomas] represents a shining example of what a financial advice professional strives to be. His reputation throughout the industry for trustworthiness, honesty, commitment to diversity and inclusion and pragmatism is unparalleled."

High praise indeed. For Thomas, however, not only is there no retirement, there’s no resting on his laurels. “That’s the danger of these lifetime awards," he jokes. While we're on the subject of lifetimes, it seems financial service runs in the blood of the Thomas family: his father was a life insurance agent, a son started work for Crombie Lockwood earlier in 2021, his sister is with Wealth Point, and two of his brothers are in the SHARE business in Christchurch and Palmerston North.

Thomas spent 11 years on the board at the Professional Advisers Association, seven of those as chairman.

"It served our segment of the industry very well, back when the industry bodies were quite segmented, until the formation of Financial Advice New

Zealand. When I joined the board, there were only about 210 members. That grew to about 900 members. Part of the success of that organisation - and what we did at SHARE – was based on the idea of never being afraid to employ people who are smarter than you are.”

That last piece of advice came from an older brother. While there's been plenty of bad advice over the years he's managed to ignore, he leans toward guidance which benefits his clients.

"We always put the client at the top of the tree, and always employ good admin support staff.”

Thomas says building a business by knocking on doors or using a telephone book is pretty much over, so you should never be scared to spend money on a good administrator.

"They are vitally important. I've had only two primary administrators in my career and they’ve been gold - it's a profession in itself. It goes back to my earlier point about employing people smarter than you are. It’s about recognising what you are good at and what you are not good at."

Thomas encourages new advisors

to work their butts off – but preferably within a group context.

"Get into a group which provides your branding, marketing, operating systems, processes and licensing, plus the opportunities to work with an established client base. This is not a part-time career. If you want to be successful, you have to work hard to get to the top.”

Since 2009, Thomas has been chairman of the board at SHARE, with the company set up on a similar model to the Highland Group - a company he also played a part in setting up, back in 1998. SHARE has spread out across the nation, with around 23 offices and 500 advisers in the insurance, lending and financial advice business.

After the purchase of Newpark last year, he says one focus for 2022 will be on introducing more technology behind the scenes.

"SHARE has been a huge success thus far and we’re obviously hoping that continues. Bigger doesn't necessarily mean better, but we have great processes in place and are excited about the future. A business like ours has an opportunity to grow substantially and be a major part of New Zealand's financial services structure.

"There are things we’ve got to do better around technological integration with providers, but our main focus at SHARE is advice: advice matters, and you have to be there for your clients."

In terms of regulation, Thomas says the pain is yet to be felt by smaller operators. While the industry has actually had a 10-year lead into regulatory change, the reality of the full licensing system is yet to come for many.

“The amount of documentation you have to put together is going to be tough for some of them."

If he had to go through it all as a sole

operator himself, he says he’d probably chuck it in. But at SHARE, the impact is minimal.

"The new regime is the way we’ve been operating for well over a decade, so it's just not an issue for us. Tony Dench and the team at Takapuna have taken care of all of our licensing requirements, so we can concentrate on our clients.

The most important thing, however, has not changed: giving good advice.

"New Zealanders need advice more than ever. I get a real buzz out of helping

clients and it's what I do on a daily basis. I've got three people in my admin team plus an adviser in my ‘business within the business’, so I can spend a lot of time seeing clients."

Thomas would like to see the industry push hard for better technology-based solutions which would give more New Zealanders access to financial products and advice.

"This will also help attract younger people into a business they can see is a modern industry.” A

An unusual combination of factors

Recession not imminent but risks rising

The risk of a worldwide recession is increasing, but Bevan Graham warns don’t worry too soon.

We entered 2022 expecting a challenging year.

We expected the macro environment to offer up a unique set of circumstances: growth slowing; headline inflation moderating in the latter part of the year; core inflation remaining problematic; and central banks bringing forward the withdrawal of monetary conditions.

Vladimir Putin’s war in Ukraine then exacerbated that already unique set of

circumstances: headline inflation has moved even higher; growth forecasts are being revised further downwards; and there is a new layer of uncertainty to think about in the form of the future geopolitical landscape.

Developed-world central banks realised only belatedly that they did indeed have an inflation problem.

Most have now started the process of withdrawing monetary stimulus, with many now racing to get to “neutral” as fast as possible.

Biggest risk is a policy mistake

As central banks have become more aggressive, fears of stagflation have morphed into fear of recession.

The biggest recession risk is a policy mistake.

Having made such a bad mistake in not recognising the seriousness of this current surge in inflation, no central bank wants to get it wrong again now by abruptly ending the post-Covid economic expansion.

They are simply looking for the means

to lower the inflationary side-effects of a range of extraordinary stimulatory phenomena, recently compounded by the Russia-driven energy shock.

At the same time, central bank credibility has taken a bit of a knock.

In failing for too long to recognise that rising inflation was likely to prove more persistent, requiring a monetary policy response, many developed world central banks now find themselves well behind the curve and facing the possibility of a more problematic “unanchoring” of inflation expectations.

This would ultimately require an even more aggressive tightening of monetary conditions, which would be more damaging to economic activity, the labour market, and asset markets.

Indeed, both the Fed (Federal Reserve) and the RBNZ (Reserve Bank of New Zealand) are projecting monetary conditions will need to become restrictive soon.

Harbinger of recession

The more hawkish positioning in the US has contributed to a significant flattening of the US yield curve as short-dated bond yields have risen faster than longer-dated bonds.

At times, various parts of the curve have inverted, as short-term yields have moved higher than longer-term.

Conventional wisdom has it that an inversion of the yield curve is a harbinger of recession.

Recession risk has certainly increased as supply chain constraints have worsened, rather than eased, because of the Ukraine conflict; and China’s commitment to its Covid elimination strategy has recently seen the most significant restrictions, this time in Shanghai, since the initial outbreak in Wuhan more than two years ago.

More generally, higher inflation is denting real household income, higher wages are providing only a partial offset, and interest rates are now rising sharply.

Not all bad news

But it’s not all bad news. Labour markets are tight and there is high demand for labour. Strong hiring combined with strong wage pressure is boosting aggregate labour income.

In general, corporate earnings remain healthy, and business investment in key economies such as the US is strong. Furthermore, in the US and elsewhere, household-sector balance sheets are in

good shape and many households have significant cash balances.

Aggregate global growth is clearly slowing, but recession doesn’t appear imminent anywhere we monitor.

However, a closer look at the signals from the US yield curve indicates an average lag of 19-months between the curve inverting and the onset of recession.

That is consistent with our expected peak in the interest-rate cycle and the bottoming of the economic cycle.

So, yes, be wary of recession risk, but it’s also important not to get too negative too early. A

Bevan Graham is an economist at Salt Funds Management.

‘Be wary of recession risk, but it’s also important not to get too negative too early’

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A cold shower for the valuation-phobic

Clear your head, be wary of attractive but flawed narratives, and stick to the basics, says Greg Fleming.

Commentators have been fluent in diagnosing the causes of 2022’s reversal in asset prices, after a record-breaking 2021.

In economic terms, many factors have a role to play in pushing asset prices back closer to what valuation may support, including high and still-persistent inflation, central banks’ tardy response to some of its causes, profitability challenges in a period of elevated energy and labour costs, and the Russian aggression in Europe.

Nevertheless, the market and societal conditions which predisposed the current sentiment collapse have an equal basis in a flawed narrative - one which has held sway since at least 2015, and which is now being subjected to a welcome degree of interrogation.

A fairly recent work by esteemed Nobel-winning economist Robert Shiller, “Narrative Economics: How stories go viral and drive major economic events” (2019), casts light on why some market participants regularly subordinate judgment to “a good yarn” and all the ensuing negative dynamics.

Among the worst negatives has been the neglect of fundamentals and valuations.

Judgement misdirected by narrative

With his customary good sense and profound knowledge of economic history, Shiller theorises that human judgement is prone to being overtaken and misdirected by a compelling “narrative” - a plausible story which implies

predictable and exploitable changes coming in the near-term future.

When investors get caught up in narrative thinking, lowering their guard, they miss tell-tale clues – often historically-repeating ones - and embrace, or even embellish, the emerging hype far too uncritically.

Crowd dynamics flatter the earlyadopters of a market narrative, because such inventive or unconstrained investors will likely have already staked out their own substantial exposure to financial holdings that are linked to their master narrative.

A topical example is the emergence of so-called “Crypto Bro” billionaires.

These early adopters and amplifiers of any investable exaggeration will be either “true believers”, who genuinely think they are pioneers in a radical opportunity, trend-followers who simply jump aboard securities whose price has been appreciating, or self-advised hobbyists who are flattered by the idea they are “smarter than the pros.”

Very often, what results is a selffulfilling asset-price trajectory, following a path laid out in the mid-1980s by hedge-fund titan George Soros in “The Alchemy of Finance.”

Without going into detail, a process of “reflexivity” takes hold, whereby the rise in value of the security in question buttresses the justifying narrative and allows new collateral to be accessed, either as new entrants seek to acquire the asset, paying ever more for it, or – more dangerously – as financial institutions accept the unrealised gains

on a pool of holdings, and begin to extend loans against such gains, converts to the apparent logic of upward revaluation.

Traditional valuation metrics are undermined in that climate, and statements like “if lots of people believe it, it has value” become an alternative narrative, drawing in the unwary or inexperienced.

This is not just a problem in the cryptocurrency arena. Popular technology has a unique way of dazzling the public and professionals alike, possibly due to saturation media coverage and the rhetoric of revolution in social practices.

What is a real asset?

At such times, it is important to remember the factors that have always characterised a real asset. At heart, an asset must be an enforceable claim on an actually-existing item, resource or process.

‘Statements like “if lots of people believe it, it has value” become an alternative narrative, drawing in the unwary or inexperienced’

Its value should always be determined comparatively, by ranking it against other claims on other resources.

If a certain “investment” cannot be sensibly compared with others, through discounting, risk premia, or applying liquidity and other prudent criteria, then chances are that is it not truly an investment asset.

This simple test gets confused if a new undertaking creates popular perception of future enforceable claims that are presently “going cheap.”

Many recently-potent investor narratives could be gathered under the rubric: “Get In First (GIF)”.

The principles here are difficult to distinguish from the classic Ponzi structure.

Pandemic-era Ponzis are fuelled by widespread perceptions of a digitalsocial gold rush, allied to a selfrealisation culture super-charged by social media, and incentivised by broadly inadequate retirement savings which need rapid supplementing.

Online marketing pitches hope of windfall wealth gains, enabling leisure at an early age without the tedium of a slow, salary-sacrifice-based savings plan.

Investors caught up in the GIF narrative tend to downplay patient wealth accumulation in favour of being early buyers of “moon-shot securities”.

They tend to be close followers of celebrity entrepreneurs; they ignore or dispute valid critiques of implausible business models; and they

align themselves with heavily mediadependent “disruption” hypotheses.

Get In First aspirants are sustained by appreciation of the wealth accruing to early shareholders in enterprises such as Apple and Microsoft, and are prone to believe the age of social media will offer repeat screenings.

Risks of playing an “investment game”

On another level, much has been made of participatory advances in investment “democratisation” through internet trading platforms.

Computing power and changing leisure preferences have enabled many to join an “investment game” with low barriers to entry. However, as in politics, the disadvantages of investment “populism” are emerging.

In certain equity types, the idea of transformational tech has led to market valuations implying sustainable profit growth much higher than was realistic, even if there were no such thing as competition or diminishing returns to any given new technology or platform.

In bonds, the quiescence of inflation for a decade boosted a narrative whereby monetary liquidity could be created and distributed with impunity. This masked a swathe of serious risks.

Corporate debt was rapidly expanded to finance acquisitions or stock buybacks, while consumer debt rose to bid for increased equity in a range of holdings as well as simply to enhance

lifestyles.

Government debt also achieved a new tribe of enthusiasts.

In neither the equity nor the debt cases were some market participants much concerned with timeframes beyond the next few years; some tended to extrapolate the future from the recent past.

However, all reflexive market processes eventually unwind, and much paper wealth can vanish in the process. Repricings underway this year show signs of such unwinding.

The key risk now is a self-fulfilling “recession narrative” triggering a liquidity drop and loss of real purchasing power, as inflation erodes the elevated cash holdings of the newly-cautious public.

Back to basics

We expect greater sobriety to enter investment calculations over the next few years, as is usually the case in the wake of a value-destructive narrative deflation.

Our approach is to consistently look at an asset’s earnings prospects over a multi-year horizon, and to assess whether this plausible profitability path really justifies what is being paid for that security.

At times, other securities will represent good value, having been caught up in excessive negative sentiment, and will prove rewarding long-term holdings.

Such assessment is always done comparatively, allowing the relative value of certain companies and other asset types to inform every investment decision and allocation of our investor’s capital.

Portfolio sustainability implies that the repetitive but ultimately rewarding work of disciplined asset valuation remains key.

Once the extraordinarily cheap and plentiful monetary liquidity which has distorted asset prices for over a decade has drained from markets to a greater degree, it will be possible again to connect investment performance more closely with asset fundamentals.

However, the price disruptions that can occur, and the erratic rate of retreat from stimulus that may follow, mean that the best investment assets for the present are likely to be some of the simplest.

We favour real assets, particularly infrastructure, defensive quality equities, and thematic exposure to the increasingly-urgent climate-change mitigation imperative. A

Greg Fleming is the head of global diversified funds at Salt Funds Management.

Shape up or ship out

Naomi Ballantyne encourages diversity and inclusion throughout the insurance industry.

BY NAOMI BALLANTYNE

2021 was another humdinger of a year. Nothing we could predict, and therefore nothing for which we could prepare.

But I’m sure my fellow industry executives had a similar experience to me, in that the people we serveour customers, advisers and staffseemed to have developed a heightened sense of gratitude. Gratitude for the business we’re in, and for the way we do it.

We are accustomed to customers

thanking us from time to time, but in 2021 that thankfulness seemed to go into overdrive. Feedback from the vulnerable customers we have helped with claims or affordability issues was intensely thankful. This has humbled, inspired, and motivated my team like never before. Advisers also seemed more willing to share praise and to offer a pat on the back compared with 2020, when there was a significant degree of anxiety and panic. And as for my staff, I have only one word: magnificent.

Business as usual not returning

While I desperately want this year to be more comfortable and more “business as usual”, I know that even if Covid-19 were gone tomorrow that would still not be the case.

We also know that we will make mistakes. We have areas needing improvement. We are grateful to advisers and customers for providing us with constructive feedback to help us improve our business. Many of our new initiatives, including the recently launched direct

client access to MUM, have happened because of this feedback.

But while there has been much thanks and constructive feedback, along with support, encouragement, and plain old kindness from the majority, there is also the continuation of an emerging experience: a kind of “hyperobjectionableness” from a few. It is similar to what we saw across the nation in 2020 and 2021, in response to the Government’s management of Covid-19.

When a small number of seemingly perpetually-angry people get frustrated or scared, they seem to take all of their pent-up emotions out on others. In my job, that “other” is often me. From interactions with other industry executives over the years, I know I am not alone in being on the receiving end of some considerable vitriol.

Feedback akin to abuse

This “feedback”, akin to abuse, has appeared across all aspects of our business, in regards to commission levels, systems, functions, premium increases, and even to our Covid-19 policy for the physical protection of our staff when working in our office. While extremely unpleasant for myself and my team, at least it is focused on the things we do and is something my team can generally handle with their usual good grace.

But then there are the people-related attacks. The “helpful suggestions’’ and/ or “demands” about how we must “fix” our business by effectively discriminating against specific groups of people that the complainant considers to be undesirable.

That’s right: there are a handful of people out there who want to deal with only a certain kind of person, and/or who think we should ban specific sectors of society from being provided insurance coverage - or in some way make it uncomfortable for them.

Over time, as insurers have changed the parts of our businesses that might previously have created significant barriers to some members of our society, we have become targets for those who vehemently do not want us to do so.

An enlightened world

We live in a much more enlightened world than has ever existed before. We understand so much more about how our reactions as a society, to the differences between people, can cause serious alienation and physical, emotional, social

and financial hardship. We understand more now about how the simple randomness of where we are born can lead to considerable inequity.

Globally and locally, the words ‘diversity’, ‘inclusion’ and ‘vulnerability’ are now a standard part of the lifeinsurance dictionary. They are words that our regulators are focusing on. They are also words that all employers are obligated to include in their employment practices.

But more than that, they are words humans should have always embraced.

So, when anyone in our office is on the receiving end of communications such as the following, it’s a pretty bad day:

• Demands to deal only with a staff member with an English-sounding surname

• Complaints about a staff member’s “foreign” accent

• Attacks against our support of the rainbow tick

• Assertions that using the word “gender” is pandering to “ridiculous” people, because “there are only two sexes”

Representing a multitude

Partners Life’s people – our customers, advisers and staff - are spread across all demographics. Our people are as diverse as the entire New Zealand population. Collectively, we represent a multitude of ethnicities, spiritual beliefs, sexual preferences, genders, abilities/ disabilities, ages, relationship statuses, and socio-economic circumstances. We are a company of, and for, New Zealanders.

Into the future, we will continue to evolve ourselves and our business to reflect our increasing understanding of how all of the following impact on our customers:

• Use of language

• Our underwriting questions

• Our design of products

• Our underwriting decisions

• Our service delivery, and

• Our claims decisions.

We will also push back furiously on any uncalled-for discriminatory opinions headed our way, to lessen the likelihood of any of our staff being victimised or

made to feel vulnerable. I encourage our colleagues in the insurance industry to increase their boldness alongside of us in the year ahead.

Removing barriers

By removing access barriers to minority groups, we are not introducing any new barriers to the groups of New Zealanders for whom access to protection products has always been easily available.

By embracing New Zealanders in all their glory, we do not harm the masses, but we do increase our opportunities to provide protection to more people, recruit even more amazing and diverse staff, and increase the attractiveness of our industry to a wide range of new advisers.

My team and I are proud of the steps Partners Life and our competitors have taken to increase our inclusiveness over the years, and we are excited about continuing this journey into the future. We believe showing kindness to others is in equal parts what we do as a business, and how we choose to do our business.

So, to the majority of advisers who have shown me, my team, and my fellow insurers so much love, kindness and support in 2021, thank you. Here’s to more mutual success (and the related celebrations) in 2022.

And to those who are crusading to stop us from welcoming people into our fold who are different to themselves, please stop. You are absolutely entitled to think whatever you want; and you are welcome to find another insurer to support you if you cannot accept Partners Life’s position on diversity and inclusion.

I am hopeful, however, that 2022 will be a year when the differences between people are increasingly understood and respected, and that acceptance will rule over bigotry. A

Naomi Ballantyne is the founder and managing director of Partners Life.

‘We will push back furiously on any uncalled-for discriminatory opinions headed our way’

Allow me to help you stop procrastinating

Compliance consultant Karty Mayne details how to ensure you meet the regulatory deadlines – and how to maximise a compliance calendar for the year ahead.

BY KARTY MAYNE

As we move through the second quarter of 2022, it is frightening how fast the year is progressing. But the regulatory deadlines on the horizon will move at light speed.

Understanding the components of your regulatory compliance framework is an easy way to make sure your business has covered all bases, regardless of your size, scale or complexity.

Your regulatory compliance framework

A “fit for purpose” framework means that you have done enough to meet the regulatory obligations as they apply to your business.

In general the components will be the same, but the processes which sit behind your policies will be only as detailed as needed to reflect the size and scale of the business.

Imagine that you have a new starter, but no time to train them. Could they understand your business approach, and your end-to-end processes, just

by reading through your company compliance manual or operations manual? They should be able to do so.

Here’s how to stop procrastinating and get on with meeting your regulatory deadlines.

1. Sort your Financial Advice Provider licence – and quickly!

If you haven’t applied for your licence, now is the time:

• Class 3 licences are due by the end of June

• Class 1 and 2 licences are due by the end of September

While your preparation doesn’t have to be perfect, here are some hints about what to have ready for when you do put fingertips to the keyboard to complete the licensing interrogation.

Step 1. Download the Guide for Providers of Financial Advice Services (Version 6). This guide sets out all the questions you will be asked and what the FMA expects to be in place.

Step 2. Make sure you have created or updated key policies and documents as required for the licence. The “must have” documents and processes include:

• Business continuity plan

• Cyber-security arrangements

• Your end-to-end advice process and ongoing client-servicing arrangements

• Arrangements if you hold client money or client property

• How your advisers meet the competency requirements

• Ongoing training and development to maintain competency

• Oversight policy or governance framework

• Outsourcing due diligence

• Complaints handling

• Conflict of interest management

• Record keeping and destruction policy

• Conduct and compliance polic

• Fit and proper policy

• Staff recruitment, vetting and onboarding processes

Step 3. Once you have developed these processes and procedures, they need to be formally approved and dated. You then have a responsibility to review and update them, either every year or when things change.

So set a review date on the documents.

Make a note of these dates as you will be asked for them when you complete your licence application.

Step 4. Having created these new documents to meet your regulatory obligations, you need to put arrangements in place to confirm that you are compliant.

Usually this is in the form of a compliance programme. This explains the compliance activities you will complete during the year.

Step 5. You need to keep evidence of your compliance activities, any breaches or issues, and control tests. Setting up a simple online register is a great way of tracking these activities.

We also recommend creating a monthly compliance calendar to keep you on track during the year.

Link your financial advisers to your full licence.

Once your business has its licence, ensure all your financial advisers are linked to it. This is an easy process.

Start by logging into the Companies Office and finding your FAP on the dashboard. Go into the FAP, find the “financial services” section and click, “maintain financial services”.

Then it’s a simple process to add financial advisers to your full licence.

2. Now that you have your full licence

Once you have obtained your full licence, it is important to implement the policies and processes you created to meet the new regulatory obligations.

Compliance doesn’t have to be complicated. But you do need to allocate enough time and resources to do what you said you were going to do.

Three easy steps to master compliance Here are three easy steps to make you a compliance master:

• Know your sources of truthfamiliarise yourself with the Acts and Regulations, standards and codes, guidance notes and industry body, agreements and policies.

Being familiar with these will help you comply with them.

• Create new policies – Sometimes it’s better to buy new wool than unravel an old jumper! Create new policies as the foundation of your compliance instead of trying to rewrite the old ones. Keep your policies broad in nature, and make sure you are open to your procedures continually changing and improving.

• Get to know your controls – your controls are your checks and balances. Ensure the processes operate as they are designed, whether they are automated or manual; these will keep you safe!

Creating a compliance calendar can help you keep on top of your compliance requirements without getting overwhelmed.

Add reminders to get a couple of compliance tasks completed each month, so you work on it throughout the year instead of all at the last minute.

It is also important to remember what you outlined in your licence application and to hold true to it – this will also help keep you compliant.

Plan, plan and plan some more Having plans in place is the backbone of staying compliant.

Just as a compliance calendar will help lighten the load, by spreading it out across the year, having a business plan will also help keep you on track.

A business plan can be the difference between success and failure, but make sure you keep it simple (stupid).

These days, large corporate companies have a “plan on a page” so you don’t need anything too detailed. Just enough to keep your goals in sight.

3. Automate your compliance where possible

Now that you have created your regulatory compliance framework, you need to integrate it into your business in a way which balances client management with business management and compliance.

We are seeing great examples of FAPs using everyday software to help remind them and automate these activities.

Utilising software is a cost effective and efficient way to help you automate your compliance and stay on top of your obligations.

We use TeamsPlus (formerly called Dacreed), a New Zealand-based software system which provides a simple compliance dashboard.

We chose it because it is a modern, easy to use and suitable for the smaller scale of New Zealand’s financial services industry. Most importantly, it is affordable for small businesses.

Here’s my dashboard. Whoops, it looks like I have a course to complete!

Companies and advisers are able to use these types of software systems in a variety of ways:

• Document storage – Keep all your documents in one area, whether upto-date business policies or evidence of professional development.

• Courses – Courses can be created and distributed effortlessly using the software, in order to help you meet your continuing professional development obligations. Ensure the software comes with an up-todate course library of relevant and interesting training modules.

• Business policies and attestations – Forget policy manuals taking up space in your bottom drawer or losing attestation papers; roll out your policies and attestations in an interactive way. We have set up our policies and compliance attestations in the software, which can then be assigned to a person, with an attestation attached, so you know they have been read and understood.

• Reports – The reporting dashboard allows you to see compliance at a quick and easy glance, making it easy to keep track and to follow up with anyone who is falling behind. So instead of looking at lots of reports, I can confirm compliance just by looking at our team dashboard.

Good luck on your compliance journey –and remember to utilise the tools around you to make it fast, easy and efficient. A

Karty Mayne is a compliance consultant and the founder of Rosewill Consulting Ltd.

Reaching for the summit

BY DAWN PICKENS

Sumit Monga’s career path has taken some surprising twists while spanning two continents. He moved from Kenya to study engineering at the University of Canterbury in 2003 - but engineering was his parents’ dream, not his.

“I was never going to be a great engineer, so I took a year off and decided to talk to people while working in sales and marketing. I always had the ability to

relate to people and I was a natural at it.”

Marketing was so innate, he inadvertently broke a national company record his third day on the job while procuring new customers for a marketing firm contracted to American Express. He completed 17 enrolments in a single day.

“I was working in a Christchurch mall. I’d smile and tell shoppers about the promotion, which I thought was a great offer.”

Learning to listen

Growing up in Africa, Sumit honed his ability to listen - a skill he thinks most people lack. One formative communication experience happened in primary school, when he collected donations for an aged-care charity called HelpAge Kenya.

“I was just a little boy, but I went around and ended up raising a lot of money. Believing in what you’re doing

Passion is what gets advisers in the financial services industry to the top, says Sumit Mong.

is important. If you don’t believe in your product, you won’t be passionate.”

After recognising Sumit’s talent for talk and passion for products, a friend recruited him into the insurance industry.

A decade of working for Combined Insurance ended when the company stopped accepting new business in Australia and New Zealand – a change which provided Sumit the opportunity to start his own firm, EliteInsure.

“It meant I had more autonomy with what I could do. I could implement solutions without going through the red tape. I fully thanked them [Combined Insurance] for what they did. It was the best thing that ever happened to me.”

EliteInsure now employs the friend who recruited Sumit to the industry as the company’s South Island regional representative.

ASSET Magazine reached Sumit at his parents’ home in Kenya, where he was spending a working holiday in January. The Aucklander says he never looked back after starting EliteInsure in 2016, and today has 19 advisers on his team. He’s proud that he and his staff can help bridge the knowledge gap for consumers when it comes to financial products.

“The ability to simplify products and relate to a client in a straightforward way is my point of difference. You can complicate a simple concept because you don’t understand it or you can simplify it, and that makes it easy for clients to make decisions.” Sumit quotes one of Albert Einstein’s most famous phrases: “If you can't explain it to a six-year-old, you don't understand it yourself.”

Education and outcomes

Creating satisfying outcomes is paramount. Instead of merely offering advice, EliteInsure provides solutions tailored to clients’ situations and goals. In addition to insurance queries, advisers also handle KiwiSaver questions, which have taken on a new urgency the past couple years.

“When the pandemic hit in March 2020, I read a few stories where advisers had switched clients to conservative funds. It’s important to educate clients and know the fundamentals when it comes to KiwiSaver.”

Sumit says the savings scheme is designed as a long-term investment, not something you can grow in two or three years.

“You need to be very mindful and aware of the client’s needs. We say volatility is part of any investment, and if your investor profile means you can handle the volatility, you must

understand it as a strategy.”

He likens KiwiSaver to owning a home whose value may fluctuate over time. “You don’t cash out of a house when its value has dropped. If you wait, you would expect it to have capital growth.”

Another part of an adviser’s role is explaining insurance products, not only at the point of sale but also when life happens and the policy is tested. Sumit recalls a customer who was upset with an insurer and wanted to talk through a claim. It took four or five visits, but the man’s income protection claim was resolved in the end.

“It was a matter of letting him vent his anger, explaining the process and working through his lack of understanding. In the end, he was paid out and was very satisfied.”

Growing a new crop of advisers

Training the next generation of advisers is one of the hurdles the industry is facing, says Sumit. Gaining a Level 5 Certificate in Financial Services is a good first step for new advisers, but it only scratches the surface of what’s needed for success.

Fortunately for his team, Sumit is passionate about training and development. He says recent recruits require nurturing throughout the early phase of their careers.

“New advisers are like babies; they need constant care and attention. I think it’s like any learning process. You have to be very patient with them, very understanding.

“We all make mistakes. Patience, and leading them to the right source for information, is very important.”

A limited talent pool of advisers is another pressing concern. Sumit says the financial services industry in New Zealand needs more leaders who can inspire up-and-coming advisers.

“I think if every qualified, experienced adviser gave back a bit by teaching an entry-level adviser, it would really help the industry.”

His own rookie advisers have come mostly from referrals.

“The growth we have had was quite accidental. I have never advertised for advisers.”

When screening potential associates, he looks for character, capacity and attitude, and says passion is paramount.

“If they’re not passionate about being an adviser, often they will not succeed. They also must have integrity, ethics, and the capacity to learn and implement solutions while educating clients.” Sumit says while these traits can be strengthened, an adviser-in-training must have aptitude and desire from the start.

“You can’t make Usain Bolt sing. Usain Bolt runs.”

Navigating in the Covid-19 climate

The pandemic environment has posed challenges, too. Sumit says business owners are constantly weighing the economic impact of restrictions and lockdowns, so they are fearful about being audacious with insurance. “They’re quite watchful of expenses, and, as advisers, we have less time with them. It’s reduced productivity quite a lot.”

Digital solutions such as online video communication help, but Sumit believes in-person meetings are much more efficient.

“It’s a different environment when you’re sitting with a client face-to-face. When you’re at someone’s house, a coffee shop or the office, you get a better feel for the situation.

“Zoom is great, but I would prefer in many instances to see the client in a face-to-face capacity. You can read the body language more effectively to provide a better solution.”

When he’s not problem-solving with his team or his clients, Sumit shoots a lot of eight-ball as a league pool player. He keeps fit by taking long walks in the bush, aiming for at least 10,000 steps each day, and also likes to read anything business-related.

He recommends an audiobook he recently downloaded called, The Simple Path to Wealth, by JL Collins. It offers a basic map to financial freedom, including tips about saving, spending and investing.

Sumit says this is an interesting time to be working in the financial services industry. Things are changing fast, thanks to licensing pressure, regulatory revisions and the pandemic.

“Being able to adapt is one of the finest qualities of any business person. Sometimes hanging in there and seeing things evolve is a strong trait.

“Don’t change too much at one time. Adapt slowly and hang in there. Things will work out.” A

‘Believing in what you’re doing is important. If you don’t believe in your product, you won’t be passionate’

The truth, the whole truth and nothing but the truth… or not.

Russell Hutchinson looks at the reasons behind shame and dishonesty when filling in insurance application forms.

According to an actuaryunderwriter I spoke to recently, fear, guilt and shame are significant drivers of non-disclosure.

I think she’s onto something. What’s more, it is an especially important topic given the changes proposed in the Insurance Contracts Bill.

This is how she believes the shame process leads to dishonesty: application processes require disclosures around weight, work, mental health, sexual health, sexual orientation, food and alcohol consumption, tobacco and drugs.

In societal terms, these disclosures may feel shameful. Even if you, as an adviser, are comfortable with a person who has had the odd joint, your client may feel deep shame about it.

Maybe he or she comes from a family or culture where certain habits are seen as a massive personal failures. Maybe a family member lost a child to a drunk driver.

We may never know the motivations behind a person’s private shame – and subsequent dishonesty - but it is often driven by the views of society as a whole.

Not telling the whole truth

The interview context can be critical, as disclosures are often made in front of someone: an adviser, a partner. The information disclosed will then go to a company which is often unknown and may not be trusted by the person making the disclosure.

Shame around certain types of disclosure may be a major factor behind the failure to be completely honest in application forms.

For example, some clients regularly understate their use of tobacco and alcohol because they feel shame about how much they consume - or they fear the judgment of their partners or advisers.

I know one adviser who always used to pause when he got to the questions regarding alcohol and drugs, and give a brief disclosure himself.

This strategy, common in helping clients understand that they should disclose illness, helped generate more honest answers, because the client felt that he or she would not be judged by the adviser.

Rightly or wrongly, there was also the sense that if the adviser were comfortable with it, the insurer would be too.

I felt the strategy carried risks, because of the potential for the judgment to then fall the other way. But add a dash of courage, and your personal disclosure could save a client a declined claim.

Combine it with techniques such as ‘feel, felt, found’, and you have a fairly simple formula for helping the client overcome shame regarding alcohol or drugs usage.

‘Even if you are comfortable with a person who has had the odd joint, your client may feel deep shame about it’

Self-deception and the role of the doctor

Likewise, many clients who suspect they may be overweight cease to weigh themselves and practise a form of selfdeception by quoting the weight when they last weighed themselves, even if that was, literally, years ago.

A good, standard strategy is to suggest stepping on the scales. Another is to request a build exam, but that tool should be used sparingly.

Most advisers are great at reading people and figuring out the right approach with each individual.

The role of shame may also make its effects felt in the room because of a relationship outside of the room.

Doctors can be an authority unto themselves – and they have feelings too. If, for whatever reason, a medical professional isn’t completely honest with a patient, we can find the client unwittingly, or perhaps willingly, repeating a phrase the doctor has used in order to minimise a medical problem.

By way of example, a client was told by his doctor that a panic attack was ‘skipbreathing’ – and no mental health issues were discussed. The medical file notes, however, made it clear that although there was a decision not to discuss the issue in detail, the doctor would look for other signs or symptoms of mental health problems in the future.

The insurer was concerned that the client had attempted to minimise a known mental health condition and was reluctant to issue based on the non-disclosure.

People do not like to be judged

Some clients are still being told by their doctors that routine elements of their sex lives are things they ‘shouldn’t be doing’.

While rare in metropolitan Auckland, this attitude is more common in other regions.

Each time it happens, an honest answer becomes less likely next time. After all, people do not like to be judged.

The actuary I spoke to from one major insurer felt this fear of judgement was a key mechanism, explaining how shame can stand in the way of better underwriting outcomes. If a person is scared to even disclose an issue, then they will probably also have trouble seeking help for the same issue - making it more likely they will experience some negative outcomes.

The fear of being judged also explains why, counterintuitively, many people are more honest in digital, online applications than they are when being assisted in person: they don’t feel as much shame when there is no other human around.

Some of this explains why people tell lies on application forms. In some respects, what is surprising is how honest people are in application forms, whether intentionally or not.

And sometimes shame makes no difference whatsoever, even when people do lie. An underwriter recently said to me that when a true alcoholic completes the application form, and minimises his or her drinking, the number of units is still so high that the addiction gets picked up.

Asking better questions

For all these reasons, insurers and reinsurers are working on asking better questions.

It is possible that by asking questions about activities which may be impacted by illness or disease, we can get more honest answers than by asking about the disease itself.

Improving the questioning process also allows us to open up the subject in a way which is not overly challenging. For example, starting out by asking how many sick days a person took each year last year, and the year before, may make a condition easier to disclose, because taking a few sick days is a normal thing.

A challenge for the design of forms

Clearly, all of this is a major challenge when it comes to the design of forms –and not just because of changing how questions are asked and the accelerated shift to digital due to the pandemic: the draft Insurance Contracts Bill will soon redefine the duty of disclosure.

This will result in a focus on questions and answers, rather than on a general duty to disclose anything that could affect the risk.

Guides to disclosure will also become more important, explaining to the client just how critical it is to make robust disclosure: total honesty is required if an insurer wishes to rely on the answers, and certain remedies may or may not be available to the client in the event of non-disclosure.

It is a complex area, bringing together law, product design, and human behaviour.

And contrary to the findings of the regulatory impact assessment of the Insurance Contracts Bill, it could take decades for the impact on claims, and therefore pricing, to be fully realised.

A Russell Hutchinson is director of Chatswood Consulting and Quality Product Research, which operates Quotemonster.

‘Many people are more honest in digital, online applications than they are when being assisted in person: they don’t feel as much shame when there is no other human around’

Avoiding the unintended consequences of inheritance law changes

Patrick Gamble explains key changes being made to inheritance laws.

The expression “don’t throw the baby out with the bath water” comes to mind in light of the sweeping changes proposed to our current inheritance law. Change is most certainly needed – some of it has not been altered in 70 years –but in trying to accommodate changing attitudes and circumstances in a modern society we need to be careful we are not unintentionally creating pathways for a return to the divisive, discriminatory practices the current legislation specifically sought to stamp out.

The proposed changes come at the same time as the greatest transfer of wealth in New Zealand history begins in earnest (estimated to be $1trillion from the baby-boomers in NZ alone), so it’s important we get this right (particularly where millennial and Gen-Z adults are becoming ever more dependent on an inheritance as a way of securing home ownership).

All in, there are 140 separate proposals made in a report by the Law Commission, which over several years

has comprehensively reviewed New Zealand’s inheritance laws, including the Family Protection Act, the Testamentary Promises Act, the Administration Act (which governs intestacy), and aspects of the Property (Relationships) Act. But at its core, the question the Law Commission has been asked to grapple with is: should you have a right to leave your wealth to whomever you like, however you like (“testamentary freedom”), or should the state dictate to whom and how your estate should be passed on (“forced heirship”)? Our current law sits somewhere in between, allowing flexibility within guardrails and allowing certain family members to challenge a Will through the courts.

Most people instinctively lean toward the former (it’s their money after all!), and what’s wrong with skipping over a child who is financially well established in their own right, in favour of a child with greater need or a charity who will use the money for a public good? Or for including ‘blended family’ members alongside (and at the expense of) biological

children? Or recognising different cultural norms (including but not limited to tikanga Maori)? There are many strong arguments for that view (they are being well covered by other commentators), and it’s reflected in the very favourable response the Law Commission got when asking the question: “should an individual be free to decide how their assets are distributed?”

But I would argue that, like any legal reform that will affect nearly all New Zealanders, it’s more complicated than it appears. True testamentary freedom is a double edged sword for society. One question the Law Commission didn’t ask was “would those who agree with the principle of testamentary freedom for themselves say it was fair or reasonable if they were excluded from a parent’s Will?” I imagine the response would have been much less positive.

It’s also worth remembering paternal primogeniture (where the oldest son gets it all and the other siblings hope for his largesse (refer: Prince Charles and the Duchy of Cornwall)) was socially

acceptable until relatively recently, as was ‘cutting out’ a child from inheritance for some unforgivable sin like marrying outside their ethnicity or religion, having a child out of wedlock, or being a member of the LGBTQ community. It’s precisely those sorts of abhorrently discriminatory practices that led to the current laws in the first place, mandating a level of relatively equal treatment of natural children in an estate regardless of the Will-maker’s personal views. It would be nice to think that society had completely left those sorts of views behind of course, but unfortunately Perpetual Guardian is still asked to draft Wills to that effect from time to time. As it stands currently, we can definitively advise those provisions won’t stand up to legal challenge and I would be loath to undermine that principle. Not everyone is as kind as we would like to think.

Any change from here will not be a speedy process – it may take another two years or so – but change will come, and we should prepare for it to be substantial and extensive, affecting nearly every New Zealand family. Here is what you need to know:

Consider the unintended consequences it may have on you or your family

This is a message both for lawmakers and everyday Kiwi. Change for the sake of change rarely ends well, and the current system, while flawed, still has its merits. We generally embrace the concept of “forced heirship by stealth” there is an expectation that estates will be distributed fairly equally among the natural adult children of the deceased (possibly including other beneficiaries), and cases where an adult child has been excluded may entitle that person to mount a legal challenge on the grounds that inheritance laws have been breached. That gives us social stability in a fundamental area of society (albeit at the expense of the individual liberty of the Will maker).

Currently, the vast majority of cases where Wills are contested by a child who has been excluded result in an adjustment by the Court. However, that does not mean they necessarily get the same as “the rest”. Adjustments can be between 1% for large estates, 10% (usually thought of as the “rule of thumb” guidance) for many estates and, more rarely up to 70% of some. So it can be difficult to know what a given claimant will likely get, and it is an extremely costly exercise to find out.

The Law Commission itself has recognised that the issue can be divisive and there are no easy answers, so it has proposed a couple of inherently conflicting options for consideration. One

is that claims can only ordinarily be made by children under 25. The other is that children and grandchildren of any age should be eligible to claim if they in are in financial need and have not been justly provided for or otherwise recognised. Critically for both proposals, the definition of ‘children’ is being massively extended to include natural, unborn but in utero (not conceived post-death by IVF), adopted, and otherwise “accepted children” (which includes whāngai, step-children in blended families, and ‘feeding children’). There are good reasons for those extensions, but they add unprecedented complexity and need to be kept in mind when considering the two options above.

A reversion to full testamentary freedom, where anyone would be legally allowed to exclude a child from their Will for any reason, would probably not be acceptable to the vast majority of New Zealanders. It would lead to more people using money as a tool of control or abuse, and to punish those who are considered to have somehow disappointed the deceased for some asinine reason or another as discussed above. “I’m cutting you out of the Will” conversations don’t do much for family harmony or broader social cohesion, and New Zealand society has well and truly moved past that (even if there remain individual citizens who have not). I don’t think the introduction of an age limit of 25 will help much either. That said, there are definitely situations where it is just and proper, and in the best interests of our society, to allow inheritances to be tailored to individual family circumstances. A one-size-fits-all approach doesn’t work here meaning whatever new legislation we get, we will still need areas of discretion and recourse to the courts when disputes arise.

Finally, it’s worth remembering that if the adult child is in real need and is cut out of the Will, it will be the tax payer who picks up the bill for supporting them, even where there is significant family wealth otherwise available. That is hardly a desirable outcome.

You can – and should –have a say

The stated objective of these law changes is to “reflect New Zealand society as it is today – our modern views, attitudes, and patterns of family-building and repartnering. New Zealanders’ views cannot be reflected in the law unless the Law Commission hears from you. Perpetual Guardian submitted extensively during the first round of public submissions, and we expect at least one more round (potentially two) before the final Bills are ready to be put before Parliament.

I would encourage anyone who has a

strong view on this topic, whether for or against testamentary freedom, to read the Law Commission report and consider the recommendations. This change to our laws will have a significant effect on the unique society New Zealand has built over its history, and we should hear as many views as possible to get a thorough picture of what all New Zealanders really think.

Kiwi: have your say. It is too important to be left to the ‘experts’ and the politicians.

Start the conversation now

If you are not already talking about Wills, family or charitable trusts, and your estate planning objectives in your own family, now is the time to start.

Professional advisers should be drawn in as necessary – they can advise on the ramifications of potential legislative change and how families can plan ahead – but the key is always clear communication within the family.

You might start by discussing:

• Whether your family wants to grow its wealth beyond their current lifetimes, or simply distribute assets for inheritors to do as they wish?

• Whether all adult children have equal needs. Perhaps one has special needs or a health condition and requires additional care or funding, or one has a considerably higher net worth than another. These factors may influence how a Will is structured.

• Whether your family is generally peaceable – is there significant conflict or estrangement? Will distributing assets via a Will make existing problems worse? Is there a role for an independent executor or professional trustee to minimise further conflict and safely manage family conversations?

• Considerations around the wider family structure – whether adult children are married or in long-term partnerships; whether agreements are in place to contract out of the Property (Relationships) Act; if there are grandchildren for whom provisions should be made.

• The role of a family trust, which can facilitate security and oversight of assets long-term, as distinct from a straightforward distribution of an estate. It is possible to establish a trust and transfer assets so an individual can die with nothing left in their own name – in some scenarios this arrangement can be preferable for families.

A

Patrick Gamble is the chief executive of Perpetual Guardian

The Importance of Style

You know style when you see it on the street. You may even know your own. But what about investment style? David van Schaardenburg looks at the various merits of value and growth investment styles.

According to Yves Saint Laurent, “Fashions fade, style is eternal”, but what about investment style?

Much debate in New Zealand investment circles has centred around the relative merits between a low-cost (hopefully), passive/index approach versus the usually higher-cost, active approach to investing in shares.

Unlike overseas, in recent years I have seen little local debate assessing the relative merits between the two predominant styles, or approaches, when it comes to active share investing: value and growth.

Notwithstanding possibly a lower level of local-investor interest in this debate, this column re-examines the relative merits and logic of value versus growth investing in portfolio construction.

Risk management options for shares

In a world of low-yet-rising interest rates and relatively high inflation (the foreseeable future!), my past columns have highlighted two things: the risk of negative real returns from ‘defensive’ assets, and the importance of having portfolios substantially oriented towards shares not bonds or cash.

If an investor’s portfolio is substantially (if not totally) made up of shares, it is increasingly important to consider the strategies available to manage risk.

Risk management options span diversifying by geography, business industry, individual security, cyclicality versus stability of business model, and investment style

Let’s focus on the last of these riskmanagement options: diversifying investment style.

What’s the difference between value and growth investing?

Value investing refers to an approach focused on finding shares which are trading below their fundamental value, more than often defined by, say, a low price-to-earnings (P/E) or price-to-book ratio (P/B) or high-dividend yield. This can also be assessed not just in absolute terms but also relative to historic, peer group or market averages.

These companies are normally found in ‘out of fashion’ industries, or where a company has had negative news, often unanticipated. Hence their share prices in recent times have often been in a downward trend.

In contrast, growth investors are looking for companies which display

signs of above-average growth, currently and/or forecast (in revenues and/ or profit), even if their share price appears expensive in terms of the above fundamental metrics.

No surprise then that value investors are sometimes termed pessimiststhey find joy in negativity - and growth investors are viewed as optimists.

Complicating things further are investment approaches which are variants of growth/value such as GARP – growth at reasonable price, or high dividend funds.

Examples of ‘style’ shares

The shares of any company can, in theory, fit either mainstream investmentstyle category at a point in time.

However, broadly speaking, value stocks tend to come more from traditional ‘smokestack’ industries like commodities extraction or

‘Which investment style is better, value or growth? It depends’

manufacturing, while growth stocks tend to be more often found in knowledgebased sectors like IT and health services. But not exclusively.

When one looks at the industry composition of the S&P500 value index relative to the growth index, for example at 28/2/2022:

• IT makes up 12 versus 45%

• Manufacturing makes up 13 versus 3%

• Financials make up 16 versus 7%

The largest component of the value index is Berkshire Hathaway, an investment conglomerate, while that of the growth index is Apple, a diversified IT company. Ironically, Berkshire’s largest investment is Apple.

Both investment styles carry risk

Although Yves St Laurent famously declared, “Fashions fade, style is eternal”, style in the investment world can go out of fashion - for a while.

Over the three years to the end of February 2022, the S&P500 value index (USD) has underperformed the growth index by a cumulative 36.3%.

So, it’s no surprise that popular shares promoted on direct-investment platforms like Hatch and Sharesies tend to be growth shares, typically those operating in the IT industry.

Does that mean growth will always outperform value? Nope.

In the three months to the end of February, there has been a radical reversal in medium-term relative performance between the two styles. In this short period, the value index has outperformed the growth index by 14%.

Taking a longer-term view, since the

style indices started nearly 30 years ago in 1992, the total return of the value index series is cumulatively 1.3% above growth, which works out at about… 0.03% per annum.

So, style return variations are negligible in a longer-term sense, but meaningful in the short-to-medium term.

At an individual share level, both investment styles have risks.

Companies or industries which are out of favour yet look attractive in terms of value fundamentals can continue to stay out of favour due to irreversible technological or social change. Examples of these in the last 20 years include coal mining, video stores, and telecoms industries. Value investors need to be careful not to ‘catch the falling knife’.

Conversely, a growth stock can hit a ‘bump’ in the expansion of its business. This often occurs due to the maturing in demand for their products, increased competition, or a failure to execute primary business plans.

How to access differing share investment styles

With a rather narrow set of quality companies in the New Zealand sharemarket, it’s not easy to build a portfolio exclusively based on either a value or growth style.

Hence you don’t tend to hear New Zealand share managers talk much about having a particular growth or value investment style, though each may have a ‘bias’ towards one or the other.

Notwithstanding this, with the increased number of ‘knowledge based’ shares in the New Zealand market, you could feasibly build a growth portfolio centred around technology stocks such as Ebos, F&P Healthcare, etc.

On the opposite side, there are shares

in traditional sectors like construction, oil and gas, and banking which might give an investor a value-biased NZ share portfolio.

However, when looking at the US or global sharemarkets, there are plenty of options to access particular investment styles - which is great for the style conscious.

Style-based investment options span a variety of New Zealand based funds (PIEs), exchange traded funds or offshore managed funds like Australian unit trusts. Within these fund groupings there are actively managed style-based funds such as Harbour’s T.Rowe Price Global Equity or Nikko’s ARK Disruptive Innovation Fund, as well as style-based index trackers (such as promoted by Kernel).

Value or growth style: which is best

Which investment style is better, value or growth? It depends.

However, given the relatively extreme valuation gap between the value and growth share universes, rising interest rates, and an increasingly uncertain economic growth outlook, my style preference post Covid crash, and up to late 2021, has leaned towards overweighting towards value shares.

But fashions don’t stay the same: the recent significant reduction in price of many popular growth companies, while many previously ‘value’ stocks have soared, should make one reconsider.

Value is a relative measure, so yesterday’s cheap stock can become expensive while an expensive growth company can become cheap.

A bit of both - staying open-minded - may be the best way to help manage style risk in your share allocations, while not forgetting that, as Giorgio Armani said, “The difference between fashion and style is quality”. A

David van Schaardenburg is an independent investment analyst.

‘No surprise that value investors are sometimes termed pessimists - they find joy in negativityand growth investors are viewed as optimists’

AMP

AMP

AMP

AMP

AMP

ANZ

Aon

Aon

2.057 -5.51

1.5635 -5.81 0.41 0.88

1.56023 -5.76 0.42 0.95

1.63932 -5.93 0.31 0.91

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SIL

Summer

Westpac KiwiSaver-Cash

1.4705

NZ Insurance Equity Region Australasia

AMP

AMP

AMP NZRT

OneAnswer KiwiSaver-Australasian

1.75704 -11.89

2.4658 -13.69

NZ Insurance Equity Region Australia

AMP KiwiSaver Australasian

1.4543 -12.19 3.87

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NZ Insurance Equity Region NZ

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NZ Insurance Equity Region World

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NZ Insurance Global Bond

AMP

AMP

AMP

AMP

AMP

OneAnswer

Summer

Summer

NZ Insurance Miscellaneous

AMP ARS-UK

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1.19971 -12.89 -0.26

2.31268 -13.06 -1.14

1.96232

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1.0535 -10.20

1.0535 -10.20

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NZ Insurance Miscellaneous Non-PIE

TOWER Vital Fund 2.36

NZ Insurance Mortgages Non-PIE

TOWER EnRoute Gold Fixed Income 17.85346 0.05

TOWER Investment Account - Fixed Income 1.7649 0.09

NZ Insurance Multisector - Aggressive

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2.09674 -12.07

ANZ

ANZ

Aon

Select

3.86

5.43

KiwiSaver Scheme-Balanced 2.0795 -9.69

2.1717 -9.68

-9.34

TOWER

TOWER

-

NZ Insurance Multisector - Conservative

AMP KiwiSaver

AMP KiwiSaver

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1.7624 -10.90 0.98 2.33 436.59 3

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Fisher TWO KiwiSaver Cash Enhanced 1.92993 -10.30 1.98 3.20 302.93 4

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Milford KiwiSaver Conservative Fund 1.8804 -9.66 2.42 3.66 190.90 5

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OneAnswer KiwiSaver-Conservative 1.858 -10.24 2.17 2.98 468.15 4

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NZ Insurance Multisector - Growth

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AMP KiwiSaver LS Growth Fund 1.996 -10.78 4.90 6.01 870.05 2

AMP KiwiSaver Nikko AM Balanced 2.1692 -13.47 2.53 4.68 90.98 1

AMP NZRT AMP Growth 2.83365 -10.64 5.21 6.31 275.72 2

AMP NZRT ANZ Balanced Plus 3.32913 -10.07 5.74 5.75 291.99 2

AMP NZRT ANZ Growth 1.5223 -8.92 8.13 7.97 30.35 4

AMP NZRT ASB Growth 1.4533 -8.93 5.53 6.58 17.12 3

AMP NZRT Nikko AM Growth 1.40202 -14.49 3.94 5.94 30.30 1

AMP PSS Lifesteps Growth 2.2646 -11.23 4.37 5.25 0.12 1

ANZ Default KiwiSaver Scheme-Balanced Gr 2.1906 -9.24 6.51 6.64 228.87 3

ANZ Default KiwiSaver Scheme-Growth 2.2821 -8.91 7.86 7.75 216.03 4

ANZ KiwiSaver-Balanced Growth 2.3247 -9.23 6.51 6.63 2753.91 3

Aon KiwiSaver Milford 4.87694 -5.47 10.32 10.48 184.11 5

Aon KiwiSaver Nikko AM Balanced 21.6224 -13.63 2.59 4.82 11.05 1

Aon KiwiSaver Russell Lifepoints 2045 11.23629 -10.66 5.75 6.59 21.61 3

Aon KiwiSaver Russell Lifepoints Growth 12.02748 -10.28 6.26 6.97 60.87 4

ASB KiwiSaver Scheme's Growth 2.4271 -8.74 5.86 6.94 4530.68 3

BNZ KiwiSaver Growth Fund 1.9888 -10.55 6.22 6.91 1196.96 3

Booster KiwiSaver Balanced Growth 2.2769 -8.70 7.20 7.60 494.57 4

Fidelity Life Growth 5.7325 -9.62 6.10 6.94 5.93 3

Fidelity Life Super-Super Growth 172.16

Fisher Funds Growth KiwiSaver Fund 2.7267 -11.46 6.83 8.05 2906.99 5

Fisher TWO KiwiSaver Scheme-Gr 2.3209 -7.58 7.17 7.62 810.10 4

Generate KiwiSaver Growth Fund 1.9524 -12.62 6.20 7.72 1022.08 4

Mercer KiwiSaver Sustainable Plus Gr -8.38 6.54 6.61 202.69 3

Milford KiwiSaver Active Growth Fund 4.8635 -5.40 10.39 10.54 3009.11 5

NZ Defence Force KiwiSaver Growth -9.00 6.16 6.31 39.36 3

OneAnswer KiwiSaver-Balanced Growth 2.3595 -9.23 6.52 6.65 555.22 4

ANZ

ANZ

2.015 -9.89

Aon KiwiSaver Russell Lifepoints 2025 10.27959 -12.15 2.43 3.69

Aon KiwiSaver Russell Lifepoints Mod 11.18031 -11.79 3.15 4.27 30.54

ASB KiwiSaver Scheme's Moderate 2.098 -10.69 1.85 3.61 2317.91

BNZ KiwiSaver Moderate Fund 1.5743 -11.13 2.71 3.87 681.54

Booster KiwiSaver Moderate 1.9213 -9.82 2.69 3.76 221.52

Fisher Funds Conservative KiwiSaver Fund 1.7715 -10.67 1.89 3.25 1051.67 3

Fisher TWO KiwiSaver Scheme-Cnsrv 2.00961 -10.81 1.85 3.31 193.04

Generate KiwiSaver Conservative Fund 1.5233 -9.76 3.47 4.74 472.56

Kiwi Wealth KiwiSaver Scheme Cnsrv -11.60 2.67 3.31 952.06

Mercer KiwiSaver Sustainable Plus Mod -9.15 3.14 3.86 214.27

Milford KiwiSaver Moderate Fund 1.1428 -7.52 94.55

NZ Defence Force KiwiSaver Moderate -9.33 2.93 3.66 7.14

OneAnswer KiwiSaver-Conservative

Summer

Westpac KiwiSaver

Westpac

NZ

AMP

AMP

AMP

AMP

Fidelity

Fidelity

OneAnswer KiwiSaver-NZ

SIL

2.0354 -9.88 3.71

1.0455 -10.32 1.97

1.4229 -10.99

1.8346 -10.49 1.73

2.55343 -14.03 -2.11

-14.98

-14.40

4.1916 -10.65

1.7373 -13.42 -1.15 1.19

3.0369 -13.69 -1.31 1.06 3.89

3.0369 -13.69 -1.31 1.06 3.89

SIL New

Summer New Zealand Fixed Interest 1.0715 -12.16 -0.82 1.43 5.50

Summer New Zealand Fixed Interest 1.0715 -12.16 -0.82 1.43 5.50

Summer New Zealand Fixed Interest 1.0715 -12.16 -0.82 1.43 5.50

Westpac Retirement Plan - Accum Port 3.2206 -10.63 -1.38 -0.13 11.57

NZ Insurance NZ Bonds Non-PIE

Sovereign - Colonial Invstrbds Fx Int 0.3633 0.18

NZ OE Cash

AMP AIT NZ Cash - UT35 1.15587 -5.78 0.36 0.93 59.51

AMP PUT Select Cash 1.37447 -6.05 0.15 0.70 1.99

ASB Cash Fund 345.31

Fisher Cashplus Fund 1.3722 -6.54 0.35 1.07 11.87

Macquarie NZ Cash 1.63875 -5.36 0.78 1.33 350.68

Milford Cash Fund 1.0326 -5.21 0.88 262.86

Nikko AM NZ Cash 1.0367 -5.27 1.19 1.73 362.80

Westpac PIF Enhanced Cash Fund 2.2259 -5.43 0.84 1.39 4.62

NZ OE Equity Region Australasia

AMP

BT

NZ OE Equity

AMP

NZ OE Equity Region Europe

Pie

NZ OE Equity Region NZ

AMP

AMP

Fisher

Fisher

Fisher Trans

Harbour

Macquarie

Macquarie

Milford NZ Equities

Nikko AM Core

Octagon

OneAnswer SAC

QuayStreet

Russell Investments

Smartshares

NZ

AMP

Elevation

Fisher Funds

T.

Macquarie

Milford

OneAnswer

1.9062 -13.97

2.84499 -13.02

3.46415 -13.75

260.65

3.9794 -13.63 7.32 12.73 699.30

2.6339 -11.00

3.7551 -9.26

5.9337 -14.23

3.4149 -11.00

1.9385 -13.35

1.3357

1.6929

1.91119

1.9917 -10.92

3.5478 -3.06

2.3017 -18.54

10.46 82.66

8.70 54.19

10.13 162.32

Macquarie Income Generator 1.13921 -5.82 4.49 5.55 72.73

Milford Balanced Fund 2.7877 -5.26 8.10 7.81 1610.30

OneAnswer MAC Balanced 2.1067 -9.72 5.00 5.30 858.67

QuayStreet Balanced 2.2321 -4.66 6.02 6.21 321.31

QuayStreet Socially Responsible Inv 2.1036 -6.71 5.05 5.19 61.33

Westpac Active Balanced Trust 2.5737 -11.73 3.94 4.91 399.21 3

NZ OE Multisector - Conservative

AMP PUT Select Income 1.60911 -12.49 -2.20 -0.12 1.52 1

ANZ Invmt Fds Conservative 1.6616 -10.27 2.11 2.84 112.43 3

ASB Conservative 1.7083 -11.37 0.25 1.94 125.67 2

Milford Conservative 1.1505 -9.86 2.42 3.71 570.80 5

OneAnswer MAC Conservative 1.6616 -10.27 2.11 2.84 112.43 3

QuayStreet Conservative 1.904 -8.35 2.25 3.47 138.98 4

QuayStreet Income 1.1778 -7.06 2.06 3.40 319.05 4

2.23778 1.34 11.56 10.36

2.6826 -7.76

3.0762 -6.88

Westpac Active Conservative Trust 1.9955 -10.67 0.95 2.23 194.74 2

NZ OE Multisector - Growth

AMP AIT Balanced Portfolio - UT 02 2.21513 -11.82 2.76 3.85 59.62 1

10.33 244.37

Pie Global Growth 2.2805 -10.74 13.72 11.32 232.12

QuayStreet International Equity 2.7047 -0.52 10.81 9.53 384.23

Russell Investments Global Shares 2.5767 -3.75 10.69 9.57 310.59

NZ OE Equity Region World - Hedged

AMP AIT Global Equities-Multi Mgr-UT28 1.58512 -9.56 9.07 7.13 10.42 2

AMP AIT Global Infrastructure UT04 3.66124 8.91 8.37 7.88 13.46 3

AMP Prem PUT SSgA Global Shares IndexHdg 3.21008 -9.85 10.96 7.74 3.84 3

ASB World Shares 2.2375 -6.75 9.75 8.01 806.14 3

BT PS International Diversified Share 2.3383 -12.65 9.28 7.80 29.36 3

Fisher Funds International Growth Fund 2.9189 -23.29 9.17 10.24 105.99 3

Fisher Funds Premium International Fund 3.0885 -22.99 9.62 10.67 351.86 3

Fisher Global Fund 7.5801 -11.58 10.56 8.84 160.61 4

Macquarie All Country Glb Shares Idx 1.29159 -7.45 10.63 84.27 4

Macquarie Core Hedged Global Shares 1.99176 -9.05 10.02 7.08 34.31 3

Macquarie Ethical Leaders Global Shares 2.23535 -7.71 9.98 8.21 41.10 3

Macquarie Glbl Listed Infra 2.21609 10.56 9.93 8.68 252.11 3

Macquarie Global Shares 3.93341 -6.41 10.12 8.56 29.78

Milford Global Equity 2.0187 -11.85 10.81 9.06 388.28

Nikko AM Global Equity Hedged 2.5473 -11.93 12.97 9.29 22.27

Pathfinder Global Water 2.5878 -11.68 9.17 7.79 56.60

Russell Investments Hedged Global Shares 2.5632 -10.50 10.08 7.65 336.66

AMP AIT eInvest Growth - MDF6 1.65274 -10.80 4.79 5.78 8.49 2

ANZ Invmt Fds Balanced Growth 2.3818 -9.27 6.47 6.51 553.91 3

ANZ Invmt Fds Growth 2.6248 -8.94 7.82 7.62 343.34 4

ASB Growth 2.0265 -9.20 5.31 6.39 239.25 3

Milford Active Growth 4.7671 -5.84 10.09 10.29 2610.52 5

OneAnswer MAC Balanced Growth 2.3818 -9.27 6.47 6.51 553.91 3

OneAnswer MAC Growth 2.6248 -8.94 7.82 7.62 343.34 4

OneAnswer SAC Balanced Growth 3.7929 -9.25 6.49 6.54 51.18 3

QuayStreet Growth 2.4043 -3.27 7.60 7.42 328.54 4

Westpac Active Growth Trust 2.6136 -11.88 5.09 6.07 107.83 3

NZ OE Multisector - Moderate

AMP AIT eInvest Conservative MDF2 1.27326 -11.21 0.67 2.02 6.18

AMP AIT eInvest Moderate - MDf3 1.35973 -11.52 1.41 2.83 24.77

AMP PUT Select Conservative 1.81892 -11.96 -0.01 1.37 9.86

ANZ Invmt Fds Conservative Balanced 1.8793 -9.91 3.67 4.14 409.93

ASB Conservative Plus 1.7436 -11.49 0.68 2.57 676.61 2

ASB Moderate 1.7978 -11.14

TOP 10

As usual it has been a busy month on Good Returns . Here is a list of the top 10 most read stories over recent weeks.

01 Brian Gaynor dies

One of the titans of New Zealand's capital markets, Brian Gaynor, passed away this morning after a brief illness.

02 Commission creep concerns FMA

The Financial Markets Authority is warning product providers that it does not like what it is seeing with commissions.

03 FMA didn't disclose Booster conflict

The Financial Markets Authority failed to address conflict of interest issues during the KiwiSaver default review process.

04 Quarter of advisers consider quitting due to stress

New research into the mental health of financial advisers across New Zealand has found an increase in work burnout and deteriorating mental wellbeing.

05 Kiwis need better financial advice, says new FMA boss

There is a “big gap” between the level of financial advice New Zealanders need and what they are getting, says the FMA’s new CEO, Samantha Barrass.

06 [WATCH] Now is not the time to sell an advice business

Insurers are worried about the drop in new business levels and a growing trend for advisers to leave the market.

07 Is Asteron for sale?

Reports out of Australia say that Suncorp is looking to sell its New Zealand life insurance business, Asteron Life.

08 [GRTV] AIA rolls out direct life insurance plans

AIA has launched three direct to market starter plans with the aim of getting more New Zealanders covered.

09 Running a customer-centric business: how the FMA wants to see it done

In response to questions from advisers and insurers, the FMA has spelt out what it means to put customers front and centre of their businesses – a key requirement for compliance with the industry’s new conduct regime.

10 [OPINION] Who will buy KiwiWealth? And why it matters

Now the worst kept secret is out; that Kiwi Wealth is on the market, the question is who will buy the firm. But there are some other big questions too.

Keep up with the news at

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