ASSET DECEMBER 2011

The magazine for smart advisers

VOL 10, ISSUE 11 DECEMBER 2011

w w w. goodre turns.c o.nz

Reflecting on regulation How it has changed business Also tHis MontH

Most influential people How to invest in Australia Embrace the online world

Committed to advisers and the advice process Asset DECEMBER 2011 1 0800 88 22 88

Take the path to business growth with a trusted partner At OnePath, we have a long and successful history of helping New Zealanders create, manage and protect their wealth.

Much of our success is thanks to the efforts of financial advisers like you who, by recommending our products and services, help clients achieve their goals. So in return, we want to do what we can to help you grow your business.

We recognise that your world is one of change and complexity. Whether it’s new regulation, volatile market conditions or evolving consumer needs, you are constantly being called upon to respond and adapt. What you need is a trusted partner who understands what it takes to help you meet your customers’ expectations.

OnePath is more than just a name; it’s our commitment to partner you in reaching your goals.

OnePath (NZ) Limited

2

Asset

DECEMBER 2011

We look forward to the opportunities the New Year will bring as we work with you to help New Zealanders shape and protect the quality of their lives.

up front what’s inside

Top 10 in 2011

11

Health, wealth and wellbeing

18

Reflections on 2011

24

up front Head office 61-63 Marguerita Street, Rotorua PO Box 2011, Rotorua Phone: 07-349 1920 Fax: 07-349 1926 editor@assetmagazine.co.nz publisher Philip Macalister production assistant Alana Petersen editoral assistant Margie Macalister staff writers Benn Bathgate, Niko Kloeten contributors Darrin Franks, Chris Douglas, Edward Richards, Russell Hutchinson, design Art Tank Ltd debbie@arttank.co.nz advertising sales Sarah Harcourt 07 349 1920 027 4202069 sarah@goodreturns.co.nz subscriptions Dianne Gordon Phone 0800-345 675 subs@goodreturns.co.nz Asset is published by Tarawera Publishing Ltd (TPL). TPL also publishes online money management magazine Good Returns www.goodreturns.co.nz and The NZ Mortgage Mag All contents of Asset magazine are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited.

news & people Ideas and happenings at home and abroad including local news from www.goodreturns.co.nz

4-7

editorial Another year bites the dust

9

feature Top 10 in 2011

10

cover story

14

If you still have the first issue of ASSET back in April 2002 you’ll see it had a sketch of Jane Diplock cracking a whip on the cover. The story was “Your Last Chance” – to sort yourselves out or be regulated. Ten years later, Niko Kloeten takes up the story…

investment researcH Speaking of Australia...

18

Kiwisaver Leaving the lucky country

20

insurance special report Health, wealth and wellbeing – how’s yours?

22

professional advisers association Reflections on 2011

24

HutcHinson Embrace the online factor

26

practice management website Using the net to catch clients

28

iso Banking Ombudsman reports “unprecedented” year

30

asset adviser managed fund performance tables and other data

32-34

ISSN 1175-9585

Asset

DECEMBER 2011

3

up front people Newpark appoints new BDM Newpark has appointed Simon Yarrell as BDM in Christchurch.

This is a newly created role due to Newpark’s focus on expansion and growth and Yarrell will start in January 2012.

Over the past ten years Yarrell worked as an independent financial adviser for AMP and then moved to work for ASB as an insurance manager.

Trustees Executors appoints new private wealth advisers Four new AFAs have joined the nationwide private wealth team at Trustees Executors.

David Rendell joins the Auckland Private Wealth team. Originally from the UK, David brings with him international experience in the financial services industry and has worked with some of the world’s largest banks and building societies David Rendell providing comprehensive investment and financial planning advice.

Ross Sheerin is responsible for the Bay of Plenty/Waikato region and has over 13 year’s experience as an investment adviser and financial planner, bringing a wealth of experience Ross Sheerin and qualifications to his role and is a CFPCM practitioner.

Helen Chapman is a CFP practitioner with Helen Chapman over 11 year’s experience as an investment adviser and financial planner. She joins the Wellington team with a focus on providing tailored investment and financial planning services to Trustees Executors’ clients.

Gary McFadyen joins Helen Chapman in the Wellington team. He has a diversified professional background that includes over Gary McFadyen 25 years with the financial services industry.

AIA New Zealand announces new relationship role AIA has appointed Anand Srinivasan to National Manager - Key Relationships.

Srinivasan has been with AIA since March 2006 and brings over 16 year’s experience in the financial services industry to his role. Srinivasan was instrumental in developing the AIA ACC combined calculator, a prospecting tool that helps advisers to gain new business.

Fidelity Life appoints new director Fidelity Life has appointed Anne Blackburn to the board of directors.

Blackburn has a strong banking background and has also worked as a journalist and diplomat. She spent 15 years in investment banking in New York and London, returning to New Zealand in the mid-90s Anne Blackburn to take a role at one of the major local banks leading its capital markets activities.

Mark Brighouse role no more rumour We can confirm that Mark Brighouse, who has headed Brook Asset Management for a number of years, is taking up a role as chief investment officer with Fisher Funds Management.

He has responsibility for overseeing the investment team, asset allocation, currency, and Mark Brighouse overall investment strategy.

Brighouse is a well-respected investment professional having held a variety of investment industry roles for 24 years. He is a Chartered Financial Analyst (CFA) and was the President of the CFA Society of New Zealand from 2008-9.

Major clean out at OnePath ANZ Wealth has announced a major shake up of its investment management team which sees many well-known and long serving managers losing their jobs.

ANZ Wealth general manager Simon Botherway has announced the new structure and senior appointments to its Investment Management team.

Roles that have been disestablished include: Chief Investment Officer – OnePath; Senior Fixed Interest Manager – OnePath; and Head of Investments - ANZ. Also, the Structured Credit team has been disbanded.

Losing their jobs are: Philip Houghton-Brown. He has been a member of the senior leadership team for the majority of his 15 years of service, including in his role of Chief Investment Officer.

Amanda Smith. Smith has served as Head of Equities at OnePath for over 14 years.

Senior Fixed Interest Manager, Andrew Michl and Head of Structured Credit, David Jansen also lost their jobs Staying on are: Graham Ansell will continue in the role of Head of Fixed Interest, but now for the combined OnePath and ANZ Wealth teams.

Mark Brown has been appointed Head of Equities. Brown has been a senior Investment Manager in the OnePath equities team for many years and has established a strong performance track record over that period.

For more go to www.goodreturns.co.nz and click on People

Keeping families strong with innovative insurance products 0800 88 22 88 4

Asset

DECEMBER 2011

www.quotemonster.co.nz

Brand-spanking new insurance quoting and comparison software for NZ Financial Advisers.

Powerful, intuitive, and totally free.

It’s quoting the way it should be.

EE! R F IT’S

Build

Comparing the market has never been this easy. Quote 10 insurers and a huge range of policy options, add-ons, and premium structures - all in a matter of moments.

Compare

View insurers side-by-side and graph policy options and premiums. Plus access up-to-date brochures and policy documents.

Quote Report

Generate a clear, concise Quote for your client in a matter of moments. The Quote features your details and can be integrated seamlessly into your existing insurance sales process.

Try it today - it’s FREE. Register at www.quotemonster.co.nz Asset

DECEMBER 2011

5

upnews front News at a Glance

News briefs from New Zealand ifA trains up bank staff The Institute of Financial Advisers (IFA) is to provide Westpac’s AFA staff with training in a move IFA chief executive Peter Lee says will benefit the whole advisory sector.

Lee also dismissed concerns that IFA would in effect be up-skilling advisers’ competition.

“Any time you add a new adviser to the pool you could argue that’s competition, the fact is the bank staff are there already,” he said.

ifA boss says get rid of RfAs The two-tier system of registered and authorised advisers is confusing to consumers and should be replaced, according to Institute of Financial Advisers (IFA) president Nigel Tate.

“My pet desire is to get rid of the twotier accreditation process - I wouldn’t have Registered Financial Advisers and Authorised Financial Advisers, just AFAs. “At the moment it is confusing to consumers, who don’t understand the difference between a Registered Financial Adviser and an Authorised Financial Adviser.

AMp gives Mercer the boot AMP Capital has dumped Mercer as asset consultant on its multi-manager funds, replacing it with US consulting firm Towers Watson, which brings an existing relationship with AXA. AMP reviewed Mercer’s role because of the deal’s imminent expiry and because “AMP Capital’s requirements for asset consulting services have changed in recent years as our multi-manager team has grown in size and increased its capability,” according to a press release by AMP.

Advisers urged to question fund managers Financial advisers need to ask fund managers the hard questions when offer documents don’t provide enough detail, according to Pathfinder executive director John Berry.

Berry said concerns remain about the level of disclosure in offer documents in New Zealand for offshore investments.

for the best daily news go to

www.goodreturns.co.nz

no tick for shorten’s best interest duty Assistant Treasurer Bill Shorten has tabled the second tranche of the Future of Financial Advice (FOFA 2) draft legislation, spurring industry response over the keenly awaited best-interest duty component of the reforms.

FOFA 2 would enshrine in law a ban on most product-related commissions and would clarify the legal definition of best-interest duty, a legal requirement that advisers act in clients’ best interest and put the clients’ wellbeing ahead of their own.

While the commission ban, or conflicted remuneration, component of the reforms has been widely telegraphed, the industry has been awaiting legal clarification of the best-interest duty.

“This duty undermines a core objective of the FOFA reforms - to increase the availability and accessibility of advice,” Financial Services Council chief executive John Brogden said.

Source: www.investordaily.com.au

fofA best interest too prescriptive: fpA The best interest duty component of the second tranche of the Government’s financial advice reforms is a good compromise, but could have gone further in guiding good behaviour rather than prescribing it, the Financial Planning Association (FPA) said.

FPA General Manager Policy and Government Relations Dante De Gori said best interest was a solid step in transforming financial planning into a true profession.

“We think this is a great start. In all honesty, we think it could have gone further. There’s probably a bit too much prescription in there for our liking. It’s a compromise that, for this point in time, probably will work,” De Gori said.

Source: www.investordaily.com.au

future volatility should trigger advice The continuing macro headwinds of the European debt crisis and the slowdown of China’s economy should prompt Australians to seek financial advice or lead investors to reconnect with their adviser, Financial Services Council (FSC) chief executive John Brogden said.

“There’s no doubt the markets are down and flat, but it’s a bit like when you’re sick - you don’t try to kill yourself, you go and see a doctor.”

“So when [investment] times are difficult, you go to see an expert and get advice [on] what opportunities there may be. Our hope is that in difficult times people do take advice. This is not the time to take a punt; this is the time to take professional advice.”

Source: www.investordaily.com.au

investor confidence on the up Confidence among Australians remains strong overall even though only a small percentage of the nation’s population feels in control when making financial or life decisions, industry research has found.

Research from Macquarie Bank’s banking and financial services group found 65% of Australians felt positive about their lives, however, one-quarter felt confident and in control when making life or financial decisions.

“Those who have sought expert advice are much more confident about making financial decisions than those who haven’t, and are vastly more confident talking about finance (56%) than those who have not sought advice (44%),” it said.

Source: www.investordaily.com.au

6

Asset

DECEMBER 2011

Keeping New Zealand financial advisers strong 0800 88 22 88

Guardian Advice phases out BOLR Guardian Advice (Guardian) is doing away with buyer of last resort (BOLR) arrangements and will sign up new businesses under buyout facilities based on market value as set out by an independent valuer rather than the traditional recurring revenue model.

The shift to practice buyout facilities (PBF) from BOLR, outside of honouring existing arrangements, is part of Guardian’s revised strategy for expanding its adviser network.

The strategy includes financing arranged through its ultimate parent Suncorp, and, from 2012, equity participation.

“We’ve got some grandfathered BOLR arrangements and we’re working through those with some of our retiring advisers - working through those BOLRs as we speak,” executive manager Simon Harris said, but declined to give details.

Source: www.investordaily.com.au

Coalition calls on Government to delay FOFA date Senator Mathias Cormann has called for the government to delay the start date of its Future of Financial Advice (FOFA) reforms.

“There is still a whole set of issues that are unresolved.

There’s a lot of uncertainty still. Anybody I talked to in the industry says very clearly that there is just no way that legislation passed by the end of March in relation to FOFA can be seamlessly implemented by the industry come July 1, 2012,” he said.

As well as calling for Shorten to act, Cormann also reaffirmed the Coalition’s position on FOFA. “We are in favour of any measure that improves the efficiency and transparency and competitiveness of the financial advice industry,” he said.

Source: www.investordaily.com.au

Clients could lose out from opt-in: FOS Illness and extended travel could result in inadvertent termination of adviser agreements under opt-in, the Financial Ombudsman Service (FOS) says.

In its submission to the Parliamentary Joint Committee (PJC) on Corporations and Financial Services, FOS expressed concern that illness, extended holiday travel or difficulty in understanding long, technical documents could prevent clients from renewing adviser agreements.

As a result, they could be penalised by inadvertent termination of the relationship.

The financial services dispute resolution body said the opt-in measure needed a requirement that clearly stated how failure to renew would affect the client.

News at a Glance News briefs from New Zealand

Globalising forces to impact on NZ advisers Financial regulations in New Zealand will be increasingly driven by overseas developments, according to Institute of Financial Advisers (IFA) chief Peter Lee. Lee also said that gives professional bodies such as the IFA that engage with global peers the chance to shape those future regulations.

FMA warns against KiwiSaver fee doubledipping KiwiSaver investors shouldn’t be charged two lots of fees on the same return, the Financial Markets Authority says.

The FMA has released a new draft guidance note on KiwiSaver performance fees, saying it has received an “increasing number of enquiries regarding the reasonableness of performancebased fees.”

OnePath’s share of new business falls as lapses soar OnePath Life has seen a sharp drop in its share of new life insurance business in the September quarter and its rate of lapses, surrenders and cancellations is the highest in the market with the exception of Kiwibank.

The latest Investment Savings and Insurance Industry Association (ISI) figures show OnePath’s new business in the individual term, trauma, replacement income and lump sum disablement product categories fell to $6.7 million in the three months ended September or 14.8% of the total new business in those product categories.

For the best daily news go to

www.goodreturns.co.nz

Source: www.investordaily.com.au

Asset

DECEMBER 2011

7

advertorial

Partners – Have You Heard?

Clearing up market misinformation and untruths by naomi and the partners team

T

he team at Partners has had a few giggles at some of the market misinformation and untruths that have been attributed to us over recent months. We are obviously delighted to be the centre of attention – but we do think that it is time we corrected some of the more outrageous of those misstatements and untruths as follows:

is there a concern around partners underwriting practices?

As part of the standard terms of our reinsurance treaty, our reinsurance partner, SCOR, have been actively involved in reviewing and auditing our underwriting processes over the past 8 months. These reviews have reinforced the effectiveness of Partners’ strategy of recruiting experienced and highly regarded underwriters. The results of these reviews and initial audit have confirmed that we underwrite prudently – just like we said we would when we launched.

We have actually lost cases where we couldn’t ‘match’ existing terms or where we were not prepared to ‘match’ new terms offered by other providers.

Reinsurers regularly audit underwriting for their ceding companies. Both to give themselves comfort that their client companies are following their underwriting guidelines (which they are required to do by treaty), and to assist their client companies to identify any potential issues with their overall underwriting performance (or with any individual underwriters). This is a standard industry process and one all of our underwriters are very familiar with from their various previous employers.

why is partners encouraging churn and damaging the industry accordingly?

Partners advocates the best product for the client’s situation based on quality advice, it is as simple as that. Partners does not offer transfer terms, and all applications are fully underwritten with appropriate acceptance terms offered.

Partners is focussed simply on providing a product range that delivers against clients’ needs and reduces the risks to the adviser of selecting a product with potentially serious gaps in it.

If that means the adviser believes the Partners product is better for a particular client than the product they already have in place; the acceptance terms with Partners are the same or better than their existing terms; there are no new stand-down periods for transferred benefits and the adviser is able to justify their recommendations to an external compliance body, then in our view the adviser is right to recommend the client replace their existing product and we are very happy to accept the business.

Partners believes that Product providers should compete on 8

Asset

DECEMBER 2011

the basis of the value they provide to the client. This is simply competition and, as in all industries, competition is generally good for the consumer.

Doing the right thing by the client is not the same thing as ‘churn’ solely for the purposes of commission, irrespective of the outcome to the client – something which you are aware the Partners Executive team has always very strongly objected to.

In fact, the annualised percentage of replacement applications that Partners have received to date is roughly in line with the percentage of replacement business written across the industry for each of the past 10 years – a period during which Partners did not exist. It would certainly appear that life companies have been gaining business from and losing business to each other for many years.

Partners have also received a substantial amount of brand new business over the past 8 months, which we believe is fantastic for the industry as a whole.

Partners provides loyalty discounts; unique contractual claims commitments and guaranteed policy wordings upgrades in our policy wordings to ensure our clients and their advisers continue to value their Partners contracts well into the future. We see it as our responsibility to hold onto our clients long-term.

Aren’t the founders just trying to build an asset to sell?

The entire Partners team is certainly trying to build an asset –a very valuable one at that. Partners have a number of shareholders who have whole heartedly supported the company since before it was launched, some of whom will want an exit strategy for some or all of their shares at some stage. Partners have plans for an IPO listing but only when market conditions make that an attractive proposition. In the meantime the Partners team have been tasked with building a successful, sustainable business which meets client, adviser, staff and shareholder expectations – all of which are clearly important to a successful IPO. The Partners executive team has a proven track record of building and running successful life companies over many years and between them can lay claim to some of the longest consecutive tenures at the helm of life companies of any executive in the industry today.

Partners Managing Director, Naomi Ballantyne, is one of the younger CEO’s in the Life Insurance industry today and is totally committed to seeing the long-term goals for Partners come to fruition.

In reality at any given time the possibility exists that any of the current companies could be subject to an acquisition. The impacts of any such acquisition for the staff, advisers and clients

up front editorial of those companies will be determined by the decisions and actions of the new owners – i.e. their outcomes – good or bad – will be of their own making.

Isn’t Partners ‘buying business’ by paying higher commissions than others?

Partners pitched its commission levels with the market at the time we launched. We see commission levels as a maintenance factor and have deliberately chosen not to compete on commissions – just to match what the industry was paying.

We do have a unique deferred commission scheme that is linked to our share price, which allows advisers to earn future commissions depending on any increase in the value of the company over time. This scheme is designed to reward a combination of production and persistency - both of which are important to the profitability and value of the company.

The shareholders of Partners are willing to share their value with advisers in this way because they believe that mutually rewarding relationships deliver better value to all parties over time.

Commission structures – like product design, pricing and service delivery - are totally in the hands of each company to compete with as they choose. Shareholders and executive teams have the choice of how they share value with their clients, advisers and staff and the choices they make determine the outcomes they achieve.

Is Partners running out of reinsurance funding?

Reinsurance was used to enable both Sovereign and Club Life to successfully enter the market. Partners have been using SCOR as our reinsurance partner in supporting our successful entry to the market and they are committed to building our business with us.

Partners have provided SCOR with a unique opportunity in the Australasian market and we therefore see this as a true winwin reinsurance relationship.

Has the regulator refused to give Partners a licence?

No. We, like the rest of the industry, are working closely with the RBNZ to complete their provisional licensing process. We continue to provide them with any information they request and answer any questions they may have. We expect to move through this process in the same way as our competitors and we have not been made aware of any issues by the RBNZ to date.

Partners welcomes the scrutiny that is required from the licensing process as it minimises the opportunity for detractors to make unsubstantiated accusations about us – as has historically been the reaction to new competitors into this market.

If there’s anything we’ve missed and that you would like clarification for – just give any of the team a call – otherwise have a fantastic Christmas – and we look forward to doing business with you in the New Year.

Another year bites the dust

W

hat a year it has been. This time 12 months ago I recall people saying it had been a tough 2010 and they hoped this year would be better, easier with more business written.

I’m not sure that has been the case. Regulation has had a huge impact on everyone in financial services and there is little doubt this trend will continue into 2012.

The biggest impact has been on AFAs and provider companies. Registered Financial Advisers by comparison have had a pretty easy ride. I wonder though whether that will be the case in the future – especially after reading comments on Good Returns from IFA president Nigel Tate suggesting that all advisers become AFAs. We try to avoid too much navel gazing on the year past, but to help look at what have been the big issues I went back through Good Returns to see what have been the most popular stories of the year.

The top news story was about the Financial Markets Authority and its now infamous “Cowboy” ads. This was also a story which generated a huge amount of comment.

One of the things which is going to be fascinating to watch over the next year is how the relationship between the FMA and the industry, that is advisers and providers, develops. I’ve written before how there is currently tension between the FMA, as the police, and the people and organisations it enforces. Hopefully this will mellow.

Back to the top stories there was a strong showing around regulation, particularly when loopholes and uncertainty were discovered.

Another popular topic was OnePath. The company continues to make headlines and get reaction to changes as it moves through the process of becoming more integrated into ANZ. The evolving shape of the industry is also a hot potato. An easy prediction for 2012 is there is plenty more to come in this area.

It is a big year for ASSET in 2012 as we mark our 10th birthday. While there will be celebrations we look forward to keeping you up-to-date with everything happening in the advisory world.

Thanks to all our loyal readers and people who have commented on stories and provided feedback during the year.

Thank you too to those companies that have supported us with advertising which helps us bring you all the news and events.

That is 2011 wrapped up for another year. From all the team here at ASSET Magazine and Good Returns we wish you a happy Christmas and prosperous 2012.

Philip Macalister Publisher

Asset

DECEMBER 2011

9

up front feature

in what has been a turbulent and tumultuous year for financial services in new Zealand, certain people have stood out for their influence on the fast-changing sector. niko Kloeten ranks our top 10 contenders – but who is the winner?

T

he big theme this year has been regulation, with the launch of the Financial Markets Authority, the regulation of financial advisers. This list reflects the impact regulation has had this year, forcing many companies to change their business models and in many cases try to absorb extra costs. Meanwhile, the movers and shakers in the industry continue to lead the way, developing new products, re-shaping their organisations and coming up with fresh ideas that competitors are eager to follow.

10

phil goff

Phil Goff

The now-former Labour Party leader would have been higher on this list but unfortunately for him the voters rejected his party at the polling booth. Despite this failure on election day the changes Goff made to Labour’s superannuation policy were significant, and their importance cannot be underestimated. Labour will one day be back in government and, unless the party back-tracks, that will mean compulsory KiwiSaver, a capital gains tax and a commitment to (eventually) raise the age of eligibility for New Zealand Superannuation.

All these policies represent sacred cows that National won’t touch. Compulsory KiwiSaver will give a huge boost to the fund management industry, which is ironic when National is considered by many to be the party for big business. Most New Zealanders, particularly younger voters, recognise that the current superannuation system is unsustainable in the long run and needs changing, and at least one of the two major parties has finally acknowledged this.

10

Asset

DECEMBER 2011

9

in 2011

gareth Morgan

Love him or hate him, there’s no denying fund manager Gareth Morgan’s ability to get his name in the media and use this publicity to generate Gareth Morgan discussion about financial issues important to New Zealanders.

This year his hobby horse is his “Big Kahuna” idea – a plan for a radical overhaul of New Zealand’s tax and welfare system. It would do away with WINZ and institute a guaranteed minimum income, a flat income tax of 25%, and a capital tax. The Big Kahuna has about as much chance of being implemented as Sean Hughes does of being invited to Bernard Whimp’s Christmas party this year, but it is a welcome addition to the debate about how to improve New Zealand’s wimpy economic growth and address some of its social issues. Ask anyone on the streets to name a fund manager and Morgan would be one of the first names mentioned.

8

Darren pratley & peter leitch

Professional Advisers Association (PAA) chairman Peter Leitch (not to be confused with the bloke who sells sausages) and New Zealand Mortgage Brokers Association (NZMBA) chairman Darren Pratley make the list because of their role in the proposed creation of a joint board between the two organisations. In the new era of super regulators it seems super lobby groups are the way to go – just look at the proposal by the Investment, Savings and Insurance Association (ISI) to create a new pan-industry group. However, that is just a pipe dream at this stage, while the hook-up between the NZMBA and the PAA is much closer to fruition. There is some common ground between the two organisations Darren Pratley and working together would increase their clout: between the two bodies there are an estimated 1000 to 1200 members.

Feedback from advisers suggests strong support for the collaboration. Pratley and Leitch (and their colleagues) are to be commended for coming Peter Leitch up with the idea.

upfeature front

7

Justice Robert Dobson

6

simon Botherway

High Court Justice Robert Dobson probably doesn’t spend a lot of time looking at yield curves but the judge has had more impact on New Zealand’s finance sector this year than most of the Carey Church number-crunchers.

This is because his judgment in the Armitage v Church case, in which a pensioner sued his financial adviser, has sent shockwaves through the entire financial adviser industry. Justice Dobson found partly in favour of the investor, Neil Armitage, but also noted the responsibility of clients with regard to their own investment decisions. The controversial judgment will set an important precedent for similar cases, particularly now the appeal has been cancelled so there is no chance of it being overturned. It has resulted in the Institute of Financial Advisers issuing new guidelines for its members, and has been a hot topic around the country at professional development sessions and roadshows. Amid all the talk about regulation it is important to remember the importance of case law, and until now there hadn’t been very much of it in this area. Expect similar cases to filter through the courts in the next couple of years.

A pensioner sued his financial adviser and sent shockwaves through the entire financial adviser industry. Justice Dobson found partly in favour of the investor, Neil Armitage, but also noted the responsibility of clients with regard to their own investment decisions

A prominent figure in the financial industry said New Zealand is “very lucky” to have Simon Botherway and ANZ clearly agrees, snapping him up earlier this year as general manager of investment management for ANZ Wealth. He played a key role in the changes at ANZ Wealth and OnePath’s investment teams (mentioned below in John Body’s profile).

But the former Brook Asset Management boss has also made an impact on the regulatory front this year, in his role as chairman of the Financial Markets Authority establishment board. The latest in a number of high-profile jobs since he sold out of Brook, the task of setting up the FMA was a big one but he succeeded in getting the government to give it the funding the establishment Simon Botherway board asked for.

5

John Body

ANZ New Zealand’s managing director wealth has had plenty on his plate this year and, while others in the industry may have garnered more headlines, his is a name that comes up regularly in discussions as someone who is flying under the radar but still making a big difference. ANZ Wealth and OnePath (formerly ING NZ) have undergone significant changes this year, with an overhaul of the investment team’s structure. This has seen a number of prominent staff lose their jobs as ANZ went about eliminating duplication between the OnePath team in Auckland and the ANZ Wealth team down in Wellington. Body worked closely with Simon John Body Botherway on these

Calling all New and Seasoned Advisors time for a better career and a better lifestyle

Join a motivated Company and look forward to your future!

VERY competitive package which includes:• • • • • • • •

You own your clients You receive your full commission entitlement We have both RFA’s & AFA’s working in our office Compliance all taken care of Leading and unique analysis & report system – (clients rate highly) Highly experienced staff (underwriting, mortgage, retention, claims) Client database management Modern offices in Mount Maunganui & Hamilton

To find out more about joining the Planwise Team Contact:Bruce Cortesi 027 434 0031 07 547 4266 bruce@planwise.co.nz www.planwise.co.nz

Asset

DECEMBER 2011

11

up front feature changes. He was also involved in OnePath’s management internalisation deals at listed property trusts Argosy and Vital Healthcare, speaking out about criticisms of the deals.

4

Jack Regan

Jack Regan

AMP’s New Zealand boss has had the imposing task of meshing together two of the largest fund management, insurance and advisory businesses in New Zealand, and by all accounts is doing a pretty solid job. Industry insiders say the merger brings together the different strengths of the two companies and negates their weaknesses, making it a good match. However, there was always the risk the employees of AXA wouldn’t be too enamoured with their new company. So far there has been no talk of dissent or disillusionment from AXA staff, and with a merger of this size that’s no small feat.

Regan can take a lot of credit for that, and the company has plenty of challenges on its plate without having to deal with HR issues.

AMP also seems to be making good use of AXA’s resources; for instance, AMP Capital recently ditched Mercer as consultant for its multi-manager funds, replacing it with a company AXA already uses for its own funds. Regan will be looking to make good use of AXA’s resources in New Zealand, including its excellent use of technology.

3

Naomi Ballantyne

This one is really Naomi Ballantyne and Chris Coon who this year launched new insurer Partners Life.

The company is taking on the established players and as a recent report on goodreturns.co.nz shows the company was ranked third in terms of market share of new business for the September quarter. The big loser appears to be her former company OnePath Life. Ballantyne seems to polarise the industry and, rightly or wrongly, creates waves around the issue of churning.

Partners Life has been the most influential company in the life insurance sector this Naomi Ballantyne year.

2

Sean Hughes

Local knowledge, international experience and a nononsense attitude to dealing with financial miscreants are some of the attributes Sean Hughes brings to the table as the Financial Markets Authority’s inaugural chief executive. Hughes showed the FMA meant business when he issued a warning about the low-ball share offers by Bernard Whimp on May 2, only a day after the “super regulator” Sean Hughes launched. The FMA

12

Asset

DECEMBER 2011

has also taken aim at dodgy KiwiSaver sales tactics, particularly the antics of the now-infamous Patrick Diack. Despite the FMA’s vastly increased budget compared to its predecessor the Securities Commission, Hughes has been quick to stamp out the extravagance that drew criticism of the regulator’s previous incarnation. He has made it clear he will be no “Plane Jane”, a reference to the nickname given to former Securities Commission chairwoman Jane Diplock for the frequent flyer miles she racked up during her time in the job.

1

Simon Power

Simon Power

The most influential figure in New Zealand’s financial services sector in New Zealand this year was a former lawyer who had never even worked in the industry. Former Commerce Minister Simon Power, who retired from Parliament at this year’s election, earned the accolade with the creation of the Financial Markets Authority. The “super regulator” went from idea to reality in only a year, launching on May 1 this year after Power announced it at an INFINZ dinner in late April 2010. One prominent financial industry player described this achievement as “quite extraordinary.” It completed a busy three years in Parliament for Power, who has been instrumental in pushing through a wide range of reforms in finance and commercial law, including the Financial Advisers Act which came into force this year as well. And he isn’t finished with finance either – he has moved to a job in charge of Westpac’s private bank. While some may question his credentials for the job there is no doubt he can get a lot of things done in a short space of time.

. . . drum roll . . . … and the winner is: International markets More influential than any single person have been the volatile international markets that have caused so many headaches for the finance sector not just here but around the globe. Instability has been the big problem as markets have bounced and crashed on the latest news, often on the same day. The malaise has affected most asset classes, making it difficult for investors, fund managers and advisers to find a safe haven. Gold has continued its meteoric rise in an uncertain environment, helped along by artificially low interest rates in many countries. But the big worry is the Euro debt crisis, which shows no signs of improving any time soon. Critics said the bailouts of big banks in 2008/2009 would only worsen the problems by increasing the size of the banks and transferring risks from private companies to taxpayers, and with a number of European countries on the verge of bankruptcy these warnings seem prescient. However, the biggest problem in terms of sovereign debt is massive, unaffordable welfare states, which show no signs of shrinking just yet.

HOW EASY IS IT TO PACK UP KIWISAVER AND MOVE?

HERE’S OUR THINKING Moving your KiwiSaver to Brook Asset Management is easy and can be done in one quick visit to www.brook.co.nz/easy*. It’s a move well worth your consideration. Here’s why.

At Brook, we believe your KiwiSaver contributions are a medium to long term investment with the potential to grow over time. Our approach to KiwiSaver brings together the best thinking we have about local and international shares, currencies and bonds. We diversify your investment across different assets while actively selecting quality investments. You can choose the Balanced Fund or Growth Fund depending upon your circumstances.

The results speak for themselves. Both fund returns are ranked number 1 in their respective categories over the four year period since the inception of KiwiSaver†.

So if you’d like a thoughtful approach to your KiwiSaver contributions, choose Brook. Move your KiwiSaver to Brook today. †Morningstar KiwiSaver Performance Survey September Quarter 2011

*An Investment Statement for the Brook Professional KiwiSaver Scheme (“Scheme”) is available at www.brook.co.nz, by telephoning Brook Asset Management Limited (“Brook”) on 0800 802 766 or from your financial adviser. Applications to invest must be made on the application form accompanying the Investment Statement.

Investments in the Scheme are not deposits with, or other liabilities of, Macquarie Bank Limited ABN 46008 583 542 (“MBL”) or of any other Macquarie Group company and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Neither MBL, Brook nor any other member of the Macquarie Group guarantees the performance of the Scheme or the repayment of capital from the Scheme or any particular rate of return. MBL is a company incorporated in Australia and authorised under the Banking Act 1959 (Commonwealth) to conduct banking business

in Australia. Neither MBL nor any member of the Macquarie Group, including Brook, are registered as a bank in New Zealand by the Reserve Bank of New Zealand under the Reserve Bank of New Zealand Act 1989. Brook is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth) and its obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of Brook, unless expressly noted otherwise.

This general advice has been prepared by Brook and does not take into account your objectives, financial situation or needs. Before acting on this general advice you should consider whether it is appropriate to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Asset

DECEMBER 2011

13

up front cover story

Reflecting on

if you still have the first issue of AssEt back in April 2002 you’ll see it had a sketch of Jane Diplock cracking a whip on the cover. the story was “your last Chance” – to sort yourselves out or be regulated. ten years later, niko Kloeten takes up the story…

14

Asset

DECEMBER 2011

regulation A

investment internationally was the market intelligence area. For wave of regulatory reforms washed over New example in the Madoff case, there were a number of red flags Zealand’s financial sector this year, forcing many that could have resulted in the situation being picked up earlier.” companies and advisers to change the way they do One of the most important decisions in the establishment business. board process was the appointment of FMA chief executive And for those who are taking a deep breath thinking it’s all Sean Hughes, a New Zealander who has spent time in Australia over, think again – there’s still plenty of change to come in the working for ASIC. next couple of years.

Botherway said Hughes was the top pick from a strong list of One of the biggest changes this year was the introduction of contenders, including a number of international prospects. the Financial Markets Authority, the so-called “super regulator” “I think he was a very strong candidate and that replaced the Securities Commission and the other good thing about him in this role is incorporated some roles previously held by he’s an expat. The thing about expats is they other government agencies. actually know what it’s like in New Zealand.

One of the architects of the new regulator “Some senior appointments [from was Simon Botherway, who was chairman overseas] in other agencies haven’t worked out of the FMA establishment board, and he is as hoped. There’s a different culture here and pleased with how the finished version of the it’s a long way from other financial centres.”

FMA turned out.

Speaking to ASSET magazine from “The short answer is yes,” he said Sydney, where he had been meeting regulators when asked if he was happy with how including ASIC, APRA and the ASX, the government had responded to the Hughes agreed that local market knowledge is establishment board’s recommendations. important in a job like his, but his Australian “We were very fortunate to have had “One of the big experience has also been valuable quite a lot of latitude in terms of how we challenges and “For me it’s been a real advantage to recommended it be structured,” he said. surprises for understand the New Zealand market in the “We were able to go out and look at the me coming back context of broader global markets, particularly regulatory environment globally in places Australia. such as Canada and Hong Kong, particularly after 20 years “I think it’s important to understand more post-GFC, and that really informed our overseas is that the psychology of the New Zealand markets decision on the overall governance structure.” there is still a and be familiar with not only their make-up Importantly, the government agreed but also the way the New Zealand market is to give the super regulator a super budget sense of fear or operated. increase compared to its predecessor. anxiety about “One of the big challenges and surprises “We were able to build a model participating for me coming back after 20 years overseas organisation then cost it from the bottom in the equities is that there is still a sense of fear or anxiety up and use that as a basis to submit to the about participating in the equities market – government for the budget increase. market” shares are seen as an uncertain commodity.

“The increase really did reflect the – Sean Hughes “They still refer to the share market crash importance with which the government was that happened in October 1987, which no-one treating this – in the context of a zero budget does in Australia.” the government approved a reasonably substantial increase over Hughes said there were a couple of other key differences what the Securities Commission had been working with.” between financial markets in Australia and New Zealand, one of But it wasn’t just the money committed to the new regulator them being the greater investment in fixed interest here (a side that Botherway was happy with – he said there were other things effect of share phobia). the establishment board asked for that were granted by the “Also, because there’s been no compulsory superannuation, government. people haven’t had the opportunity to see their retirement “There were a couple of things we asked for. Number one was savings growing each year.” the derivative action power that was based on the ASIC (Australian Restoring that confidence will take more than just a few Securities and Investment Commission) section 50 power. convictions of finance company directors, Hughes said, the “That was quite positive from the perspective of the FMA’s licensing role is crucial for stopping rogue operators establishment board and it was a power that it should have had before things get to that stage. for some time.

Prosecutions are only one tool in the toolbox: “It’s a bit like “The other capability that was the subject of considerable

Asset

DECEMBER 2011

15

up front cover story qualification requirements, is an expensive exercise according to having the funeral hearse backed up to the bottom of the cliff Institute of Financial Advisers president Nigel Tate. waiting for the body to fall into the coffin,” he said.

Tate, who operates his financial planning business in the His experience in Australia has also given him some Waikato, said the costs didn’t stop once advisers got authorised; perspective on what not to do when it comes to regulating the compliance costs and time required to comply with new financial markets. requirements has also put a strain on profitability for advisers.

“I think mistakes have been made in Australia potentially “The key thing for me is the re-documentation of existing around excessive disclosure. The 2000-2001 financial reform clients… that’s effectively given a window of opportunity of one was meant to be guided by the principles of “clear, concise and year as we do client reviews to bring them up to speed.” effective” but they forgot about the concise part.

Although it doesn’t add a huge amount “Disclosure documents have become of extra time to each client review (Tate excessively long and difficult for Another key change says about 10 to 15 minutes), when added consumers to understand.” on the way is the up over a whole year the time, and cost, A key responsibility for the FMA is begins to mount up. overseeing the financial adviser regulations, move to a single He estimates re-documentation could which came fully into force earlier this year. product disclosure cost advisers more than $20,000 in the first The regulations are governed by the statement that year, because of the reduced number of Financial Advisers Act, which along hours they can charge for advice. with the Financial Service Providers will replace the “If you do two interviews a day that’s (Registration and Dispute Resolution) Act current system ten interviews a week, that’s two and a half requires advisers to be registered and, for of investment hours and if you’re charging a couple of many of them, authorised. hundred dollars an hour that’s $500 a week.

The new regime includes a two-tier statements and That’s a reasonably significant investment system of financial products, with category prospectuses of time which in most cases is not paid for one products requiring authorisation and by the clients. the less complex category two products only “That’s not even including the costs of education which can requiring registration. be in excess of $10,000 to get to that stage. A lot of us had Authorisation, which features a number of hurdles including already spent that years ago and got through easier this time.”

So for all that time and expense, does it make the clients happier, and do they even know about the regulations? Tate said clients were lukewarm about the process.

ONWARD AND UPWARD “It’s interesting, they acknowledge it’s there but I don’t think at this stage they appreciate its value – it seems to them to be a bit of a time-waster.

“But you can tell them you have to do it this way if they want you to continue to give them financial advice.”

While Tate said he was happy overall with how the regulations PO Box 47222 Ponsonby, Auckland 1144 had turned out, he said there were a couple of things he would have changed if he had been in charge of the process.

“My pet desire is to get rid of the two-tier accreditation process – I wouldn’t have Registered Financial Advisers and Authorised Financial Advisers, just AFAs. “At the moment it is confusing to consumers, who don’t understand the difference between a Registered Financial Adviser and an Authorised Financial Adviser.

“I wouldn’t have given lawyers and accountants a free ticket to the game.”

Tate said there’s technically no such thing as an RFA: “they’re really just non-AFAs,” he added.

For background details on our services go to He said it was “way too easy” to become registered, and www.mikemoore.co.nz disagreed with the way certain financial products had been or give me a call on categorised under the regulations.

“According to the FMA risk insurance is a simple product much like a term deposit. Well I would dispute that.

“Show me a simple income continuance policy… the implications of getting it wrong are massive; the cost of getting it wrong is bigger than the policy itself.”

P: 09 520 5131 F: 09 520 5141 www.mikemoore.co.nz Another criticism he had of the regulatory system was that

Buying!

Selling!

Specialising!

We can assist !

021 974 231

16

Asset

DECEMBER 2011

if he and an RFA down the road both gave the same advice on the same category two risk product they would be treated in different ways if things went wrong.

“I’m held to a different standard than they are and that’s wrong in my view.”

But while advisers are feeling the squeeze at the moment, other groups are set to benefit from the regulations.

According to Mint Asset Management chief executive Rebecca Thomas, boutique fund managers like Mint will find it easier to win business with banks as a result of the regulations.

“Banks are looking to avoid a repeat of the product selling scandals which revealed the practice of reputable banks selling their own in house products to their clients, products which often did not stack up in terms of performance or product design against more independent, specialist fund managers.”

“One of the biggest issues at the time was that Mum and Dad investors did not understand that banks were regularly selling their own in house products, often under different brand names,” Thomas said.

“Today under the Financial Advisers Act, and as a QFE, banks are faced with a legal obligation to disclose information about its services, including if they are offering a tied or in-house product.”

She said another advantage for banks that use third-party managers is a reduced compliance burden which can be very overbearing in highly regulated markets.

“In a regulatory sense, the banks are responsible for advice on products but depending on how they structure the offering, the features and benefits of the product is the responsibility of the third party fund manager.”

This year has seen a number of other regulatory changes kick in, such as the requirement for Trustee companies to be licensed.

The FMA has issued temporary licenses to trustees while it goes about reviewing the companies to make sure they are up to scratch.

However, the new regulatory regime still has “a couple of weak links in the investor confidence value chain,” according to Trustee Corporations Association chairman Clynton Hardy.

The first ‘link’ is custodians; the second is the conduct of auditors, particularly around disclaimers.

“TCA is firmly of the view that both issuers and the markets expect investors to be able to rely on financial information included in the prospectus and investment statement.

“If that information is accompanied by auditor audience limitation clauses, then surely this makes a moral nonsense of the new regulatory environment and the government strategy of building investor confidence.

“We hope that Parliament can address these two issues when it resumes after the election.”

These and other issues will be addressed in the Financial Markets Conduct Bill, a massive piece of legislation which was introduced to Parliament before the election and will be examined further in Parliament next year.

Another key change on the way is the move to a single product disclosure statement that will replace the current system of investment statements and prospectuses.

This is an important change, according to Pathfinder Asset Management executive director John Berry, who said important information in the prospectus is sometimes missing from the investment statement.

An issue that is simmering but has yet to be dealt with is KiwiSaver fees and in particular the difficulty consumers and analysts have comparing fee levels between funds.

This was highlighted recently when the government-funded Commission for Financial Literacy and Retirement Income got its fee calculations for a number of schemes wrong.

Thomas, who is also on the board of the FMA, said there were some big steps taken in the regulatory process this year but there was still a long way to go.

“It has been a big change but in my view this is just the beginning of the process of bringing us up to speed in an area where we’ve been far behind other countries.

“I often say to advisers that you think you’ve been singled out but you’re really just the first cab off the rank in this regulatory process.”

NOTICE FOR SENIOR ADVISERS Looking for a lifestyle change or wanting to slow down?

Are you thinking about

• Retirement?

• Semi-retirement?

• A smooth succession plan for your business?

Apex Advice Group can work with you to structure a plan that will suit your personal circumstances. This can be a complete purchase for those that want to fully retire or something in between, which will assist you to retain your ability to earn an income as well as enjoying the benefits of semi-retirement.

CONTACT ANDREW HAY P: 021 424 102 E: andrewh@apexgroup.co.nz W: www.apexadvice.co.nz

RFA ADVISERS Looking for someone to manage your Category 1 clients?

Talk to Apex Advice Group about how we can assist you with your investment clients.

Asset

DECEMBER 2011

17

investment research

Speaking of Australia... the Australian sharemarket is where it has all been happening – for the last 100 years anyway. so it’s not a question of whether to invest in Australian shares, but how you invest.

Chris Douglas weighs up the options

F

of implications for performance reporting and rom the New Zealand perspective, it’s difficult assessment. to ignore the record-breaking performance of Our universe includes a number of funds which the sharemarket across the ditch. According invest in Australia but still use a New Zealand shares to Credit Suisse, the Australian sharemarket benchmark. Although this can still be considered was the best-performing sharemarket in the world meaningful if the Australian exposure is only at the over the past 111 years. This included a healthy 7.21 margins, the increasing number of what are effectively percent annualised performance over the 10 years to trans-Tasman share funds require deployment of 30 June 2011, despite the past three years’ anaemic a split country benchmark for appropriate and 0.32 percent gain.

By Chris Douglas meaningful performance reporting. The case is the The Australian sharemarket is also attractive to same for the calculation of hurdles for New Zealand fund managers because of the wider performance fees. opportunity set.

In the past, New Zealand fund managers have benefitted There have been no significant listings on the New Zealand from increased exposure to a strongly-performing Australian sharemarket over the past decade. Although the National sharemarket, and the ever-declining weighting of Telecom in the Government has signaled a commitment to the (probably New Zealand market as a formula for ‘outperformance’. The partial) listing of a number of state-owned enterprises, the last nine months has however been something of a wake-up call. nature of the sharemarket remains a constraint for New The S&P/ASX200 Accumulation Index returned -15.11 percent Zealand fund managers attempting to invest according to their convictions, find firms which pass their metrics, and grow their assets bases. figure 1: Average Share Fund Australian and The Australian sharemarket’s track record of great returns, New Zealand Country Exposures, 2007-11 broader spread of listed securities, and ease of access have 90.00 all prompted New Zealand fund managers to want a piece Average Australian Exposure of the action. A number have reoriented their businesses to 80.00 Average New Zealand Exposure focus on trans-Tasman investing. Fisher Funds acquired the 70.00 First New Zealand Capital Trans-Tasman fund in 2010, and has been restructuring its Australasian equities team. Milford 60.00 Asset Management has hired an Australian to lead its research and stock selection efforts across the Tasman, and significantly 50.00 increased the allocation of Milford Active Growth to Australian 40.00 shares. The transformation of the former Milford Peak into Milford Trans-Tasman will also see Milford compete more 30.00 aggressively in the competitive Australasian equities fund sector.

20.00 Figure 1 below shows the average New Zealand and Australian exposures from 2007 – 11 of the funds we have 10.00 assessed qualitatively, showing the meaningful increase in 0.00 average exposure to Australian shares.

2007 2008 2009 2010 2011 This increased Australian shares exposure has a number Source: Morningstar DirectTM 18

Asset

DECEMBER 2011

in $NZ terms (-12.40 percent in $A terms) over this period, managers with Australasian equities mandates performed well compared to the NZX50 Index’s 1.04 percent $NZ return. relative to their Australian-domiciled counterparts. (This is on This has produced a ‘perfect storm’ for the portfolios a pre-tax basis, and so does not include the value-add from with substantial Australian exposure. The combination of imputation credits.) outperformance by the New Zealand market, the strengthening Given the strong showing of the Australian sharemarket over $NZ, and a turnaround in Telecom New Zealand’s share the period – as illustrated by the lacklustre performance of the price (which rose close to 22.0 percent over the six months NZX50 Index and the category average performance of the to 30 September 2011) has led many of these trans-Tasman New Zealand-only share funds – there has clearly been some share funds to underperform their indices. The funds which successful stockpicking, but two other key elements have led to produced the strongest performances over the past year were the strong results achieved by the New Zealand fund managers either heavily-weighted to New Zealand running Australasian vehicles. Firstly, shares, or not underweight Telecom New the Australian fund managers tend to Zealand. Only three of the 16 vehicles run more benchmark-aware portfolios, The Australian we assess managed to outperform meaning that their performances are more sharemarket’s the NZX50 Index over the year to 30 closely correlated with that of the market. track record of September 2011. None of these had New Zealand-based Australasian share great returns, significant Australian exposure. Only funds are more benchmark-agnostic, and three underperformed a split 50:50 have generally benefitted from avoiding broader spread of NZX50/S&P/ASX200 benchmark over the poor performance of Telecom New listed securities, the same period, and all were Australasian Zealand, while taking advantage of the and ease of access funds with typically over 50.0 percent resources-led bull run on the Australian of their investments in Australasian sharemarket. have all prompted equities. This illustrates the effect country Additionally, New Zealand-based New Zealand fund allocation can have on performance.

Australasian share funds tended to hold managers to want a high levels of cash in 2008, when the piece of the action NZX50 and S&P/ASX200 Indices fell Are you Better off Buying an 27.90 and 36.60 percent respectively.

Australian share fund?

These comparatively high cash Many well-managed Australian-domiciled weightings acted to cushion the returns the New Zealand-based share funds are easily available to New Zealand investors.

Australasian share funds were able to generate. All this suggests However, it should not be automatically concluded that funds that while there are some very good Australian share fund investing in the ‘lucky country’ will necessarily produce better managers, New Zealand investors may find that having a local returns than New Zealand share funds. fund manager investing selectively in Australian stocks produces Figure 2 shows the growth of a nominal $NZ10,000 invested an equally favourable outcome. in the NZX50 and S&P/ASX200 Accumulation Indices from 2004 – 11, as well as the category average performances of New Zealand and Australasian share funds, and the AustralianThis article is an excerpt from Morningstar’s 2011 New Zealand and Australasian domiciled Australian Large Blend category. The graph shows Equities Sector Wrap. Chris Douglas is Morningstar’s Australasian Co-Head of that over the past seven years, the New Zealand-domiciled fund Fund Research. He can be reached at christopher.douglas@morningstar.com

figure 2: Growth of NZ$100 From NZX50 and S&P/ASX200 Accumulation Indices and Category Average Performance for New Zealand and Australasian Equities Funds and Australian-Domiciled Australian Large Blend Fund Category, 2004-11 270.0 253.0 236.0 219.0

NZX 50 TR NZD New Zealand OE Equity Region NZ S&P/ASX 200 TR Australia OE Equity Australia Large Blend New Zealand OE Equity Region Australasia

202.0 185.0 168.0 151.0 134.0 117.0 100.0 83.0

30/11/04

30/11/05

30/11/06

30/11/07

30/11/08

30/11/09

30/11/10 30/11/11 Source: Morningstar DirectTM

Asset

DECEMBER 2011

19

investment Kiwisaver

Leaving the lucky country leaving home - and an investment bank grade pay packet – proved to be one of the smartest moves pete norris ever made. He tells Benn Bathgate how it enabled him to finally pursue his dream career in financial advice

T

o fulfill his long term ambition of becoming a financial adviser, Pete Norris was willing to take a salary haircut that would make even a Greek debt holder squirm.

And he’s never been happier.

Norris, Accelerate director and Authorised Financial Adviser (AFA), always had an affinity for finance and always wanted to run his own business, but a successful career at Citibank in Australia – then the world’s largest bank – and the A$250,000 salary that accompanied it – proved to be something of a stumbling block in the way of his main career ambition.

However, a Kiwi wife, a young child, the search for a better lifestyle and the chance to fulfill his career ambition combined to create an irresistible force that saw Norris and family cross the Tasman. Norris started out as a sole practitioner before a merger of four businesses created Newmarket-based Accelerate Consulting.

“The biggest barrier preventing me from getting into financial advice was my salary. That went when we decided to move here” he said.

“The idea of bringing together: helping people; running my own business and being able to make something simple that most people find pretty scary and complex – it all just lined up.”

And interestingly, the shift from Citibank’s corporate credit cards team and billion dollar budgets to offering financial advice didn’t prove to be as seismic a shift as some might imagine.

“It’s the same process but with less zeros, the $2 billion deals I was doing before are now $200,000, but the underlying foundation concepts are just the same – people are people and they want help with stuff that’s complex and they like people to make it easy from them.”

So leaving the ‘lucky country’ and a quarter-of-a-million salary, any regrets?

“It’s the best thing I’ve ever done. The day I started I knew I’d found the last job I’ll ever have - my career. I knew instantly.”

Norris advises clients across the board: investments; mortgages; financial plans and of course KiwiSaver – though 20

Asset

DECEMBER 2011

the retirement savings scheme is one product he didn’t need to stretch his financial acumen to see the worth of.

“It’s the foundation or cornerstone, KiwiSaver is a no-brainer in that absolutely everybody should be in it,” he said.

He is keen to stress however that when it comes to retirement planning, KiwiSaver is not the end of the matter, just the beginning.

“KiwiSaver is where you start and take advantage of all the benefits until those benefits run out then you start building up the retirement plan over and above that.

“Worst case scenario you’re getting a 50% return before market returns because the Government’s putting in, and for some people in the first year they’re getting a 300% return. People say I don’t want to do KiwiSaver because I want to pay off my mortgage, well from a financial point of view you can do both and it’s going to be far more impressive in building your net worth.”

On the subject of paying off a mortgage – sometimes given as a reason for a reluctance to save – Norris has an interesting view.

“It depends on the individual but it’s often an insecurity thing, they don’t want to look like they don’t understand it all, so it’s really easy to say, off the cuff, I’d rather pay off the mortgage,” he said.

“But you can tell them they’re not - as they’re paying the minimum the bank tells them to.”

He also has an interesting take on the issue of Government tinkering with the scheme, seeing opportunity for advisers in what he believes will be continual changes.

“It will be constant. When KiwiSaver first came in the first thing I said to all my clients is this will change every single year you are in KiwiSaver without fail. My role is to help you take advantage of those changes as they come along.

“There was always going to be changes to KiwiSaver and it’s beyond your control. When it happens we get stuck into it and ask what do we need to do for our clients to make sure they’re now maximising all the benefits of it, that’s why we’re here.”

Norris said the key is making sure you can use the changes to

the scheme, and those looking for an overall retirement plan. your clients’ advantage.

Servicing those latter clients is where he really gets to utilise Having experience of the Australian model, Norris is also his talents as a financial adviser. convinced one change that’s often mentioned – compulsion – “You want to know where the risks are, where the underlying would be of huge benefit to New Zealand. asset allocations are, you want to know whether their property “We’re the only OECD nation that doesn’t have it, we’ve got allocation is overweight direct or listed, because it’s going to the lowest savings records, we’ve got guaranteed Super that’s impact on other areas you’re advising on.” unaffordable for anyone over 65, we’ve got a financially illiterate He says this process will involve an in-depth underlying fund population. Compulsion is going to drive people’s focus and analysis, looking at how often the provider changes out of the interest into taking responsibility for their own finances, welfare fund, how many times its been reviewed, whether it is reviewed and retirement.” quarterly and where the fund manager ranks in their class.

On the issue of financial literacy – or more precisely its absence “I think that’s what separates out the best advisers, those that – Norris can also draw on his Australian experience to predict this have access to all the information and provide will change as KiwiSaver balances grow. the appropriate level for that particular client He says he believes clients’ will start asking for what they particularly need.” more and more questions of their adviser Norris said that at Accelerate they have an when balances reach the $25-$30,000 range, association with the AMP network so use their a change he will welcome. approved provider list of AMP, AXA, Tower and “I want clients that want to work with me OnePath, and that sticking to default providers and are interested and have a healthy debate has its benefits. with me, challenging recommendations, “My understanding is that every KiwiSaver because if they’re taking an active interest provider applied to become a default provider you can work with them to get the right and only six of them made it, they were solutions and they’re going to give you more “KiwiSaver whittled out and six got through based on information to help better advise them.” is where you Government criteria. That says to me they’ve Getting that information is one of the got the most robust processes and they’ve met key points for Norris, exemplified by his start and take all of the very stringent criteria’s across the approach to the crucial first client meeting. advantage of Government level.”

He said he will often take as many as 15 all the benefits Another trend Norris sees accompanying pages of notes and that part of that process until those larger KiwiSaver balances is more choice from involves ascertaining a person’s thoughts and fund managers and, as a consequence, more understanding of financial matters – including benefits run out fund switching. experiences and dealings of family and friends. then you start “That’ll change as balances grow higher, “It’s amazing how much bearing that building up the and as the fund managers start to give us more [family] can have with people,” he said. retirement plan choice,” he said.

“For me the most important thing is “At the moment they’re all multi-sector understanding their values, that’s what I really over and funds, but if single sector becomes available like to get out of the first meeting, what’s above that” and if balances are larger, I’d say switching will important to these people, because without – Pete Norris become a bigger part because we can wrap that I don’t really think you can build the long advice around it.” term trust and provide the long term support For the moment though, for Norris the important thing is and assistance they need.” simply being in KiwiSaver, full stop.

Another long term development Norris sees coming – and “I want people in KiwiSaver, I don’t care so much how they again will welcome – is the opportunities that will open up for get there, I just want them in and if they want our advice going advisers as people begin to access larger and larger pots of forward, we place them in a fund.”

KiwiSaver cash on retirement.

Talking about getting clients in the right position financially, He says that while many people will turn to the banks, as the enthusiasm that prompted Norris to walk away from the financial literacy increases people will seek out advice. lucky country and Citibank’s generous remuneration comes “People suddenly go hang on, some of this money I’m not going shining through. to use for 15 years, maybe it actually needs to be in a slightly more “It’s really powerful, really powerful because you’ve aggressive allocation to stay ahead of inflation,” he said. enlightened them, something that was scary and complex and “That’s where the investment planning service will come you’ve made it easy for them to have confidence in what they’re into play, where the real financial planning kicks in as you’ve got deciding to do,” he said. to manage funds to get a regular income out of them through “I find it ironic sometimes that we’re advisers, because adviser markets like we’re experiencing at the moment.” implies we tell them what to do, whereas what we do is actually When it comes specifically to KiwiSaver, Norris says he give them enough information to make the decision.” broadly has two types of client – those simply wanting to get into

100% committed to New Zealand financial advisers Asset

DECEMBER 2011

21

0800 88 22 88

insurance special report

Health, wealth

the traditional, profit-at-any-cost model has generated great wealth for many companies and people, but that model is failing. According to the best business minds and a preponderance of evidence, the best companies are those invested in the wellbeing of society, AiA new Zealand’s Head of Distribution and Marketing Darrin franks reports

R

you can be forgiven for thinking that you did the right ecently we’ve been focusing on the deep thing – after all, with wealth comes improved wellbeing but not so obvious connection between and better health outcomes, right? Not so, according to one’s personal health and wellbeing and Professor Kanter of Harvard Business School. In fact, the health, wellbeing and wealth of the she argues, great companies use a different operating organisation. There is no doubt that the better we logic. Rather than being disconnected from society, feel, the better our economic output, and the more they see themselves as an intrinsic part of it, and their wealth we can generate and enjoy. decisions about how to make money result in enduring But are we missing a bigger picture? organisations that foster and maintain awareness of the Most of us grew up with a traditional economic needs of people and society. theory: that the sole purpose of business is to

By Darrin franks All over the world during the past decade, make as much money as possible. We’ve been business people ranging from social entrepreneurs given to understand that companies of all sizes are to multinationals have been seeking ways to solve problems in supposed to be money-making machines, and nothing more. the developing world. When it comes to insurance, we in New Our own businesses have probably been built in this image, and Zealand are the developing world, with an insurance take-up rate some are still. of only about half the average of the OECD nations.

But it’s this thinking that is getting business offside with This non-traditional economic thinking sounds like a perfect society. You need only look at the Occupy Wall Street movement model for our industry. After all, our entire essence is founded to draw that conclusion; a large cross-section of society is on the needs of people and society, but in many ways we are represented there, not just a bunch of hippie hangovers. stuck in the last century, which ended in corporate collapse, And if you have built your business in this traditional image, 22

Asset

DECEMBER 2011

and wellbeing – how’s yours?

corruption, scandal and reputational trust issues, and the public voted with their feet.

Garnering people’s trust is the driver of our industry regulators, but we all agree that regulation won’t do it alone. Dr Gary Dennis spoke to a group of advisers recently about the power of stories and the passion with which we can connect to people and society.

Is it an art we have lost in pursuit of building businesses wedded to traditional economic theory?

In an independent survey of more than 1,200 people commissioned by AIA, the lack of uptake of life risks insurance directly correlated to knowledge: ‘I don’t understand, I don’t have, therefore I don’t rate or value’.

The Christmas season is a time for most of us to refresh our minds, challenge or check our habits, and rebuild our bodies for the new year ahead. While you are doing this, don’t forget the indisputable connection between these facets of our health and wellbeing and the wealth we get to share with people and society.

Best wishes this Christmas to you and yours from us all at AIA New Zealand.

Rather than being disconnected from society, they see themselves as an intrinsic part of it, and their decisions about how to make money result in enduring organisations that foster and maintain awareness of the needs of people and society

Asset

DECEMBER 2011

23

insurance professional Advisers Association inc

Reflections on 2011 unless it is the grave that you crave, learning to live and cope with a certain level of stress is an essential life skill and 2011 has provided plenty, writes Edward Richards

E

many small businesses and jobs, let alone the loss of very year is challenging, but 2011 stands 181 lives? Who would have expected the Government out as the most dramatic period since to offer to be the underwriter of last resort for a major 2001 when the world witnessed the 9/11 insurer? And who, twelve months ago, would have terrorist attack in New York and when New predicted Christchurch would need to be rebuilt at a Zealanders lost a heroic leader, Sir Peter Blake. possible long term cost of $20 billion?

As a country, we were affected by extraordinary 2011 was historically important for insurance, natural and manmade disasters. More than ever, mortgage and investment advisers. The new we look for the constants in such times, to seek out regulations categorise these professions as ‘financial the logs in the raging torrent. Confiding in a TV

By Edward advisers’. And from 1 April licensing of advisers and producer friend in the USA gave no solace when Richards other financial service providers occurred. responding to the question ‘where do we find more Licensing regulation arrived with a price tag. stability in life’. The reply was withering: ‘You’ll find Over 7,000 registered advisers incurred around $1,200 each in plenty of stability in the graveyard’ he counseled. So we must registration and dispute provider fees, whilst many of the 1,900 embrace change like a long lost friend. In this vein, the gritty AFAs incurred between $5,000 - $10,000 due to the cost of former Australian cricket captain, Steve Waugh, memorably mandatory education or assessments to satisfy the requirements remarked: ‘The way to deal with stress is to secretly enjoy it.’ of the National Certificate in Financial Services. The Extreme stress, though, is plain unenjoyable. Who, at the opportunity costs were evident, including the loss of revenue beginning of this year, could have foreseen the earthquake through institutions and advisers having to invest in swarm in Christchurch (and nearby districts) that destroyed

24

Asset

DECEMBER 2011

compliance - and themselves.

The new regulator, the Financial Markets Authority, burst out of the starting blocks with gusto. The message was be ‘on your game’ or yellow or red cards will be issued. Unsurprisingly, the FMA was quick to make an example of former directors of finance companies.

Advisers were well served by three players in the disputes resolution market: Financial Services Complaints Limited, Insurance and Savings Ombudsman and Financial Dispute Resolution (FDR). A curious quirk in the legislation allowed the FDR, as the original default provider, to receive funding from an ‘administration levy’ on advisers, many of whom may be members of other disputes providers.

Astute advisers and firms looked to utilise the regulated nature of financial services as an opportunity to brand, and grow client businesses. As Mark Weldon said, ‘regulation is good for your brand.’

Total insurance claims paid exceeded 1 billion (June 2011) - testimony to the hard work and integrity of advisers and insurers alike.

KiwiSaver assets rose further, surpassing $10 billion as of September 2011, whilst the New Zealand superannuation fund hovered at $18 billion as at October 2011.

The growth of our national saving scheme ought to send a positive message to investors and credit agencies in a world in which every country’s indebtedness is under scrutiny.

In May the Professional Advisers Association held a popular ‘industry conference, with the theme, ‘Your Time, Your Place, Your Tomorrow’.

There were ample pearls of wisdom and multimilliondollar tips (if put into practice) including the following: • Everything must be consistent with placing the interests of the client first; only advise on matters in which you are competent and have the evidence to prove compliance. (David Ireland and Gary Young, Code Committee) • How good are you at knowing when to open your mouth and when to shut up?

(Allan Pease, International Body Language expert) • It is not important who is right or wrong in a dispute: focus attention on resolution (Trevor Slater, GM of FSCL) • Facebook will become the norm, just like email has replaced letters and faxes.

And Facebook will become a vital source for referral business. (Philip Macalister, publisher of ASSET) • When a business partner dies, have a plan that has the right amount of funds from the right source pass to the right party at the right time (Sue Laing, The Risk Store, Australia) • ‘I’m in the money business. I buy insurance for clients. I give second opinions on what you do in life.’ (Rob Winch, MDRT, on ‘Why Life Insurance is still the greatest business on earth’)

“The way to deal with stress is to secretly enjoy it.”

– Steve Waugh • Everybody under the age of 65 should be in KiwiSaver (Mary Holm, Business Journalist) • Your client is your benefactor. It pays to know your client like you’ve never known them before. (Dr.Ian Brooks, bestselling business author on customer relations) And we won the World Rugby Cup by a margin narrow enough to remind the All Blacks to rid themselves of every ounce of complacency when they defend the trophy in 2015.

The Government was re-elected on 26 November, with a policy platform including partial asset sales, fiscal austerity and no tax increases. Time to relax then? Not a chance.

Edward Richards, CEO, Professional Advisers Association.

Your business, your future, your choice

Independent Thinking and Independent Advocacy for advisers

• ASSET magazine (monthly) • Monthly newsletters • Biennial Industry conference – international and local speakers • Regional meeting programme • National Roadshows • Business Toolkit for Advisers • Practising Certificates and CPD programme • Code of Ethics and Complaints Process • Competitive Professional Indemnity Programme and Group Life Cover • 7 holiday homes Website: www.paa.co.nz

Professional Advisers Association Inc, PO Box 911 335, Victoria Street West, Auckland 1142 Phone: 0800 275 722, Fax: 0800 275 712, For member enquiries: admin@paa.co.nz

Asset

DECEMBER 2011

25

insurance Hutchinson

Embrace the online factor instead of fearing online tools will predate your clients, embrace them and focus on the high value services you can offer, Russell Hutchinson explains

A

as a way small businesses should do their own accounts and save the money that would otherwise have been spent on a professional accountant these tools are now a major source of new clients for small accounting offices. Accountants actually pay to get referrals from the software providers and establish good mutual clients. There is a gain to both clients and accountants from the technology.

Now take the Companies Office example – why

By Russell pay an accountant $2,000 to set up a company when Hutchinson you can do it yourself online for $161? It even takes less time than it takes to drive to your accountant’s Could it be like that with insurance as well? office. But I have witnessed the decision being made to pay the I often read on www.goodreturns.co.nz of some adviser or other higher sum not once but twice. complaining about ‘online’ being ‘parasitic’ and ‘stealing’ clients, My accountant explained to a client why he recommended who have been developed by proper advisers, with lower prices. using his accounting office to perform the company formation.

Quite apart from the fact that most online offers aren’t any It was an exemplar in sales. He agreed with the obvious benefits cheaper than offline offers, experience is beginning to show that of the direct-online proposition, and then explained how some of the traffic is actually in the other direction. his clients had discovered the pitfalls later, too late in fact. Then People tend to search and/or buy online as a prelude to a he listed the services he provided to manage the risks, and the wider professional engagement. Younger people tend to do added benefits arising from his involvement. I felt it had been this much more than older people. People like to do it as a honed by long use – and it would not have been used a lot if it way of learning and reducing their fear around engaging with wasn’t needed. He tells me he nearly always gets them. a professional – but it doesn’t seem to affect the actual use Now, how do you think his office did the company of professionals. Higher numbers of hours and greater value formation? That’s right – they used the same online service to engagements are going to lawyers, accountants, and doctors do it – and why not, it reduces back office costs. But they did irrespective of the rapid growth in online services in their fields. use a different constitution and supported the client with some Take the accounting software example. Originally conceived ccountants don’t worry about cheap online alternatives to their services – and neither should you. In fact, as professional advisers, accountants don’t mind online services which either transfer mundane tasks back to the client, releasing them from low value work – or actually generate business for them. Further than that, they appreciate good online tools, and are heavy users of such services because they reduce cost and administration in their back offices.

26

Asset

DECEMBER 2011

Customisation

C

is increasingly a factor and applies not only to the plethora of options and choices available between products, but within products and within the client’s own risk plan as well. Most advisers handle this really well. implementation is the poor cousin and is not yet done well by most advisers.

st

om

is

at

io n

Russell Hutchinson is principal of Chatwood Consulting.

Disclosure: Hutchinson is a director of Allied Kiwi’s parent Inform Holdings.

n

Cu

To relate back to insurance again: there are five reasons you need a professional: context, education, risks, customisation, and implementation. They are just as effective against touch sales channels such as banks and travel agents as they are against online.

Context is the interview with the client, understanding their requirements. Often these are family, financial, health, occupational, and lifestyle factors that are the drivers for purchasing cover in the first place. Without the “why” clients cannot hope to get the “what” cover stage of the process right at all. Clients can often only discover the reasons why they need cover through a discussion with someone who is expert in the field.

Education is a part of the purchase process – learning about the different insurance covers. Understanding the difference between the two kinds of insurance with the word ‘disability’ in them is worth hundreds of thousands at claim time. I suspect that half the market can’t read well enough to figure out one policy document – let alone compare half a dozen.

They should not be left alone to get those choices wrong.

Which leads us to…

There are risks. Mainly these are concentrated in the cover decision and amount of cover, or more specifically avoiding the losses in not buying cover, or not buying enough. Sure, life is life and death is death. But average insured amounts indicate that most people buy too little cover – and that’s an advice gap. Shift over to income protection or business insurance and the scope for advice to reduce risk and add value grow exponentially.

Ris ks

so how good is your professional versus online pitch?

It is more than simply ensuring policy issuance, or even, investing an hour in a policy delivery meeting. Implementation starts with taking charge of the client’s insurance file.

Implementation also means plugging insurance into the last will and testament, family trust, enduring power of attorney, guardianship arrangements, and other legal and accounting structures necessary to ensure that the right money goes to the right people at the right time. Work harder at this. Often, implementation work can provide an opportunity for fee-based remuneration as well.

Every adviser should have an overview of their advicegiving service which explains why you examine these issues within the context of the six step advice process. Once you are regularly engaging with clients on this basis you can start to have fun with online services – adopting them to replace parts of your administration, fulfilling jobs like compiling data, reports, and helping you to research and select products for recommendation.

The real danger isn’t that online will pinch your clients; it’s that life companies are so scared of upsetting you that they won’t deliver proper online services for you to capitalise on.

Education

other ‘connecting’ services. This is because the lowest value component of the entire value chain is the piece that is easiest to turn into a system; essentially a data capture form, some logic which checks that against a database, creates a new entry, and a payment processing system.

The parts of the value chain which produce the greatest gains for clients sit either side of the nuts and bolts of processing. If you have those high value services to offer, then you quickly want to get out of the low value services in the middle – and so you become an adopter of online tools which take over those functions for you!

o ti

a

t n e

t

x te

n o

m

e pl

Im

Supporting New Zealand advisers to DECEMBER 2011 27 build long term business value Asset0800 88 22 88

practice management websites

Using the net to catch clients

Advisers failing to engage with the online space are doing themselves – and their potential sales – a serious disservice. Benn Bathgate explains why if you’re not on the net in today’s digital age, you’re less likely to catch new clients

I

f the Financial Service Providers Register is your only presence on the World Wide Web, then you’re almost certainly losing business.

Altus Financial Services operations manager Gerry Pearse-Smith says that in a world where consumers increasingly turn to the web for information, especially in the newly regulated financial advice world, having an online presence is essential.

“In our case increasingly with regulation, which has probably accelerated this, I think people if they are asked to have a relationship with someone probably the first thing they do is a bit of research, to check you out,” he said.

“While they won’t get all the answers on a web presence, I would think if you haven’t got one, that’s a big black mark.”

TNP managing director Jeff Page is even more emphatic, saying he is amazed at how many advisers still don’t have a website.

He said around 80% of the population research and compare online before making major decisions.

“Every single adviser should have a web presence and every single adviser should have a look at what they can do by way of enabling interested customers to buy online from them,” Page said.

“If you’re an adviser in the marketplace and you don’t have a web presence, you’re going to be at a disadvantage.”

The simple fact is that if you’re not promoting yourself or selling online, your competitors almost certainly are, such as Insurance4Me founder Des Morgan.

Morgan founded the site – New Zealand’s first standalone insurance website – with two ideas in mind; the global growth in 28

Asset

DECEMBER 2011

the number of people buying insurance online, and the fact that some people simply don’t want to engage with an adviser.

“If you look at the research in the States more and more people are buying their insurance online, it’s just the fact of the matter. People are busy, they just want to go online and get it done,” he said.

He also cited a recent US study which found that among consumers aged 22-44, which he described as “a prime group for purchasing insurance”, 31% said they would prefer to buy direct, while one in four said the internet was their preferred method of buying.

“There is no reason to believe that New Zealand is any different,” he said.

Morgan’s belief that an increasing amount of people will turn to the internet for financial services such as insurance is shared

by Sovereign, which recently struck a deal with retailer The Warehouse to sell their products via the Red Shed’s website.

While this may initially seem like a blow to the adviser community, Sovereign’s adviser distribution general manager David Haak believes increased consumer awareness about insurance – and Sovereign – will actually benefit advisers.

“The bit we like about it is it’s also a lead generator for customers that ordinarily wouldn’t get to our adviser base,” he said.

“In the small time that it’s been running we’ve already distributed a significant number of referrals to the adviser community and they’ve enjoyed success with that.”

For Plus 4 Insurance Solutions Peter Rickards having a

website also indicates to clients your level of professionalism.

“The website is to give your clients confidence that you have a very good organisation and to glean from that, before they see you if necessary, or after they’ve seen you, that this is a real organisation.”

He said an adviser without a website “hasn’t gone the extra mile, not credible is it?”

The managing director of web design and marketing company Firebrand, Rebecca Twemlow, says advisers will certainly lose business if they don’t have an online presence.

“It’s a key method of getting your message or your product or your service out there. Where do people go to look for their adviser?”

Web solutions company Acclipse designs websites for financial advisers and accountants, and web team manager Matt Wilkinson is even more convinced of the need for an online presence.

“It’s an essential I think. I couldn’t really think of an example where having a website would be a bad idea,” he said.

He also agrees with Pearse-Smith that more and more people are using the internet to research services and products.

“The Yellow Pages is basically dead. Even if most business for financial advisers is going to come from a referral, if you were referred to a financial adviser, the first thing you’re going to do is take that name and throw it into Google for a secondary search – it’s just as important.”

Also for Wilkinson, websites aren’t solely marketing and promotional tools for advisers, but are increasingly playing a more functional role in how they conduct their business.

He said Acclipse has built over 1,000 websites for advisers and accountants and that he has seen an increasing demand for secure client portals to enable safe sharing of data.

He said that as use of online banking and sites such as Trade Me becomes more commonplace, some of the earlier fears about online security had subsided and that clients – and advisers – are increasingly seeing the time saving benefits of being able to share information online.

“I think if you ask financial planners and accountants one of the big problems they face is getting data from clients, that can

feeling social?

The arguments in favour of an adviser having a website presence are extensive and convincing, but how about social media?

The endless hype surrounding the likes of Facebook, Twitter, LinkedIn and whatever new flavor of the month has emerged since the time of writing may make advisers’ believe they need to delve into this world too, but do they?

While the purpose of a website is reasonably clear – contact information, an outline of services offered and increasingly the ability to share data – the reasons for using social media are less well defined.

LinkedIn is perhaps slightly different

range from a shoebox full of statements and receipts to various emails and attachments, so one thing we’ve tried to do is create a system where the financial planner website has a log in on it and each client of that firm can log in and have their own area where they can share files, and it has bank levels of security.”

One other issue that crops up around websites and how consumers use them is Google ranking, the idea being that if you’re not on the front page, consumers won’t find you.

“Get on that front page of Google, that’s the key,” said Morgan.

“If you’re not on the front page of Google, forget it.”

Wilkinson agrees with the importance of your Google ranking, and while he concedes that attempting to get the top spot in Google for phrases such as ‘financial adviser’ may be unlikely, it’s also unnecessary.

He argues that through a combination of regional location, and niche services, you can get that top spot.

“When people say No.1 in Google, I’d always qualify that with for what phrase? For financial planner forget it, that’s a global search, financial planner New Zealand? That’s achievable but with a lot of work. Financial planner Christchurch, OK, now you’re getting somewhere,” he said.

Virginia Farrington, the project manager at specialist US based company financialadviserwebsitedesign.com echoes Rickards comments about the need to present a professional front.

“Just like any business today, if you don’t have an internet presence, prospective clients may not think you are a valid business, others think you’re not very serious about doing business if you don’t have a website,” she said.

“A website is like your 24/7 digital sales rep.”

The final issue to consider around a website is the cost of its construction and maintenance.

Wilkinson says that at Acclipse, the cost is determined by the amount of features and generally, “we’re talking thousands.”

However, he is keen to stress the difference between cost and value.

“What you’ve got to think is if you get even one client per month from your website, over a lifetime the value of that client, you’ve probably paid for your website after a couple of months.”

as it’s mainly utilised as a businessto-business contact database, and Australian research has found this site is popular with advisers across the Tasman.

For the likes of Facebook and Twitter however, how to utilise them in a business sense is less clear, and for Wilkinson, it comes down to the ‘personality’ of your business.

He believes Facebook and Twitter have a more frivolous nature which, unlike business network LinkedIn, may make them unsuitable for the more sober minded financial and accounting worlds.

“I certainly wouldn’t want to be interacting with my accountant over Facebook as I see that as something

I would use between me and my friends, whereas LinkedIn is perfect, it’s a business network so completely appropriate.

“You’ve got to weigh up the personality of your firm and think of what works for you in your business,” he said.

Twemlow also advocates using LinkedIn as your social media option, describing the site as “the professionals Facebook” and as an ideal way to drive traffic to your main website.

“You have a business profile in there, and then you also have your own individual profile, which links to your business profile which links to your website, and they all ‘talk’ to each other.”

Asset

DECEMBER 2011

29

practice management iso

Banking Ombudsman reports “unprecedented” year the Banking ombudsman has released its latest annual report. Benn Bathgate looks at what customers complain about and provides a case study on term deposits

T

he downturn in the economy, the ING frozen funds debacle and an 18% rise in mortgage finance complaints contributed to what the Banking Ombudsman has described as a year “unprecedented in the history” of the scheme.

In its full year report the Ombudsman revealed it completed double the investigations than in any previous year and facilitated $14.5 million in compensation to complainants.

financial advisers in hot seat over frozen funds Financial advisers played a prominent role in the ING frozen funds debacle through mis-selling and poor advisory practice, according to the Banking Ombudsman Services (BOS) 2010/11 annual report.

While also citing the unforeseen impact of the global financial crisis, advisers were singled out in two bullet points, with the BOS saying there was clear evidence that “some advisers missold the products, representing them as less risky than they were” and “some advisers engaged in poor advisory practices.”

BOS found some advisers signed less sophisticated investors up to the funds without sufficient explanation of the risks, while some recommended allocations in excess of the 20% considered appropriate for low to moderate risk investors.

“Unfortunately, the risks associated with the funds were much higher than many investors – and some advisers – understood,” said the report.

Ombudsman Deborah Battell said she was reluctant to apportion blame in any particular direction, though “one of the very obvious things was the fact that there was clear evidence of mis-selling.”

She said one of the key lessons from the failure of the two funds – the Regular Income Fund and the Diversified Yield Fund – was “ensuring that advisers and customers are kept up to date with any changes to the composition of funds and associated risks.”

30

Asset

DECEMBER 2011

Battell also said that thanks to the ING investigation, BOS now has “a large amount of experience in assessing disputes involving financial advisers.”

“I think we’re in an even stronger position in a number of ways,” she said.

“One is that we have learnt a huge amount about investment complaints, about investment advisers and investment advisory practice and so we are now, of all the disputes resolution schemes, we’re the one that has actually got the hard experience in terms of assessing these claims.

“We do have hundreds of financial advisers that belong to our scheme as a result of their being part of a bank, all of their financial advisers are listed separately with our scheme, so I think that the public can have high levels of confidence in our ability to assess investment related complaints.”

CAsE stuDy: term deposits and break fees

Mr S placed over $400,000 in a term deposit with his bank for a two year term at 5.25% interest. Just over a year later, Mr S visited the bank and discussed breaking the deposit to buy a property. Mr S asked the staff member whether there would be any problems or penalties. He was told that he would just receive interest on the remaining funds in the term deposit over the rest of the term.

On settlement day, Mr S went to the bank for a bank cheque to pay the settlement sum. He was told he would have to pay an interest recovery fee of $6,600 for breaking the deposit. Mr S disputed the fee as he had not been warned about it earlier. He then made enquiries at his other bank where he also held a term deposit with sufficient funds to buy the property. His other bank advised him of a similar fee. Mr S considered he had no option but to break the term deposit and pay the interest recovery fee so he could pay for the property he was committed to purchasing.

When Mr S complained to the bank it considered it had no obligation to refund the fee. It referred to the terms and conditions

for the term deposit that allowed it to charge an interest recovery fee, and to a diary note made two years previously referring to the calculation of break penalties.

It considered Mr S’s query about whether there would be any problems or penalties involved was not the right question, and that he should have asked the bank to review the details of breaking a term investment.

Although the terms and conditions allowed the bank to charge an interest recovery fee, we considered the failure to alert Mr S to the fee was conduct likely to mislead and therefore a breach of the Fair Trading Act. The information a bank provides should not be dependent on the customer asking the right question. A customer cannot be expected to ask what they do not know.

We then considered how the complaint might best be resolved, taking into account the position the customer would have been in if the error (the nondisclosure) had not occurred. Mr S said he would not have purchased the property if he had known about the interest recovery fee. However, he had bought the property and it was not reasonable or practical to reverse this purchase.

The interest recovery fee was always payable by Mr S if he wanted to break the term deposit to buy the property, so the fee was not a direct loss. He had received a benefit from breaking the term deposit, by being able to purchase the property. However, the bank’s failure to give the correct advice had caused Mr S inconvenience. It would have been stressful to discover the interest recovery fee on settlement day. We proposed compensation of $750.

The bank accepted our proposal but Mr S did not.

He considered the compensation failed to take into consideration the amount of money he had invested with the bank and the length of time he had been a bank customer. The interest recovery fee meant the interest rate he received dropped from 5.25 to 1.15%.

We considered Mr S’s submissions but maintained our view that $750 was reasonable. Mr S ultimately accepted our recommendation.

Breaking term deposits Some customers are not aware that they incur a penalty when terms deposits are broken. This year, we publicised this fact because we anticipated that customers might need to break term deposits if they were experiencing hardship or if they decided to take advantage of other investment opportunities.

investments Over the past four years, we have assessed some 780 investment-related complaints. This case illustrates the importance for both banking service providers and customers of ensuring that customers are comfortable with the level of risk that is inherent in an investment.

If a customer does not want their investment to decrease in value, or is likely to be stressed by such fluctuations, market-traded investments are unlikely to be appropriate.

Ask CCH from the CCH tax analysts QueStion

Gift duty has been repealed for gifts made on or after 1 October 2011. Apart from residential care subsidies, does that mean donors can now freely make gifts without any other issues arising?

AnSweR

With the abolition of gift duty, the making of a gift has become more flexible. However, before a gift is made, consideration should be given to the following issues: • financial arrangements rules • creditor protection • relationship property, and • documentation. financial arrangements rules The forgiveness of debt to a trust will still give rise to income under the financial arrangements rules, unless the trust was established to benefit natural persons for whom the creditor has natural love and affection, or charities.

Creditor protection Before a gift is made, the solvency of the donor should be considered. This is because there are two main pieces of legislation which provide protection to creditors and may cause gifts to be clawed back in certain circumstances.

The Property Law Act 2007 contains provisions which allow for gifts to be “clawed back” where a creditor has been prejudiced. In particular, it applies to dispositions made after 31 December 2007 by a debtor with intent to prejudice creditors, or made by way of gift without receiving reasonably equivalent value in exchange in the following circumstances: • the debtor (donor) was insolvent at the time, or became insolvent as a result, of making the disposition • the debtor was engaged, or was about to engage, in a business or

transaction for which the remaining assets of the debtor were, given the nature of the business or transaction, unreasonably small, or • the debtor intended to incur, or believed or reasonably should have believed, that the debtor would incur, debts beyond the debtor’s ability to pay.

The Insolvency Act 2006 applies where a donor has become bankrupt. Any gift made by the donor within the two years before the bankruptcy can be set aside by the Official Assignee. In addition, gifts made between two and five years prior to bankruptcy can also be set aside if the bankrupt was unable to pay his or her debts. The onus is on the bankrupt to prove solvency without the aid of the property gifted.

Relationship property With the abolition of gift duty, it will become easier for a person to transfer property into trusts to defeat the interests of their spouse. However, a spouse may be entitled to compensation under the Property (Relationships) Act 1976 where his or her claim has been defeated by the disposition of property.

Under that Act, a court can order a person who has received the property otherwise than in good faith to transfer the property to any person that the court directs or to pay the difference between the value of the property and the consideration paid (if any).

Documentation Proper documentation should still be kept to record the nature of gifts made and the reasons for the gift, regardless of the fact that gift statements will no longer be required to be filed from 1 October 2011.

Reference: Income Tax Act 2007, ss EW 44, EW 50. Insolvency Act 2006, ss 194, 195. Property Law Act 2007, s 346. Property (Relationships) Act 1976, s 44.

Get fast answers to your everyday tax and legal questions...

The CCH Question and Answer service allows you to ask CCH Analysis everyday questions on tax, trusts and investments.

Be the one who has All the answers 

substitute your research time with income earning work



buy yourself more time by having someone else to do the research



have peace of mind with the support of a second opinion



save consultant fees for simple queries



get answers to your complex questions



keep accurate records, as answers are provided in writing



extend your areas of expertise by having expert support in a variety of fields

Call CCH today to find out more on 0800 500 224 or go to www.cch.co.nz/qanda

Asset

DECEMBER 2011

31

asset adviser managed fund performance tables for more information visit: www.morningstar.co.nz latest 1 yr 3 yr 5 yr size Morningstar transaction Return Return Rating Return $M overall Exit price %

name

new Zealand insurance fund Cash AMP Classic PSS Select Cash Enhanced 1.2892 3.04 3.02 4.69 AMP KiwiSaver Cash Fund 1.2413 3.19 3.60 -AMP Prem PSS OnePath NZ Cash 1.3501 3.38 3.44 5.43 ANZ KiwiSaver-Cash 1.113 3.31 2.98 -ANZ Retirement Plan - Deposit Port 1.18538 2.47 --Aon KiwiSaver OnePath Cash 13.22093 2.98 3.16 -Aon KiwiSaver Tyndall Cash 11.9384 3.29 3.78 -ASB KiwiSaver Scheme’s NZ Bank Deposit 1.1987 2.71 2.97 -Asteron Rtrmnt Savings Plan Deposit 9.2228 3.43 3.48 5.22 Asteron Super Yield Deposit Fund 9.245 3.44 3.48 4.86 Asteron Superplan 2000 Capital Fund 1.9345 3.34 3.72 5.27 Asteron Superplan Capital Fund 2.3407 2.82 3.22 4.92 AXA KiwiSaver Cash 1.2085 2.77 3.26 -FC KiwiSaver Scheme’s NZ Cash 1.1976 2.68 2.95 -Grosvenor KiwiSaver Enhanced Income Fund 1.2661 3.47 4.05 -Mercer KiwiSaver Cash -3.75 4.24 -Mercer Super Trust KiwiSaver Cash -3.54 4.14 -National Bank KiwiSaver-Cash 1.1135 3.31 2.99 -NZ Guardian Trust GIF - Cash Fund 1 2.99 3.45 5.10 OnePath KiwiSaver-Cash Fund 1.1951 3.44 3.22 -SIL 60s + Sup Cash Fund 1.8973 2.81 2.94 4.96 SIL KiwiSaver-Cash Fund 1.1635 3.19 2.74 -SIL P/R Cash Fund 1.8973 2.81 2.94 4.96 Staples Rodway KiwiSaver Conservative -3.38 3.13 -TOWER KiwiSaver Preservation 2392.16502 3.14 3.46 -Westpac KiwiSaver-Cash Fund 1.1674 2.84 3.15 -new Zealand insurance fund Cash non-piE Fidelity Life Cash Portfolio 2.9947 1.77 --new Zealand insurance fund Equity Region Asia pacific Asteron Superplan 2000 Far East Fund 1.003 -14.57 7.66 -10.80 Asteron Superplan Far East Fund 1.4915 -15.26 4.12 -7.74 SIL 60s + Sup Pacific Basin Share 1.5703 -7.39 7.16 5.26 SIL P/R Pacific Basin Fund 1.5703 -7.39 7.16 5.26 new Zealand insurance fund Equity Region Australasia Aon KiwiSaver Milford 1.4298 4.41 --Asteron Superplan 2000 Trans Tasman Fund 2.0371 0.12 8.04 -1.19 Asteron Superplan Trans Tasman Fund 2.6389 -0.55 7.35 -1.89 Grosvenor KiwiSaver Socially Responsible 1.0104 -4.35 --Grosvenor KiwiSaver Trs-Tasm Sm Coms Shr 1.0129 -10.24 --Mercer Super Trust KiwiSaver Shares -0.38 8.07 -Mercer Super Trust KiwiSaver TransTasman -1.70 7.48 -Milford Active Growth KiwiSaver 1.4298 4.41 10.79 -NZ Guardian Trust GIFs - Small Companies 3.0554 -9.63 15.39 -0.40 SIL KiwiSaver-Australasian Share 0.8118 4.95 7.67 -Smartshares Smartkiwi Growth Fund 0.7208 -5.69 4.70 -new Zealand insurance fund Equity Region Emerging Markets Asteron Superplan 2000 Emerging Mkt Fd 1.3167 -12.55 12.18 -1.56 Asteron Superplan Emerging Markets Fund 1.1156 -13.14 11.41 -2.34 TOWER FreedomPlan - Asia/Emerging Mkts 2.19376 -15.56 17.49 2.81 TOWER FuturePlan - Asia/Emerging Markets 2.19376 -15.56 17.49 2.81 new Zealand insurance fund Equity Region Europe Asteron Superplan 2000 European Fund 1.258 -8.57 1.30 -8.58 Asteron Superplan European Fund 1.5156 -9.26 0.59 -9.24 new Zealand insurance fund Equity Region north America Asteron Superplan 2000 Nth Amrn Fd 1.2984 4.07 4.79 -4.95 Asteron Superplan North American Fund 1.8834 3.37 4.07 -5.65 new Zealand insurance fund Equity Region nZ AMP Prem PSS OnePath NZ Shares 1.1819 9.32 9.54 1.34 Asteron Rtrmnt Savings Plan NZ Equity 1.9348 0.40 9.10 -1.32 Asteron Superplan 2000 NZ Shares Fund 1.6313 0.16 8.09 -1.17 Asteron Superplan 2000 NZ Smaller Compns 2.6506 -9.46 17.30 0.17 Asteron Superplan NZ Shares Fund 1.4959 -0.61 7.75 -1.70 Asteron Superplan NZ Smaller Compns Fd 2.4281 -10.08 16.67 -0.65 SIL 60s + Sup NZ Share Fund 2.5773 4.71 7.18 -1.70 new Zealand insurance fund Equity Region nZ non-piE Fidelity Life NZ Shares Portfolio 3.4387 -6.04 6.30 -1.78 new Zealand insurance fund Equity Region world AMP Prem PSS FD Intl Share Fund 1 Value 0.7002 -8.70 -2.37 -10.76 AMP Prem PSS FD Intl Share Fund 3 Growth 0.7303 -7.40 -3.98 -9.61 Asteron Rtrmnt Savings Plan Intl Eqty 1.5271 -3.18 2.32 -4.80 Asteron Superplan 2000 Aggressive Fund 1.2752 -3.71 4.32 -2.95 Asteron Superplan 2000 Global Fund 1.2627 -3.33 2.46 -5.45 Asteron Superplan Aggressive Fund 1.2297 -4.05 3.73 -3.59 Asteron Superplan Global Fund 1.5278 -4.02 1.68 -6.10 FC KiwiSaver Scheme’s Active High Growth 0.7782 -5.55 1.37 -FC KiwiSaver Scheme’s Global Sustain 1.0562 -3.78 5.21 -Grosvenor KiwiSaver International Share 1.0084 -5.04 ---

32

Asset

DECEMBER 2011

2.81  33.40  5.64  32.84  29.69 -2.45  1.07  187.42  4.33  13.11  4.48  41.08  18.39  8.58  12.90  10.16 -1.60 -53.88  76.47 -1.06  1.32  15.17  2.27  12.35  16.55  134.84  2.56

--

1.19 12.31 0.37 3.52

-----

28.94 -2.15  13.80  5.22 -2.87 -0.92 -0.72 -34.29  9.28  9.14  13.19  0.49 3.20 2.37 26.92

-----

1.30 10.81

---

1.26 10.40

---

5.17  1.10  0.45  1.30  0.83  3.32  3.85  1.58



5.36 5.17 3.21 0.48 1.57 4.57 15.40 1.69 3.00 2.80

         --

latest 1 yr 3 yr 5 yr transaction Return Return Return Exit price % Mercer Super Trust KiwiSaver Global --0.22 7.93 -NZ Guardian Trust GIFs - Global Equity 1.0934 -2.10 4.02 -3.27 SIL 60s + Sup International Share Fund 1.6324 -3.09 1.51 -2.95 SIL KiwiSaver-International Share 0.8368 -2.59 1.92 -SIL KiwiSaver-Sustainable Growth Fund 0.9424 -3.24 0.49 -SIL P/R International Share Fund 1.6324 -3.09 1.51 -2.95 TOWER FreedomPlan - Int’l Companies 1.77249 -2.33 8.15 -4.21 TOWER FuturePlan - Intl Companies 1.77249 -2.33 8.15 -4.21 TOWER KiwiSaver Equity 2309.55639 -2.97 6.59 -new Zealand insurance fund Equity Region world non-piE Fidelity Life Aggressive 2.0379 -15.28 2.09 -2.94 Fidelity Life International 1.4549 -11.69 -0.25 -5.83 new Zealand insurance fund Equity sector global - Real Estate Mercer Super Trust KiwiSaver Real Assets -5.61 11.08 -SIL KiwiSaver-International Property 0.7246 4.58 11.68 -new Zealand insurance fund Equity sector nZ - Real Estate MFL Property Fund 1.9415 4.51 10.34 -2.87 SIL KiwiSaver-Australasian Property 0.8672 7.52 7.97 -new Zealand insurance fund global Bond AMP Prem PSS Blackrock Global Fixed Int 1.4507 2.55 7.55 6.12 AMP Prem PSS PIMCO Global Fixed Interest 1.6077 6.23 12.64 8.80 AMP Prem PSS SSgA Global Fixed Int Index 1.4739 3.97 6.41 7.11 Asteron Rtrmnt Savings Plan Intl Fx Int 2.5441 3.41 7.28 6.30 Asteron Superplan 2000 Global Bond Fund 2.2982 3.03 7.69 6.69 Asteron Superplan Global Bond Fund 2.1744 3.02 7.67 6.65 Mercer Super Trust KiwiSaver Fixed Intr -3.52 11.16 -SIL KiwiSaver-International Fixed Int 1.2913 4.19 6.67 -new Zealand insurance fund Miscellaneous Fidelity KiwiSaver-Options Kiwi Fund 3.85557 -9.61 3.63 -new Zealand insurance fund Miscellaneous non-piE Fidelity Life Options Portfolio 3.2284 -7.85 2.14 3.70 new Zealand insurance fund Mortgages Perpetual Trust Mortgage Fund 1 6.37 7.33 7.61 new Zealand insurance fund Mortgages non-piE Fidelity Life Mortgage 3.4147 2.83 3.46 4.29 new Zealand insurance fund Multisector - Aggressive AMP Classic PSS Lifesteps Establishment 1.0813 0.95 4.54 -1.05 AMP KiwiSaver LS Aggressive Fund 0.8298 -1.97 4.80 -Aon KiwiSaver Russell Lifepoints 2045 4.29383 -0.85 10.27 -AXA KiwiSaver Growth 0.8563 -0.53 7.51 -Brook Professional KiwiSaver Growth Fund 1.127 0.09 4.60 -Fidelity KiwiSaver-Aggressive Kiwi Fund 2.60824 -5.59 4.41 -Fisher Funds Growth KiwiSaver Fund 1.0597 -3.76 14.69 -Grosvenor KiwiSaver Geared Growth Fund 1.1015 -4.88 --Grosvenor KiwiSaver High Growth Fund 0.8678 -4.71 2.32 -Mercer KiwiSaver High Growth -1.21 8.81 -Mercer Super Trust KiwiSaver High Growth -1.07 8.36 -Thoroughbred Growth Flexible Fund 1.5557 2.67 6.99 0.91 Thoroughbred Growth Locked-In Fund 1.546 2.95 7.36 1.25 TOWER FreedomPlan - Growth 1.70208 -4.77 5.34 -2.52 TOWER FuturePlan - Growth 1.70208 -4.77 5.34 -2.52 TOWER KiwiSaver Growth 0.95368 0.03 7.54 -Westpac KiwiSaver-Capital Protect Plan 1 1.1738 1.31 --Westpac KiwiSaver-Capital Protect Plan 2 1.0538 1.32 --new Zealand insurance fund Multisector - Aggressive non-piE AMP PRP Dynamic 1.3018 -2.32 2.51 -3.45 new Zealand insurance fund Multisector - Balanced AMP Classic PSS DynamicMkts Balanced 1.2368 1.94 5.10 1.89 AMP Classic PSS Lifesteps Progression 1.2449 1.86 5.09 1.91 AMP Classic PSS Select Balanced 1.1936 1.89 5.06 1.56 AMP KiwiSaver LS Balanced Fund 1.0134 0.96 5.66 -AMP KiwiSaver LS Moderate Balanced Fund 1.048 1.35 5.23 -AMP KiwiSaver TOWER Balanced Fund 1.0579 0.01 6.72 -ANZ KiwiSaver-Balanced 1.052 4.18 6.94 -ANZ Retirement Plan - Balanced 2.169 3.66 6.47 1.99 Aon KiwiSaver OnePath Balanced 14.47247 4.29 10.88 -Aon KiwiSaver Russell Lifepoints 2025 5.15442 1.27 10.68 -Aon KiwiSaver Russell Lifepoints Bal 4.91998 0.60 10.69 -ASB KiwiSaver Scheme’s Balanced 0.9956 2.25 6.71 -Asteron Rtrmnt Savings Plan Mgd Neutral 1.9819 2.18 6.23 0.19 Asteron Super Yield Managed Fund 10.013 2.14 6.21 1.05 Asteron Superplan 2000 Balanced Fund 1.5954 1.62 5.27 -0.51 Asteron Superplan Balanced Fund 2.0839 0.70 4.44 -1.12 AXA KiwiSaver Balanced 0.9848 1.34 8.14 -Brook Professional KiwiSaver Balanced Fd 1.1458 0.90 3.43 -FC KiwiSaver Scheme’s Active Balanced 0.9787 0.26 5.99 -FC KiwiSaver Scheme’s Tracker Balancd 0.9935 2.22 6.73 -Fidelity KiwiSaver-Balanced Kiwi Fund 5.64533 -0.58 4.72 -name

size $M 1.09 10.21 0.87 13.41 0.95 10.34 2.92 22.06 18.86

Morningstar Rating overall -       

0.94  0.75  0.58 3.70

---

360.14  5.29  2.43  2.66  8.16  1.13  1.26  2.08  0.90 -1.47  45.48

--

26.72

--

69.64

--

3.36

--

0.06  97.18  3.91  69.84  4.42  11.20  355.46  1.84 -46.72  19.25 -5.13 -8.86  13.67  7.49  62.86  57.62  9.31 -8.02 -91.02



3.16  3.70  52.56  146.44  139.91  8.76  100.51  24.41  7.09  4.34  29.63  202.44  14.01  20.94  7.55  61.94  93.69   1.24 18.56  16.54  69.55 

latest 1 yr 3 yr 5 yr size Morningstar transaction Return Return Rating Return $M overall Exit price % Fidelity KiwiSaver-Ethical Kiwi 2.11045 1.41 5.03 -- 6.37  Forsyth Barr KiwiSaver Balanced Port 1.0362 0.27 4.74 -- 4.40  Grosvenor KiwiSaver Balanced Fund 1.1337 1.38 5.56 -- 63.52  Mercer KiwiSaver Balanced -2.22 9.30 -- 27.13 -Mercer Super Trust KiwiSaver Moderate -2.50 8.79 -- 14.61 -Milford KiwiSaver Balanced 1.0471 3.95 --- 3.10 -National Bank KiwiSaver-Balanced 1.052 4.18 6.96 -- 151.32  OnePath KiwiSaver-Balanced 1.027 4.46 6.75 -- 6.07  SIL KiwiSaver-Balanced 1.0607 4.22 7.12 -- 147.77  Thoroughbred Balanced Flexible Fund 1.6607 3.33 7.00 2.18 19.87  Thoroughbred Balanced Locked-In Fund 1.6468 3.71 7.36 2.56 29.65  TOWER FreedomPlan - Balanced Fund 2.54191 0.34 5.55 1.27 13.15  TOWER FuturePlan - Balanced 2.54191 0.34 5.55 1.27 130.26  TOWER KiwiSaver Balanced 2952.0502 1.56 6.98 -- 198.45  Westpac KiwiSaver-Balanced Fund 1.0306 3.86 6.55 -- 248.74  Westpac Retirement Plan - Balanced Port 2.277 2.29 5.33 -0.69 91.70  new Zealand insurance fund Multisector - Balanced non-piE Fidelity Life Balanced 2.9544 -1.44 4.94 1.38 14.95  Fidelity Life Ethical Portfolio 2.0056 -1.00 --- 0.14 -new Zealand insurance fund Multisector - Conservative AMP Classic PSS DynamicMkts Conservative 1.3842 3.45 5.01 4.45 0.85  AMP Classic PSS Lifesteps Maturity 1.3196 3.52 5.02 4.51 2.39  AMP Classic PSS Select Income 1.4652 5.89 6.64 6.83 3.13  AMP KiwiSaver Default Fund 1.1632 2.72 4.54 -- 403.34  ANZ KiwiSaver-Conservative 1.1652 4.75 6.20 -- 67.38  Aon KiwiSaver Russell Lifepoints Cnsrv 6.1206 3.29 10.53 -- 32.56  ASB KiwiSaver Scheme’s Cnsrv (Default) 1.1944 3.97 6.24 -- 1136.36  AXA KiwiSaver Income Plus (Default) 1.16 3.49 7.34 -- 523.58  FC KiwiSaver Scheme’s Tracker Cnsrv 1.1926 3.95 6.23 -- 60.64  Fidelity KiwiSaver-Capital Guarant Kiwi 2.30305 2.80 3.81 -- 25.84  Fidelity KiwiSaver-Conservative Kiwi Fd 5.93504 2.79 5.33 -- 32.00  Fisher Funds Conservative KiwiSaver Fund 1.072 3.98 --- 122.94 -Mercer KiwiSaver Conservative (Default) -3.19 8.65 -- 520.94 -National Bank KiwiSaver-Conservative 1.1675 4.73 6.23 -- 97.95  OnePath KiwiSaver-Conservative (Default) 1.1789 5.18 6.63 -- 486.17  SIL KiwiSaver-Conservative 1.1744 4.76 6.29 -- 176.91   Smartshares Smartkiwi Conservative Fund 1.1112 2.33 3.35 -- 2.32  Thoroughbred Conservative Flexible Fund 1.5984 3.39 4.99 4.10 7.23 Thoroughbred Conservative Locked-In Fund 1.7106 3.59 5.44 4.51 10.07  TOWER FuturePlan - Capital Protected 1.11046 2.03 2.26 3.23 40.83 -TOWER KiwiSaver Cash Enhanced (Default) 1.19543 4.43 5.93 -- 374.36  new Zealand insurance fund Multisector - Conservative non-piE Fidelity Life Conservative 3.3145 1.28 5.26 3.26 26.20  new Zealand insurance fund Multisector - growth AMP Classic PSS DynamicMkts Growth 1.0912 -0.10 4.17 -1.39 3.47  AMP Classic PSS Lifesteps Growth 1.1307 0.98 4.39 -0.12 1.48  AMP Classic PSS Select Growth 1.0249 0.01 4.28 -1.58 30.41  AMP KiwiSaver LS Growth Fund 0.8933 -0.78 4.85 -- 119.34  AMP KiwiSaver OnePath Balanced Plus Fund 1.0767 3.00 8.58 -- 29.35  AMP KiwiSaver Tyndall Balanced Fund 0.9933 -0.73 6.14 -- 6.75  ANZ KiwiSaver-Balanced Growth 0.9893 3.68 7.14 -- 70.00  ANZ KiwiSaver-Growth 0.9261 3.18 7.27 -- 149.94  ANZ Retirement Plan - Growth 1.9324 2.78 6.69 0.73 9.80  Aon KiwiSaver Russell Lifepoints 2035 4.71287 0.19 10.43 -- 3.98  Aon KiwiSaver Russell Lifepoints Growth 4.59006 -0.17 10.41 -- 7.82  Aon KiwiSaver Tyndall Balanced 10.25891 -0.23 6.54 -- 1.98  ASB KiwiSaver Scheme’s Growth 0.8973 0.94 6.20 -- 187.77  Asteron Rtrmnt Savings Plan Mgd Growth 1.8739 0.89 5.92 -1.01 22.90  Asteron Superplan 2000 Dynamic Fund 1.4965 0.36 5.00 -1.73 1.89  Asteron Superplan Dynamic Fund 1.7358 -0.53 4.28 -2.36 15.77  FC KiwiSaver Scheme’s Active Growth 0.8892 -1.63 5.25 -- 17.65  FC KiwiSaver Scheme’s Tracker Growth 0.895 0.93 6.18 -- 13.35  Fidelity KiwiSaver-Growth Kiwi Fund 5.30146 -2.09 3.75 -- 31.36  Forsyth Barr KiwiSaver Growth Portfolio 0.9518 -0.88 4.50 -- 3.90  Grosvenor KiwiSaver Balanced Growth 1.0339 -1.73 --- 16.73 -Mercer Super Trust KiwiSaver Active Bal -2.14 9.02 -- 37.90 -Mercer Super Trust KiwiSaver Growth -1.85 8.65 -- 2.90 -National Bank KiwiSaver-Balanced Growth 0.9897 3.73 7.15 -- 124.59  National Bank KiwiSaver-Growth 0.9227 3.21 7.22 -- 243.74  OnePath KiwiSaver-Balanced Growth 0.9557 4.08 6.69 -- 7.26  OnePath KiwiSaver-Growth 0.8887 3.70 6.54 -- 7.09  SIL 60s + Sup Balanced Fund 2.3642 3.98 6.96 1.97 19.24  SIL KiwiSaver-Balanced Growth 0.9995 3.83 7.36 -- 136.30  SIL KiwiSaver-Growth Fund 0.9342 3.25 7.48 -- 96.31  SIL P/R Balanced Fund 2.3642 3.98 6.96 1.97 69.53  Staples Rodway KiwiSaver Balanced -4.66 7.25 -- 9.37  Staples Rodway KiwiSaver Growth --0.02 7.74 -- 5.56  Westpac KiwiSaver-Growth Fund 0.9768 3.86 6.61 -- 154.45  Westpac Retirement Plan - Dynamic Port 2.3671 2.90 5.54 -1.99 90.16 

name

for more information visit: www.morningstar.co.nz latest 1 yr 3 yr 5 yr size Morningstar transaction Return Return Rating name Return $M overall Exit price % new Zealand insurance fund Multisector - growth non-piE Fidelity Life Growth 2.6237 -4.18 3.84 -1.05 4.43  new Zealand insurance fund Multisector - Moderate  AMP Classic PSS Lifesteps Consolidation 1.2309 2.10 4.77 2.14 8.54 AMP Classic PSS Lifesteps Stability 1.3122 2.92 4.91 3.40 4.42  AMP Classic PSS Select Conservative 1.3743 3.49 5.11 4.50 11.12  AMP KiwiSaver LS Conservative Fund 1.2319 3.54 5.67 -- 55.39  AMP KiwiSaver LS Moderate Fund 1.1224 2.38 5.13 -- 99.71  ANZ KiwiSaver-Conservative Balanced 1.1097 4.65 6.67 -- 64.25  Aon KiwiSaver Russell Lifepoints 2015 5.73742 2.53 10.82 -- 2.70  Aon KiwiSaver Russell Lifepoints Mod 5.56341 2.03 10.72 -- 5.84  ASB KiwiSaver Scheme’s Moderate 1.0994 3.23 6.85 -- 269.99  Asteron Rtrmnt Savings Plan Mgd Conserv 2.0918 4.17 6.54 3.59 2.00  Asteron Superplan 2000 Conservative Fund 1.7266 3.66 6.11 2.80 2.09  Asteron Superplan Conservative Fund 1.9621 2.80 5.21 2.16 4.88  AXA KiwiSaver Conservative 1.2025 3.74 7.61 -- 22.02  FC KiwiSaver Scheme’s Active Cnsrv 1.1259 2.62 6.85 -- 5.10  FC KiwiSaver Scheme’s Tracker Moderat 1.0908 3.22 6.80 -- 13.90  Grosvenor KiwiSaver Conservative Fund 1.2174 4.87 6.73 -- 21.85  Mercer Super Trust KiwiSaver Conserv -2.90 8.32 -- 1.63 -National Bank KiwiSaver-Conservatve Bal 1.1109 4.68 6.68 -- 83.61  OnePath KiwiSaver-Conservative Balanced 1.1042 4.95 6.74 -- 2.53  SIL KiwiSaver-Conservative Balanced 1.119 4.69 6.88 -- 57.76   Smartshares Smartkiwi Balanced Fund 0.90365 -2.09 4.53 -- 5.21 TOWER KiwiSaver Conservative 1.2111 3.56 7.51 -- 40.67  Westpac KiwiSaver-Conservative Fund 1.1501 4.81 6.16 -- 564.85  new Zealand insurance fund nZ Bonds AMP Prem PSS OnePath NZ Fixed Interest 1.497 8.80 7.49 6.24 2.68  ANZ Retirement Plan - Capital Stable 1.9844 4.35 4.46 5.01 4.56  Asteron Rtrmnt Savings Plan NZ Fixed Int 2.4993 8.60 7.92 6.50 1.21  Asteron Superplan 2000 NZ Bond Fund 2.1795 7.88 6.88 5.82 1.80  Asteron Superplan NZ Bond Fund 2.7811 7.94 6.90 5.82 7.96  SIL 60s + Sup Capital Stable 2.3568 8.11 6.42 5.41 5.65  SIL KiwiSaver-New Zealand Fixed Interest 1.3003 8.54 6.84 -- 4.19  SIL P/R Capital Stable Fund 2.3568 8.11 6.42 5.41 7.56  Westpac Retirement Plan - Accum Port 2.8149 3.12 4.05 4.11 24.99  new Zealand insurance fund nZ Bonds non-piE Fidelity Life NZ Fixed Interest 3.3161 4.09 4.48 3.73 1.27  new Zealand insurance fund unlisted and Direct property - nZ Asteron Rtrmnt Savings Plan NZ Property 2.7523 ---- 0.76 -Asteron Superplan 2000 Property Fund 1.4637 9.16 13.84 -9.99 0.93 -Asteron Superplan Property Fund 1.3103 7.66 12.46 -10.91 1.38 -TOWER FreedomPlan - Property Fund 3.27696 2.75 3.79 8.78 1.42 -TOWER FuturePlan - Property 3.27696 2.75 3.79 8.78 7.29 -new Zealand insurance fund unlisted and Direct property - nZ non-piE Fidelity Life Property Portfolio 3.2139 6.74 4.00 3.34 1.03 -new Zealand oE Cash AMP Capital Cash Advantage Fund 1.21018 3.73 3.79 -- 262.23  AMP Capital NZ Cash Fund 1.57423 3.67 4.00 5.63 1958.78  AMP Classic PUT Select Cash Enhanced 1.1636 3.02 2.93 4.63 5.05  AMP Prem PUT OnePath NZ Cash 1.1997 3.21 3.32 5.47 6.56  ASB Cash Fund -3.31 3.48 -- 475.05  1.1691 2.47 2.88 4.34 30.15  Public Trust Cash Management Fund TOWER Cash Fund 1.1345 2.77 3.04 -- 14.97  Westpac Cash Plus Trust 1.1632 3.26 3.38 -- 84.53  new Zealand oE Cash non-piE AMP UT NZ Cash 1.6639 2.02 2.79 4.20 2.33  new Zealand oE Equity Region Asia pacific non-piE AMP UT Asian Shares 1.1853 -15.45 6.79 -1.93 1.57  new Zealand oE Equity Region Australasia Devon Alpha Fund 0.9166 -9.32 --- 36.58 -Devon Trans-Tasman Fund 2.2626 -3.93 7.82 0.19 66.36  Fisher Funds Trans Tasman Fund 1.3258 4.24 12.11 4.94 4.56  Harbour Australasian Equity 0.9818 -0.48 --- 17.11 -Milford Active Growth 1.4298 4.41 10.79 -- 198.86  Milford Trans-Tasman 1.1925 5.10 13.71 -- 39.04  Mint Australia NZ Active Equity 1.032 3.71 10.46 -- 8.30  OnePath Equity Selection Fund 1.224 8.74 8.36 -1.32 16.76  Perpetual Australasian 0.9592 -2.66 --- 12.13 -Pie Australasian Growth Fund 1.765 19.26 42.70 -- 21.37  Tyndall Aggressive Australasian Equity 0.9707 -3.20 10.05 4.95 8.85  Tyndall Small Companies Fund 1.089 -9.27 --- 4.68 -AMP Capital Australian Share Fund 1.86433 -2.66 11.58 -0.15 39.63  Devon Australian 1.0123 -5.32 --- 29.09 -Fisher Funds Australian Growth Fund 2.1481 -6.83 23.94 2.94 79.03  Fisher Funds Premium Australian Fund 0.928 -6.78 23.84 -- 67.90  OnePath Australian Share Fund 2.9777 -4.24 14.14 5.95 34.49 

latest 1 yr transaction Return name Exit price % new Zealand oE Equity Region Australasia non-piE AMP UT Australian Shares 2.0518 -3.23 new Zealand oE Equity Region nZ AMP Capital NZ Equity Opportunity 1.20307 7.11 AMP Capital NZ Shares Fund 1.49599 2.54 AMP Capital Strategic NZ Shares Fund 1.33687 -1.65 AMP Prem PUT OnePath NZ Shares 1.1979 9.30 Fisher Funds Fledgling Fund 1.17 9.03 Fisher Funds NZ Growth Fund 3.2644 9.55 Fisher Funds Premium New Zealand Fund 0.7611 9.78 OnePath New Zealand Share Fund 1.9905 4.79 TOWER New Zealand Equity Trust 2.393 -1.96 Tyndall Core NZ Equity Fund 0.9266 -0.41 new Zealand oE Equity Region nZ non-piE AMP UT NZ Shares 1.7068 0.44 new Zealand oE Equity Region world AMP Capital Core Global Shares Fund 0.68542 -6.26 AMP Capital Core Hedged Global Shares Fd 0.65903 4.20 AMP Capital Extended Markets Global Shrs 0.77692 -7.26 AMP Capital Global Shares Fund 1.30088 -0.86 AMP Capital Investments’ World Index 1.0156 -5.65 AMP Capital Resp Invest Leaders Gl Sh 0.8239 -0.88 AMP Prem PUT FD Intl Share Fund 1 Value 0.7326 -9.41 AMP Prem PUT FD Intl Share Fund 3 Growth 0.7532 -7.78 AMP Prem PUT SSgA Global Shares Index 0.9233 -6.03 AMP Prem PUT SSgA Global Shares IndexHdg 1.0199 0.67 ASB EasyFund World Shares Fund 0.7863 -1.47 Elevation Capital Value Fund 1.1091 -2.52 Fisher Funds International Growth Fund 1.0471 -12.53 Fisher Funds Premium International Fund 1.0638 -12.33 OnePath International Share 0.9757 -1.45 Thoroughbred International Equity Trust 1.1506 -2.99 TOWER Global Fund 2.7871 -6.68 TOWER Global Gateway Fund 253.6245 -4.34 TOWER International Equity 1.0876 -7.59 new Zealand oE Equity sector global - Real Estate AMP Capital Global Propty Securities Fd 0.78696 6.67 ASB EasyFund Global Property Fund 0.7328 0.83 new Zealand oE Equity sector nZ - Real Estate AMP Capital Listed Property Secs Fd 1.31775 8.23 ASB NZ Property Trust 0.9395 3.73 Mint Australia NZ Real Estate Investment 0.9238 5.33 OnePath Property Securities Fund 1.5381 7.29 new Zealand oE global Bond AMP Capital Hdgd Gbl Fixed Intrst Fund 1.74657 3.28 AMP Prem PUT Blackrock Global Fixed Int 1.357 2.21 AMP Prem PUT PIMCO Global Fixed Interest 1.609 6.20 AMP Prem PUT SSgA Global Fixed Int Index 1.37 4.10 ASB EasyFund World Fixed Interest Trust 0.9784 3.56 TOWER BondPlus Fund 1.5452 5.69 new Zealand oE Miscellaneous Fisher Morrison Infrastructure Fund 1.1804 8.91 Pathfinder Commodity Plus Fund 1.0436 4.88 TOWER Global Hedge Fund 278.3071 -5.85 1.1138 3.78 Tyndall Income Fund new Zealand oE Mortgages Westpac Home Loan Trust 1 2.49 Westpac Mortgage Investment Fund 1 2.52 new Zealand oE Mortgages non-piE AXA PMF - Mortgage Investment Fund 153.382 -1.45 new Zealand oE Multisector - Aggressive AMP Capital Growth Fund 1.507 0.67 ANZ Mdg Invmt Fds Growth 1.0145 2.60 Public Trust Growth Priority Fund 1.1722 1.52 Thoroughbred Growth Trust 1.6328 2.65 new Zealand oE Multisector - Aggressive non-piE AMP UT Dynamic 1.347 -0.36 new Zealand oE Multisector - Balanced AMP Capital Balanced Fund 1.6561 2.57 AMP Classic PUT DynamicMkts Balanced 1.2253 1.76 AMP Classic PUT Select Balanced 1.1555 1.87 ANZ Balanced Growth Fund 1.8596 2.84 ANZ Mdg Invmt Fds Balanced 1.0429 3.77 ASB EasyFund Balanced 0.9572 1.56 Milford Balanced 1.0471 3.95 Public Trust Balanced Fund 1.4202 3.07

3 yr 5 yr size Morningstar Rating Return Return $M overall 11.81 0.09

1.99



11.10 6.95 5.42 9.43 7.07 7.46 7.94 7.86 7.59 --

7.90 296.45 516.95 2.85 3.06 74.20 27.00 27.54 9.18 2.46

         --

5.35 -2.66 2.24



--0.43 -0.58 0.29 -2.16 -2.54 --2.73 -1.45 --

0.40 12.19 4.95 7.50 -3.16 6.06 -2.67 -4.20 -1.94 5.14 2.84 -9.12 9.52 3.47 2.07 4.60 -1.57 0.90

----3.07 -6.97 --10.75 -9.66 -5.58 -3.33 -----1.95 -2.68 -1.84 -1.71 -6.43

16.10 6.26

---

345.39  448.21  83.73  142.11  149.35  14.46   2.61 1.82  2.67  3.43  86.14  15.96 -14.18  21.19  18.22  2.22  65.96  39.02  16.68  151.72 31.90

---

--- 8.52 --11.34 -6.14 3.35  6.91 -- 4.54  8.24 0.50 45.53  10.26 7.44 12.57 6.42 -11.15

6.30 126.09  6.00 1.78  8.73 2.13  7.14 4.34  -- 25.45 -7.38 114.41 

--- 8.58 --- 27.90 -2.27 -0.40 11.79 7.75 -- 8.42

-----

2.78 2.79

---

3.94 176.47 6.29 329.17

-0.35 1.83

6.77

--

4.97 -0.72 702.33  --- 0.15 -6.18 -0.49 8.74  7.12 0.84 8.06  4.28 -2.81 8.71 5.71 4.90 5.00 6.40 -5.97 -6.84

2.43 1.73 1.23 1.33 ---2.24

1034.52 3.40 31.42 12.30 9.01 66.52 12.54 4.79

     - -

latest 1 yr 3 yr transaction Return Return Exit price % Public Trust Balanced Growth Fund 1.2006 2.16 6.03 Public Trust Moderate Growth Fund 1.2329 2.58 6.19 Thoroughbred Balanced Trust 1.9019 3.41 7.04 Thoroughbred Education Fund 1.9019 3.41 7.04 Westpac Diversified Trust 1.3212 2.69 5.34 new Zealand oE Multisector - Balanced non-piE AMP UT Balanced 1.5612 1.46 4.93 AMP UT Balanced - Other 1.3539 1.42 5.00 new Zealand oE Multisector - Conservative AMP Classic PUT Select Income 1.3684 5.93 6.53 ANZ Mdg Invmt Fds Conservative 1.0731 4.42 -ASB EasyFund Defensive 1.1683 3.30 5.62 Public Trust Defensive Fund 1.3451 4.33 5.98 Thoroughbred Conservative Trust 1.8035 3.51 4.95 new Zealand oE Multisector - Conservative non-piE AMP UT Conservative 1.6919 2.94 4.76 new Zealand oE Multisector - growth AMP Classic PUT DynamicMkts Growth 1.1134 -0.10 4.32 AMP Classic PUT Select Growth 0.986 -0.04 4.16 ANZ Mdg Invmt Fds Balanced Growth 1.0325 3.39 -ASB EasyFund Growth 0.8551 0.20 5.38 Diversified Wealth Management Balanced 1.064 -5.64 6.86 OnePath Balanced Fund 1.679 4.06 6.75 Public Trust Capital Growth Fund 1.3741 1.99 6.45 TOWER Multi Sector Fund 1.9475 0.36 6.72 Westpac Growth Trust 1.1921 2.75 5.50 new Zealand oE Multisector - growth non-piE AMP UT Legg Mason Balanced 1.2389 -3.76 9.23 AXA PMF - Active Growth Fund 1.6088 -1.64 4.77 new Zealand oE Multisector - Moderate AMP Capital Conservative Fund NZ 1.78473 4.07 5.71 AMP Classic PUT DynamicMkts 1.3491 3.40 4.96 Conservative AMP Classic PUT Select Conservative 1.3564 3.46 5.07 ANZ Mdg Invmt Fds Conservative Balanced 1.0611 4.21 -ASB EasyFund Conservative 1.1062 2.88 5.80 ASB EasyFund Moderate 1.0609 2.56 6.14 Milford Income 1.0583 8.71 -Public Trust Conservative Fund 1.2756 3.37 5.99 Westpac Income Plus Trust 1.3519 3.46 4.84 new Zealand oE Multisector - Moderate non-piE AXA PMF - Balanced Fund 1.9454 0.04 4.73 new Zealand oE nZ Bonds AMP Capital NZ Enhanced Yield Fund 1.17524 5.58 5.09 AMP Capital NZ Fixed Interest Fund 1.54552 8.16 9.07 AMP Prem PUT OnePath NZ Fixed Interest 1.4021 8.60 7.36 Harbour NZ Corporate Bond 1.0268 6.44 -OnePath Secure Income Accumulated 1.3248 7.97 6.31 Public Trust NZ Bond Fund 1.5551 7.51 8.17 Tyndall Corporate Bond Fund 1.0902 8.23 -new Zealand oE nZ Bonds non-piE AMP UT NZ Fixed Interest 1.6583 5.18 5.37 new Zealand oE unlisted and Direct property - nZ AMP Capital NZ Property Fund 1.36065 0.18 -new Zealand oE unlisted and Direct property - nZ non-piE AMP UT NZ Property 1.1524 -0.32 -13.74 name

5 yr Return 1.05 1.96 2.27 2.27 0.30

size $M 11.80 8.06 17.83 17.69 58.37

Morningstar Rating overall     

0.57 16.00  -0.81 0.83  6.73 4.61  -- 2.99 --- 98.86  4.41 17.55  4.17 2.26  3.66

0.92



-1.31 -2.07 ---2.00 0.44 2.15 -0.58

2.76 11.80 1.76 18.80 22.07 24.26 3.52 10.84 33.79

  -     

-1.73 1.80  -0.08 18.40  5.32 4.55 4.47 ----2.76 2.61

542.22 1.36 15.21 7.54 189.67 83.05 87.75 16.17 23.28

1.48 36.83

   -  -  

-8.61 6.23 -5.18 6.98 --

36.45  1069.67  3.32  80.43 -7.77  3.34  49.56 --

5.66

0.92 

--

226.12

--

-6.02 2.62

--

Returns are calculated to 31/10/11. Returns are calculated before tax and after fees, except for the non-PIE categories, which are after tax and after fees. For more information about this table and the methodology behind the data, contact helpdesk.nz@morningstar.com or go to www.morningstar.co.nz © 2011 Morningstar, Inc. All rights reserved. Neither Morningstar, nor its affiliates nor their content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. To the extent that any of this information constitutes advice, it is not personalised and has been prepared by Morningstar Research Limited (a subsidiary of Morningstar, Inc.) without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant Investment Statement before making any decision to invest.

Neither Morningstar nor Morningstar’s employees can provide you with personalised financial advice. To obtain advice tailored to your particular circumstances, please contact a professional financial adviser.

Asset

DECEMBER 2011

33

asset adviser data AssEt DAtA - piE funds Institution

At 1 December 2011 from Depositrates.co.nz

Fund name

Min.

Rate.

30%

33%

CASH FunDS ANZ ASB Bank BNZ Direct Broking Call Account First Mortgage Trust Forsyth Barr Forsyth Barr Forsyth Barr Forsyth Barr HSBC Premier

Call Fund Cash Fund Cash PIE Call Account PIE Trust

Kiwibank Kiwibank MARAC National Bank Nelson Building Society Rabodirect SBS Bank Spicers TSB UDC Investments Westpac

2000 500 1000

3 3.15 3.5

3.09 3.29 3.66

3.22 3.44 3.82

1

2.8

2.92

3.05

500

4.52 4.18 4.27 4.11 4.17

4.72 4.37 4.46 4.29 4.36

PIE Term Fund

5000

4.25

4.37

4.57

Term Fund

10000

4

4.11

4.3

10000 5000 10000 10000

4.35 4.4 4.4 4

4.55 4.6 4.53 4.11

4.75 4.81 4.73 4.3

10000 5000 10000 1000 5000

4.45 4.5 4.5 6.25 4.1

4.68 4.71 4.63 6.58 4.27

4.89 4.92 4.84 6.88 4.47

PIE Term Fund

5000

4.35

4.47

4.67

Term Maximiser Term Fund

5000 10000

4.4 4.25

4.6 4.44

4.81 4.64

10000 5000 5000

4.5 4.5 4.65

4.73 4.71 4.95

4.95 4.92 5.17

10000 5000

4.75 4.8

5 5.03

5.23 5.25

PIE Term Fund

5000

4.65

4.78

4.99

Term Fund

10000

4.8

5.03

5.25

10000 5000

5.5 6

5.8 6.33

6.06 6.61

2.5

2.61

3.15

3.29

3.44

teRM FunDS - 12 months

4.5 3

4.73 3.13

4.95 3.27

Lifestages PIE

10000

3.75

3.9

4.08

Cash Advantage Fund Lifestages Premium Plus Cash Fund Call Maximiser Cash Plus Trust

250 5000 5000 5000 5000

3.4 3.2 2.75 3.75 3 3

3.54 3.9 2.85 3.9 3.12 3.13

3.7 4.08 2.98 4.07 3.26 3.27

ASB Bank BNZ Kiwibank Marac National Bank The Co-operative Bank UDC Investments Westpac

5000 10000 5000 10000 5000 10000

4 3.5 3.5 3.5 3.25 3.25

4.17 3.66 3.58 3.6 3.37 3.34

4.36 3.83 3.75 3.76 3.52 3.49

5000 10000

3.5 3.5

3.58 3.6

3.75 3.76

ASB Bank BNZ The Co-operative Bank Westpac

5000 10000

3.6 3.8

0 3.91

0 4.08

ASB Bank BNZ

- latest values to 30 october 2011

5.00% 1.70% 6.40% 6.20% 10.70% 58.70% 7.80% 3.10% 0.40%

NZ Equity Private Equity Fixed Income Property Infrastructure Global Equities Timber Other Private Markets Rural Farmland

pERfoRMAnCE 9

%

-6

Oct 11

-6

Sep 11

-3

Aug 11

-3

Jul 11

0

Jun 11

0

May 11

3

Apr 11

3

Mar 11

6

Feb 11

6

Jan 11

4.4 4 4.15 4 4

2.4

Term PIE Term Deposit Fund

Dec 10

10000 5000 10000 10000 5000

Term Fund Term PIE Term Fund Term Deposit Fund Term Fund

5.66

AlloCAtion

Nov 10

ASB Bank BNZ HSBC Premier Kiwibank National Bank The Co-operative Bank Westpac

2.82 3.1 3.67 3.95 2.36

Term PIE Term Deposit Fund

Source: NZ Super Fund

Asset

33%

5.23

new Zealand super fund

34

30%

2.61 2.87 3.4 3.66 2.26

teRM FunDS - 150 days

9

Rate.

2.5 2.75 3.25 3.5 2.2

teRM FunDS - 120 days

BNZ Kiwibank

Min.

teRM FunDS - 6 months

5.01

Term Fund Term Fund Term PIE Term Deposit Fund Term Fund Term Fund

BNZ Kiwibank

Fund name

Cash Management Trust 3000 Cash Management Trust 20000 Cash Management Trust 50000 Cash Management Trust 250000 Cash Fund 10000 PIE Online Call Fund 2000 - Base PIE Online Call Fund 2000 no withdrawals Call PIE 1000 Call Fund 1

teRM FunDS - 90 days ANZ ASB Bank BNZ Kiwibank National Bank Westpac

Institution

DECEMBER 2011

teRM FunDS - 9 months ASB Bank BNZ HSBC Premier Westpac

Term Fund Term PIE Term Fund Term Fund Term Fund Term PIE Term Deposit Fund Term Deposit PIE Term Fund

teRM FunDS - 18 months ASB Bank Term Fund BNZ Term PIE UDC Investments Term Maximiser

teRM FunDS - 24 months Term Fund Term PIE

teRM FunDS - 5 years Term Fund Term PIE

Kiwisaver league table Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Provider OnePath ASB Group Investments AMP/AXA Westpac Tower Mercer KiwiSaver Scheme Gareth Morgan KiwiSaver Scheme Fisher Funds Management Huljich Wealth Management Fidelity Life SuperLife Grosvenor Financial Services Medical Assurance Aon CRAIGS Investment Partners Supereasy (Civic Assurance) Southland Building Society (LifeStages) Kiwibank Milford Staples Rodway Credit Union Smartshares Forsyth Barr Brook Asset Management Law Retirement NZ Funds totAL

FuM (31.3.11) $1,952,316,000 $1,670,587,096 $1,566,413,000 $866,305,000 $579,574,761 $533,314,324 $525,136,450 $222,751,079 $196,665,865 $194,931,043 $145,301,000 $141,791,993 $125,840,722 $122,074,623 $68,372,044 $52,170,726 $42,718,922 $29,245,000 $23,259,927 $22,596,448 $22,190,935 $19,683,554 $11,255,520 $4,975,837 $3,898,668 $1,390,647 9,144,761,184

KiwiSaver – The full story

w o n e l b A l i A v A In November ASSET published its 4th Annual KiwiSaver survey which provides details of all the retail schemes.

A full 14-page report is now available.

This report provides you with all the numbers plus additional analysis of the survey.

It has separate sections on: • Membership trends and growth • Funds under management • Member balances • Fee analysis • Plus withdrawal numbers

To buy your copy call 0800-345675 now Asset

DECEMBER 2011

35

Could your clients afford to wait?

Did you know it can take up to six months to see a specialist on the public health system? * Could your clients afford to wait?

Now, they don’t have to. With Sovereign, your clients can add our Specialist and Diagnostic Testing Benefit to any of their TotalCareMax Personal benefits, meaning they’ll have access to private specialists and help with getting a diagnosis more quickly.

Our Specialist and Diagnostic Testing Benefit also gives access to Best Doctors®, a service unique to Sovereign in New Zealand which adds true value to the insurance protection you can offer to clients. *Source: Ministry of Health website (www.moh.govt.nz/moh.nsf/indexmh/electiveservices-espi-information), Elective Services Patient Flow Indicators: ‘The goal is to have no patients waiting more than six months for a first specialist assessment’.

Best Doctors ® is a registered trademark of Best Doctors, Inc. and is used under licence.

To find out more about this New Zealand first and the other latest 20 enhancements to TotalCareMax and Absolute Health, speak to your Business Development Manager or call Sovereign on 0800 768 287 today!

Sovereign Assurance Company Limited.

All applications are subject to individual consideration. Conditions apply.

sovereign.co.nz

36

Asset

10030 1210 afford to wait.indd 3

DECEMBER 2011

18/01/11 4:50 PM