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Life and trauma claim stats uncovered [GRTV] New regs already having an impact on advice Quite a journey to Tower top table

ASSET 03 | 2021 | WWW.GOODRETURNS.CO.NZ

Code breaches force adviser’s retirement

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Contents | ASSET 3

LEAD An adviser forced into retirement by Code breaches tells her story to ASSET.

Life Insurance Russell Hutchinson and Ed Foster review life and trauma claims survey stats and their impact for insurance advice.

UP FRONT 05

EDITORIAL

The changing world of advice.

NEWS Another milestone reached for full licensing; rising costs of PI cover.

SBS SPONSORED CONTENT Graham Duston on fixing the gender gap in KiwiSaver investment.

FEATURES

PEOPLE New Craigs’ CEO, additions at Rival Wealth, and more.

GRTV Naomi Ballantyne and Philip Macalister discuss industry changes.

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PROFILE

REGULARS 28

Jonathan Beale’s journey to the top table at Tower.

KERNEL SPONSORED CONTENT Dean Anderson discusses the future of sustainable investment.

ADVISER PROFILE

HARBOUR SPONSORED CONTENT

Warren Duff speaks to Matthew Martin about his 63-year insurance career.

Learn more about Harbour’s Real Estate Investment Fund.

INVESTMENT COMMENTARY David van Schaardenburg looks at NZ’s game of regulatory catch-up.

MINDFUL MONEY AWARDS

MORNINGSTAR Morningstar data.

UP FRONT | EDITORIAL

The advice world is changing

here are already discernible changes in financial advice in the three months since the Financial Services Legislation Amendment Act finally kicked into action. One of the most obvious is advisers are leaving the industry. Figures from the Companies Office show that hundreds of financial advisers face deregistration. Added to that there is growing evidence that many advisers are selling their businesses or simply putting up the shutters. This seems to be especially so in the life insurance sector. The old timers just don’t have any appetite to deal with the additional compliance regime and level five papers which will be mandatory in the future. This also creates opportunities for new entrants into the market. It was interesting to hear Naomi Ballantyne say on Good Returns TV that four of Partners Life’s business development managers were leaving to become advisers.

One of the likely outcomes of regulation is that some consolidation will come to the financial advice industry and businesses will have more scale. No longer will advice be seen as a bit of a cottage industry. One of the most worrying observations is the impact change is having on the mental health of advisers. Research out of Australia shows regulatory and compliance demands have put a huge amount of stress onto advisers. The numbers are scary. It says 73% of advisers are experiencing high levels of burnout from work and 33% of advisers are seeking medical care to manage their health symptoms caused by the stress of the role. The report, through, does say there are a group of advisers who are thriving and it gives some really useful tips for advisers, the industry and regulators about how to manage the wellbeing of advisers. AIA, which supported the research, plans to undertake the exercise in New

Zealand. You can find out more about it on Good Returns TV (www.goodreturns. co.nz/grtv).

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Coming of age At the time ASSET went to print Mindful Money held its first ethical investing awards. We will have more on this event in the next issue, but congratulations to all the winners and finalists. The event held in Auckland was a sold out affair and it clearly demonstrated that responsible investing has finally come of age in New Zealand. This can be seen as more and more product enters the market. On pages 16 and 17 we feature a suite of new sustainable funds.

Philip Macalister Publisher

All contents of ASSET Magazine are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited. ISSN 1175-9585

UP FRONT | NEWS

Another milestone reached on the way to full licensing On June 15 the deadline for advisers to link themselves to a financial advice provider (FAP) passed marking another milestone on the journey to full industry licensing. In the coming weeks, the New Zealand Companies Office will begin to deregister those advisers on transitional licences who haven’t linked themselves to a FAP, set up their own FAP, or become an authorised body (AB) under another business’ FAP. While industry leaders say they have not seen much change in the overall number of advisers there has been a shift with some long-term advisers moving out of the industry and being replaced by younger people – many of them from banks, coming into the financial advice business. It was not all plain sailing for those slow to link to a FAP with both the Financial Markets Authority and Financial Advice NZ warning that at the start of June almost half of the industry‘s advisers had not yet linked. This was a concern as this part of the process was deemed to be fairly simple compared to what lies ahead in terms of the full licensing process. 06 | ASSET 03 | 2021

Financial Advice NZ chief executive Katrina Shanks said after that hurdle had been crossed advisers could take a breather before applying for full licences. “Once the FAP has linked [with] the adviser, then the adviser is pretty much good to go for the next two years,” she said. “They also need to make sure that the FAP has their dispute resolution guidance registered with the Companies Office. But after that they have until March 15, 2023, to obtain their full licence.” The good news is, according to the FMA’s head of compliance services Anita Frazer, obtaining a full licence is not as daunting as it may seem; but advisers should be working toward that goal now. She said of the 1,807 transitional licences approved only 32 applications for full licences had so far been received and the deadline of March 2023 was rapidly approaching. “So some haste please, we are not seeing enough momentum. “It’s a lifetime licence pretty much, but it’s also an iterative process so we don’t expect perfection the first time round but we urge you to all think about it now.”

Frazer says there are no surprises in the questions advisers need to complete for full licensing and they can be seen before filling out applications. Shanks reiterated Frazer’s call saying “... now we move into the full licensing process and have two years to do this, but that time will go very quickly”. “The sooner you apply for the full licence the sooner you can put all of this behind you.” Right now, the vast majority of advisers will be operating under a transitional licence with only a handful of businesses gaining a full licence. A transitional licence is valid for up to two years and, along with the competency safe harbour, enables advisers to continue providing the advice they were legally able to provide before the new regime was introduced. This gives advisers time to meet any new competence, knowledge and skills standards needed. If you did not get a transitional licence before March 15, you cannot provide advice to retail clients until you have a full licence – unless you provide advice under another FAP’s licence.

To Steward or not?

Robert Sloan, Chief Risk Officer and General Counsel, Trustees Executors New Zealand is rightly congratulating itself in the fact that with the introduction of the ‘Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill’ we have become the first country in the world to introduce a law that requires the financial sector to disclose the impacts of climate change on their business and explain how they will manage climate-related risks and opportunities. Despite this ‘worldleading’ approach, in other areas we appear to be ‘world-lagging’ against our international peers. In particular, one of these critical areas concerns a ‘Stewardship Code’. We are one of the very few developed economies where such as a Code does not exist.

tewardship is the use of influence by institutional investors to maximise overall long-term value – including the value of environmental, social and economic assets, upon which returns and clients’ and beneficiaries’ interests depend. A Stewardship Code is used to govern or steer the interactions between investors and investee companies, with a view to promoting long-term value creation. Overseas, Stewardship is part of a suite of policies that governments, regulators and industry are using to encourage sustainable finance. As a recap, sustainable finance isn’t about being ‘green’, it is finance which is about changing the way investment and lending decisions are made, so that environmental, social and economic factors are integral and negative impacts both immediately and over the long-term, are avoided.

“On striking a balance

between ‘Carrot’ and ‘Stick’: A Stewardship Code can be developed by the industry for the industry, with the Government bringing in legislation to support/reinforce its importance

”

In New Zealand there is currently no official Stewardship Code, and no immediately obvious place to integrate stewardship into. The Sustainable Finance Roadmap, released in November 2020, recognised this and recommended the introduction of a Stewardship Code for financial institutions. The Forum went on to recommend application of this Code should link to the licensing requirements of KiwiSaver and managed fund providers.

There are many benefits to a Stewardship Code as they help investors and asset owners: • Achieve long-term value through the active consideration of ESG factors (risks) in investment processes. • Address real-world problems and achieve positive outcomes at scale (e.g. climate change). • Give regulators trust and confidence that investors are demonstrating fiduciary duty by acting in the best interest of their clients and beneficiaries. • Provide the framework needed to help them ensure their products credibly deliver what they promise (to avoid ‘greenwashing’). • Give confidence to regulators that investors are meeting standards for culture and conduct (including conflicts of interest). • Provide clients and beneficiaries with information to allow them to make informed decisions, through improved transparency. • Maintain international currency in the rapidly evolving responsible investing policy landscape. That is not to say that members of New Zealand’s investor industry are not employing Stewardship approaches of their own as there are a number who have been certified

by the Responsible Investment Association Australasia (RIAA) and/or are a signatory to the United Nations Principles for Responsible Investment. However, a properly implemented Stewardship Code would level the playing field for investors and give corporates clarity about what to expect from their investors in terms of engagement around outcomes on systemic issues, common goals and collaborative action. This latter point is especially pertinent given the introduction of the afore mentioned Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill. Stewardship will be a critical success factor to the implementation of this Bill. There is no doubt that a Stewardship Code is beneficial but the conundrum we face in New Zealand is how should one be implemented, if at all? And should a Stewardship Code be led by industry or the regulator? The Sustainable Finance Forum’s consultation from the industry was very clear: “On striking a balance between ‘Carrot’ and ‘Stick’: A Stewardship Code can be developed by the industry for the industry, with the Government bringing in legislation to support/reinforce its importance.”– Sustainable Finance Forum, November 2020. If you would like to join the conversation or share thoughts on this topic contact robert.sloan@trustees.co.nz who has been discussing this issue with Erica Miles of West Nine Consulting Limited and Philip Houghton-Brown of BTNZ.

www.trustees.co.nz 0800 878 783

UP FRONT | NEWS

The rising costs of PI cover Since early-2020 those in the know were already talking about increases to the cost of professional indemnity (PI) cover, now those costs have become an unwelcome reality for the financial advice industry. Spurred on by the introduction of the Financial Services Legislation Amendment Act (FSLAA) and uncertainty around underwriting capacity insurers have become much more cautious, which can be seen in the rising costs of premiums. In December last year, NZI, which was understood to cover 60% of the financial advice sector, told the TripleA Advisers Association it would no longer cover advisory firms with less than three people. NZI national relationship manager Andrew Jollands said the insurer would still offer PI cover to FAPs with three or more advisers, but “... we were concerned at the significant exposure generated from multiple individual advisers’ limits of indemnity for the minimal premium generated”.

“Our concern is, with the level of compliance required under the new regulations, a one or two adviser firm will not have the capacity to maintain their advice levels, their ongoing education, along with all the compliance.” NZI’s stance was backed up by Andrew Ford, head of financial and professional risks at Crombie Lockwood, who said in May this year that external global factors, a lack of underwriting capacity and the introduction of the FSLAA regime had caused PI premiums to skyrocket. “The whole professional indemnity landscape has been hardening for the past two to three years, driven by poor loss ratios. There has been historic under-pricing and increased claims activity,” Ford said. In June this year, the NZ Financial Services Group said its advisers faced costs of $2,500 to $4,100 for PI cover as premiums soared under the new regulatory regime. Advisers with their own FAP licence will pay premiums starting from $4,100 with those costs marking a significant

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increase on previous years when PI premiums were closer to $1,500-$1,700. Later in June, Financial Advice NZ revealed its PI renewal costs saying those costs would continue to rise in the coming years. Class 1 FAPs (sole advisers with their own licence), will face premiums ranging from $1,700 to $3,600, depending on the advice stream. Meanwhile, costs for Class 2 FAPs (licensed FAPs with between two and 12 advisers) will need to pay premiums of between $2,250 and $4,300. Financial Advice NZ chief executive Katrina Shanks said with PI insurance costs escalating, the new liability programme offered great value for money and further incentives for members who qualify for “trusted adviser” status, plus runoff cover for FAPs and individual advisers. “Professional indemnity insurance is a hardening market in these uncertain times due to the changing regulatory environment and the risk appetite of insurers, and the process to finalise this programme has been robust,” she said. A

UP FRONT | OPINION

ʻMind the gapʼ

hen one of our team members recently applied for parental leave, it was reinforced to me why gender often plays a large part in the different financial retirement outcomes that New Zealanders may receive. Our team member’s happy news was tempered by the realisation that this would have a major cost to them over the long term when it came to their retirement savings. Whilst we were able to resolve this issue, this would not be the case for many other New Zealanders in the same position. As many of you are aware, when a person takes parental leave, their employer is not legally required to make KiwiSaver contributions from their paid parental leave payment. I’m aware that whilst the parental paid provisions are gender neutral, the application of this legislation tends to impact more on females. In 2017 in New Zealand, 324 males applied for paid parental leave (Stuff August 19, 2018). You might be interested to know that for the same year (2017), 30,000 females applied for paid parental leave! It’s one of the many reasons why gender plays a part in different retirement outcomes between females and males. A ”deeper dive” on this matter shows that structural labour market, education, time out of the work force, earning rates, child care, and societal issues (to name a few) also impact on this area. These are outside the scope of this article. Statistics NZ calculated that the gender pay gap in the June 2020 quarter was 9.5%. This measure is based on the difference between male and female hourly wage and salary earnings. Also, of concern was a recent report from Strategic Pay on this topic. Strategic Pay, in 2020, released a report titled, “Understanding Pay

BY GRAHAM DUSTON

Equity and Analysing the Gender Pay Gap in New Zealand”. They arrived at a conclusion that, in fact, the gender pay gap was nearly double of what was reflected in official figures. Their analysis examined what the pay gap looks like when benefits such as vehicles or KiwiSaver (as valued for pay purposes), were analysed, and when variable pay such as bonuses were thrown into the mix. Strategic Pay concluded, using data from a sample of over 187,000 employees from over 950 organisations in New Zealand, that the overall gender pay gap is 17.7% in New Zealand (the pay gap was analysed based on job level and within each sector (private, public and not for profit)). These issues all translate into a range of different gender outcomes in the area of retirement savings. What I’d like to look at and suggest is that perhaps it’s time to look at how KiwiSaver interacts and intersects with this policy area. The New Zealand retirement industry has recently started to focus on the gender gap and related education issues. This is good news and is to be applauded. This will hopefully assist in adding another dimension to the debate. There clearly is an issue. Just how much this issue can evolve over time can be shown by Australian superannuation savings and gender data. ASFA recently calculated how structural and earning differences translate into different retirement outcomes between the genders in Australia. The table below shows the average super balances for employed Australian men and women of different ages (excluding those with no super). Acknowledging issues such as the gender pay gap and structural labour market issues, as well as no provision for KiwiSaver employer payments in the paid parental payment legislation, means that there is no doubt that New

Age

Average balance Average balance - men - women

20-24

$9,481

$8,051

25-29

$28,319

$23,773

30-34

$58,035

$45,968

35-39

$92,425

$72,098

40-44

$134,992

$98,572

45-49

$182,146

$127,687

50-54

$242,007

$159,188

55-59

$311,163

$207,254

60-64

$371,599

$251,409

65-69

$384,539

$313,050

Zealand will be moving down the same track as Australia in terms of retirement outcomes unless we take positive action to “close the gap”. Unfortunately, structural labour market and societal issues can take time to resolve or even “shift the dial” a little. The London Underground message of “Mind the Gap” probably should be changed to “close the gap” when it comes to gender outcomes, retirement savings and New Zealand. Perhaps one area that might provide a “quick win” in this area, is to review the remuneration framework for paid parental leave. Should employers have to continue to make employer contributions to KiwiSaver to an employee when they go on paid parental leave? If this had been the case, 30,000 New Zealand females and 324 males in 2017, would have appreciated their employer helping them to “close the gap” in their retirement savings that year! A

Source: Association of Superannuation Funds of Australia, Experience to date with the early release of superannuation1, June 2020, pg. 15. WWW.GOODRETURNS.CO.NZ | 09

UP FRONT | PEOPLE

New CEO for Craigs

Craigs Investment Partners, has appointed a new chief executive.

Two additions at Rival Wealth

Rival’s latest growth phase sees well-known industry figure Barry Read make the move to the company. He will oversee its new Auckland operation from within the ANZ Centre on Albert St. “I have been lucky enough to work with Tim and Carissa in an advisory capacity over the last 10 years watching them successfully grow the business from their HQ in Masterton,” says Read. Fairbrother says as general manager of the Auckland office, Read will be an integral part of Rival’s business development strategy. A large chunk of Read’s time will be dedicated to acquiring and merging adviser practices, along with growing capability to provide advice to Auckland clients.

10 | ASSET 03 | 2021

Simon Tong has been appointed as the company’s new CEO. Tong was previously the chief executive at Paymark and Fairfax NZ and for the last three years has been ASB Bank’s digital, data and brand executive general manager. Tong is also a director at Payments NZ and a former director of The Instillery (formerly Origin IT) and Paymark. ong has a strong background in technology and strategy and is highly regarded as a leader who has driven

Rival Wealth has expanded its business and has appointed a general manager to head up its brand new Auckland office, along with an experienced financial adviser to help grow its operation in the country’s largest city.

Joining Read in Auckland as a financial adviser is Daryl Buckingham, who has worked for more than two decades in the private banking sector for both ANZ and BNZ. “I love the fact that Rival Wealth clients are not just a number,” says Buckingham. “I have found the philosophy and principles of Rival Wealth fit nicely with my own.” “Rival Wealth has a team approach to reviewing their portfolio mix, so Daryl will be a lot more hands-on than he was in his previous role,” says Fairbrother. “Daryl has the expertise and core values that make him a perfect fit with our team. It feels like the stars have aligned and the timing of Daryl joining couldn’t have been better.”

change, performance, and customercentricity at the companies he has worked with. “As Craigs embarks upon the next phase of its growth, the board determined that Simon’s track record and leadership attributes are those characteristics that fit our ambitious objectives,”. Craigs has 600 employees and 173 investment advisers across 19 branches and $25 billion of client funds under management.

Spokesman and co-founder Tim Fairbrother says since opening their doors in 2008, Rival has grown from just three staff to a team of 22, along with opening sister company – Rival Accounting – in 2018, which has six staff. Fairbrother says the introduction of the new financial advice regime on March 15 has highlighted how important it is to have compliant and consistent processes. Fairbrother says as general manager of the Auckland office, Read will be an integral part of Rival's business development strategy. A large chunk of Read's time will be dedicated to acquiring and merging adviser practices, along with growing capability to provide advice to Auckland clients. “With the new regulations that began in March transitional licensing is becoming testing for some,” Fairbrother says. “We have a very clear philosophy about how we give exceptional service to clients rather than seeing people get tipped into a large pot.” “As we offer Discretionary Investment Management Services (DIMS), our process had been thoroughly checked, giving our advisers the ability to focus on putting client relationships first,” he says.

Five vital recruits for AIA

AIA NZ has welcomed five new faces to front its business interests around New Zealand.

Tim Coltman is AIA’s new southern business development manager and joined the team in April. He has an extensive background in high-performance sport, both as a sailor, coach and event manager after holding roles with Sport NZ, High Performance Sport NZ, and Snow Sports NZ. AIA says Coltman brings solid planning, negotiation and project management skills to his new role at AIA NZ and will be based in Wanaka serving the lower part of the South Island.

Former fitness instructor and bodybuilder Hannah Anderson will be AIA’s new Christchurch business development manager after a stint with Coca Cola Amatil. She also spent several years with Air New Zealand, worked as a group fitness instructor with Les Mills and represented New Zealand in bodybuilding.

Anna Corbin will take on the role of lower North Island business development manager and brings almost 10 years of experience as an adviser to AIA NZ. Before running her own advice business, the former international cricketer spent 12 years with IAG New Zealand in a variety of leadership roles, excelling in key sales and service measures.

And Laura Holyoake is AIA NZ’s new vitality coach after being involved with AIA Vitality since its launch in 2019. She has a background in insurance and is heavily invested in living her "healthy" each and every day.

AIA’s new Wellington BDM is Rakesh Masalawalla. He joined the AIA NZ team in March, bringing with him over 25 years of experience in the insurance and trustee industries, working with brands such as AMP Wealth Management and Perpetual Guardian.

“We are incredibly pleased to welcome Tim, Anna, Rakesh, Hannah and Laura to the team,” says chief partnership insurance officer Sam Tremethick. “They each bring their own individual skills and enthusiasm to their respective roles and we believe these appointments provide the market with a strong indication of our future direction.” As the industry continues to adapt to new regulation and changing consumer demands, Tremethick says they have a lot to learn from other industries and high-performance sport. “As an industry it is important we look for ways to grow and evolve by ‘training smarter, not harder’. “Our new team members have demonstrated they can compete at the highest levels, and their ability to share this knowledge will no doubt help advisers take their business to the next level.” A

Are you looking to sell a book of Insurance or Kiwisaver Business? You might know John Schell from his involvement with the PAA or Financial Advice NZ. He would like to speak with you if you are looking to exit the industry over the next couple of years. John Schell 021 644 621 john@getsure.co.nz WWW.GOODRETURNS.CO.NZ | 11

FEATURES

How financial advice is changing Philip Macalister speaks to Naomi Ballantyne, managing director of Partners Life, on how the industry is looking under the new regime and the issues with PI cover. A few month into the new regime with advisers. What are you seeing in the marketplace at the moment and has it changed behaviours? We've already seen some immediate changes. We've seen a spike in agency transfers in March. So we've seen an increase in the number of people that are selling their books. Who's buying the books? We've lost four BDMs to become advisers. But that's a good thing, isn't it? It is a very good thing for the industry. It will be very good for us because they clearly know us and what we're about so hopefully that will translate to them trusting us with their customers. It's hard for us, we've lost an awful lot of experience and relationships [there] but the timing of the regulations has prompted advisers that they've worked with to go, "Hey, I'm needing a successor. I know you well and I can trust you with my client base – would you like to come into business with me?" Would you have expected that to happen? We've always expected that the career path for BDMs is either management within the company, a narrow channel, or go out and become advisers because of what

12 | ASSET 03 | 2021

they've learnt and they've seen different structures, what works and what doesn't. To get so many happen all at once is around timing of the regulations and them having an opportunity to buy a client base. They can start with an income stream as opposed to starting from scratch. You're on the hunt for a few new people. We will be. A number of our BDMs, we've recruited from within so we're certainly going to look to that first. Any changes in the business coming in? New business, replacement business? That's a really good point actually, Philip. We expected it to happen but we didn't expect to see it happen quite so quickly. We have always thought that the regulations would slow replacement business down, not that there shouldn't be replacement business but we've also been on that receiving end of opportunistic churn. I'll give you an example, advisers that write all of their new business for us but when they come across a new client that's already got a Partners Life policy, suddenly there's another company that's better for that client. And from that persistency point of view, they think we're invisible because they're not the broker that brokered the business.

But the new regulations have made people stop and think, should I and can I justify that and what trouble will I get myself into? We thought it would take time to flow through but we've just done our most recent measurement and we're probably one of the only companies that can measure – and has always measured – the percentage of business we get that is replacement. We were sitting at around 40% for the last five years of our business's replacement and the other 60% is new – top-ups or brand new business. In the last quarter, it's dropped by 10%, that replacement business so it's about 30%. That's a big drop. Do you think advisers under the new regulations are thinking more about replacement business? And does that indicate that maybe they were doing things that they shouldn't have been doing before? I think most advisers, nothing's changed because when they replaced business, they were genuinely doing it where they felt that it was right for the client. I think the few that weren't doing that and thought that they were kind of invisible so it was a nice bit of money on the side, are rethinking that strategy. It'll be interesting to track those numbers and see what happens. It will be. But there should be a healthy degree of replacement business because people's

circumstances change and companies change. Absolutely, policies change and … Yeah, exactly. But it'll be interesting to see what the normal level should be and in an environment where you really have to work to justify that as opposed to price. And I guess that's partly what the regulations were designed to do. They were, 100%. We thought it would take time for that to have an impact but it seems that it's having an impact much quicker than we thought. A year on from Covid, how are volumes? Depressed compared to before Covid, better than they were in the height of that issue, but I think advisers are still doing a lot of work retaining customers. Yeah. For two reasons. One, because Covid created some financial strain for a number of customers and that is still flowing through and also there's a requirement to prove that you're servicing. There's probably a fair bit of activity going on to demonstrate that they've been working and are reviewing their customers. That kind of removes focus from finding new customers. Again, I think that will play itself out. I think the economy's going to be interesting, inflation rates increasing, is that going to put more cost pressure on people? Well, also, it's going to push premiums up, isn't it? It will push premiums up but incomes are not going up at this point so it's going to be an interesting thing to see how that plays out. I think the original industry's gone because Covid has washed through, that's gone, and now it's much more about the general economy. And the other big issue out there for advisers is PI insurance, what are you seeing there? It's really interesting. We still insist on PI insurance because when there's financial liability, if the advice is wrong, then you need to

make sure that people have got the cover to defend against that or a fine, for example. But we're having advisers say, "But where are we going to get it from?" And I had an adviser talk to me not so long ago saying, "I can't get PI insurance for nominated representatives, or I can, there's one option, it's 10 times more expensive than it was before." And so, expressing a real concern that we, insurance companies, need to change our rules because … They're saying drop it out of your agreements? Yeah. And actually when I sat down and talked with this particular individual and pointed out, "Well, are you planning on these people being nominated representatives for the long term? Or are you planning on them becoming financial advisers and going down a qualification path?" Because that's important to the insurer and the absence of them knowing that their risk is mitigated so they can look at this in a different way, the only thing you've told them is you're going to have a whole bunch of people who are not ever going to be qualified selling insurance in a regime where there's a significant liability, right? It's not just fill in an application for insurance, it's go and talk to the insurer and explain your business and how they should not be concerned overly about the risk that you have. I think that advisers need to engage. Insurance used to be a tick the box, "I bought it from my broker and their dealer group provided discounted insurance. I didn't think about how much I should have or specifically what I require compared to what that guy requires." Now, I think they actually have to behave like we do, which is go to our insurer and say, "This is the nature of our business, here's the risks, here's how we mitigate them so you can have comfort and that you can quote insurance for us." They actually have to really think about what PI is all about. Exactly. In the past, it was a tick box exercise.

How do you think this will play out in the future? Do you think we're going to get new players coming into the market? I think we will when it is known what the liability is, how active the regulator is going to be in terms of enforcement and what size the fines [will] be. Because that was a big issue, wasn't it? Because the previous company were worried about the liability, particularly for smaller firms. But we've also got a regulatory environment in NZ, which is principles based. On the one hand, that's a good thing because it means everybody's got this little devil/angel on their shoulder saying, "Could you justify this? Could you explain this?" Rather than, "If I tick a box, I'm okay." The downside is, from an insurer point of view, you've got no idea how the regulator's going to interpret things because you've only got guidelines, not rules. As a result, as an insurer, for that liability, you have no certainty about what you're taking liability for and it will push price or availability out of the market until there's precedents set. And sort of related to that, are you getting any feedback to how the FAPs are going and taking responsibility for their members? We're hearing, in the mortgage space, there's some pushback going on. I'm not hearing that. Before the regulations came into effect, we had dealer groups, for example, saying they were going to be FAPs and taking responsibility. Then, in some cases, that didn't play out, leaving members to scrabble at the last minute. Since then though, the FAPs that are in place, I’m not hearing in the life insurance space people talking about leaving, etc. A

To watch the full interview, download an audio podcast or to read the full transcript, visit: goodreturns.co.nz/grtv

Exactly, because we forced it on them. WWW.GOODRETURNS.CO.NZ | 13

FEATURES | PROFILE

Top table at Tower Almost 20 years ago Jonathan Beale arrived in New Zealand without a job, he tells Matthew Martin about his journey to become MD of partnerships with Tower Insurance. BY MATTHEW MARTIN 14 | ASSET 03 | 2021

hen Jonathan Beale moved to Auckland in 2002 he and his wife Helen had nowhere to live, no friends

and no job. Thankfully, Beale tells ASSET magazine, he now has all three along with two children, both born in New Zealand, and says their move from the UK was the best decision they made. Beale now leads the partnerships’ team at Tower Insurance, a role he has been in since January after 15 years at ASB where he ended up as the bank’s general manager of wealth. He sits at the top table at Tower as the company’s managing director of partnerships and looks forward to the challenge of creating more business through partnership building. Born in Birmingham – he’s still a West Bromwich Albion fan – his family moved to South Wales when he was a child. Beale went on to earn a degree in economics from University College in London. “I think I ended up enjoying London more than I did university. “But by the end of university, Margaret Thatcher was the Prime Minister and there were few jobs out there for graduates so I kind of fell into financial services.” His first job interview was held in a pub in Cardiff when a friend invited him to meet his boss, “... and over a few pints of lager he gave me the job on the spot as a financial consultant”. “When the contract arrived it was 100% commission, the client base was actually the Yellow Pages – but to be fair it was a brilliant way to start and the training I got was off the chart. “I still hear myself saying things I used to say back then in the 90s.” Beale then took a job with Legal and General and his first day on the job was an interesting one – to sit a three-hour exam on product knowledge in a hotel in southeast England. “If I passed I could stay for two weeks and they would teach you how to deal with customers – if you failed you were put on the ‘bus of shame’ and driven off. “I passed, but it taught me a lot. If you are sitting in front of a customer and talking to them about any type of product you are to recommend for them, you have to know what you are talking about. “Just saying ‘I know my product’ is nonsense – because you should,” he says. He then moved back to London to join Lloyds Bank where he met his wife Helen who was working in private banking with “super-wealthy” clients. “I found Lloyds much easier as an adviser – going from a cold calling environment with a very small client base to a bank was awesome for me. “I had a computer on my desk and a list of telephone numbers.” After four years at Lloyds and a move to a specialist finance company working

with corporate clients and large pension schemes Beale says he was ready for change. “I was following a certain path in the UK and was struggling to work out how to get off it. I had always been an adviser, but I didn't want to be an adviser at 40 and talked to myself about what I wanted to do with the skills I had learned as an adviser and how I could use them elsewhere.” Life changed dramatically for the couple after a holiday to New Zealand. Beale says it’s the typical story of a Brit coming to New Zealand, travelling around in a camper van and going home to “cold, dark southeast London and thinking ‘what the hell are we doing here?’ “When we left the UK we had nowhere to live, no friends and no job, but that’s improved immensely – I’ve got all three now.” Their teenage kids both attend Takapuna Grammar and the family live on Auckland’s North Shore at Stanley Bay. “I come to work on the Devonport ferry, so it’s very hard to get stressed on the way to work compared to cramming yourself onto a train or tube. “I actually can’t remember ever being sick in New Zealand.”

‘I could see there was a massive opportunity here to train and lead, and help people understand what advice is and how to engage your customers’ Beale soon found out they had made the right choice and he could put to good use the skills he had learned as an adviser in the UK. “I could see there was a massive opportunity here to train and lead, and help people understand what advice is and how to engage your customers. “So I got more into leadership roles at Westpac and the 15 years I had at ASB were just awesome. “They gave me great opportunities to develop into finance and asset management and then KiwiSaver – I don't think that may have happened if I stayed in London – I think my timing coming to New Zealand was really good.” Now, after a little more than three months at Tower, working for his old boss from ASB Blair Turnbull, he’s got his feet under the desk and is enjoying his new challenge. “My team here is smaller than the team I had at ASB and I’m liking that, it gives

‘Tower is in a great position to kick on – innovate, disrupt and make the customer experience better – there are lots of great things happening here’ me more time to think, plan, strategise and actually do stuff. “One of the reasons I joined Tower was growth aspirations and partnerships – and while that’s always existed it’s never been elevated to the top table – it’s never had an MD running it.” Beale says while partnerships are not a new concept, many businesses are realising how important they can be and “... make sure we understand partnerships are a different and smart way to access customers”. “Tower is in a great position to kick on – innovate, disrupt and make the customer experience better – there are lots of great things happening here. “The insurance market in New Zealand is dominated by two large organisations and that is about 70% of the market. What Tower wants to do is go after that 70% – not the 30% remaining – and I think New Zealand needs more competition in that space.” At ASSET magazine we like to ask the people we profile what has been the best and worst advice they have received in their lives. For Beale, the worst advice came from an unlikely source, his Cambridge University-educated father. “Oh, he’s a very smart guy and gave me lots of great advice ... but when I was starting out in my career it was ‘Jonathan, my advice to you is to keep your head down and work hard, people will notice you.’ “Definitely the worst piece of advice I’ve ever been given – people don't notice you if you keep your head down. “They notice you if you talk about what you are good at and get out and about – you need to be talking about what you want to do and to get out there and do it. “When I started being much more open and out there it gave me a clear and concise idea about where I was at and what I wanted to do.” He says the best piece of advice was found while on an ASB development course some years ago in Taupo. “The one thing that stuck with me was about what is possible – having a mindset around what is possible and getting rid of that word ‘can’t’ – and to focus on what it takes to do what you want to do.” A WWW.GOODRETURNS.CO.NZ | 15

FEATURES | SPONSORED CONTENT

The future of sustainable investing Dean Anderson discusses Kernel’s new sustainable funds and what they offer for advisers and their investment clients. BY DEAN ANDERSON

You’ve recently announced Kernel’s Sustainable Funds, what are they? We have launched three sustainable funds which are: Kernel NZ 50 ESG Tilted, Kernel Global Green Property, Kernel S&P Global Clean Energy. All of the funds are available across the major wrap platforms, extending our product range to 11. This presents an opportunity for investment advisers and wholesale investors to couple sustainable investment with the benefits of low-cost index investing.

Why have you decided to add ESG funds to your product suite? We have always wanted to develop a New Zealand ESG fund, however, we didn’t want to just cut SkyCity. Until recently the data coverage and quality was not sufficient to enable an effective strategy to be developed. Since S&P DJI’s launch of global ESG indices in 2019 and the extended coverage of the Corporate Sustainability Assessment framework, we reached a 16 | ASSET 03 | 2021

tipping point where an effective strategy could be developed. The resulting NZ 50 ESG Tilted index will not only exclude certain sectors but tilt towards or away from companies based on other elements such as workforce diversity, cyber risk and systems through to greenhouse gas emissions.

There appears to be some confusion around what is an ESG fund. What is your definition? There is a lot of misuse of the terms sustainable, ESG, impact, ethical and socially responsible. In part this is due to a lack of global standards in terminology. Historically, SRI investments have used an exclusions strategy; excluding ownership of “sin stocks” like tobacco or gambling. ESG investing often has these same exclusions, but it might also use a scoring system across the E, S and G factors of each company to then increase investment in companies which are calculated to be creating a positive impact.

Given many of these terms are used interchangeably, yet they can be doing very different things, it’s important to look at the methodology of the investment strategy to ensure it aligns with your clients’ objectives.

How has passive investing evolved to capture ESG? What most won’t realise is that the shift towards ESG index strategies is fairly new. S&P DJI only launched the S&P 500 ESG Index in 2019. What we have seen recently is: •

a shift from pure exclusionary investment strategies towards integrated strategies

•

the use of multiple data sources to power ESG strategies

•

more targeted measurement of ESG strategies against desired objectives

•

a move towards climate solutions or adaptation, as well as mitigation.

This has fuelled the expansion of ESG indices and now the first ESG equity index for New Zealand.

Exhibit 1: S&P DJI ESG Score Aspect Levels

ESG Score

Total ESG score

Source: S&P Global. Chart is provided for illustrative purposes.

Dimension scores Criteria scores

16-27 Criteria scores

80 - 120 Industry-specific question scores

Corporate Sustainability Assesment (CSA)

600 - 1,000 data points

How are ESG scores calculated? The factors used to measure ESG performance can vary, but typically include things such as: •

Environment: Greenhouse gas emissions, waste and pollution, water use, land use

•

Social: Workforce and diversity, safety management, engagement with communities

•

Governance: Governance structure and oversight such as board composition, code and values, transparency and reporting, cyber risk

Often multiple data sources and providers are used in the calculations, including Trucost (carbon), Sustainalytics, Carbon Disclosure Project, Corporate Sustainability Assessment, and GRESB in the case of REITs and infrastructure. Each company is given an ESG score, which is the weighted average of all criteria scores and their respective weights. Total ESG scores range from 0-100, with 100 representing best performance.

What sort of tilts do the funds provide in a portfolio? The Kernel S&P Global Clean Energy fund can be used as a satellite exposure for those that want to lean into a deep green philosophy. The NZ 50 ESG Tilted fund will be an ideal building block for an NZ equity allocation, and our Kernel Global Green

Property fund is an exceptionally cost and tax-efficient option for a global real estate asset allocation.

their impact on the world may be better positioned to adapt to change and deliver greater long-term returns.

Is there much investor demand for ESG funds?

Does ESG work for passive funds when some would argue it is the domain of active investors?

We are seeing a significant global shift of assets into sustainable strategies. More investors are considering the impact their investment has in shaping the world they live. Flows into listed ESG investment funds in the US in 2020 reached $51.1 billion, which was more than double 2019 levels and a nearly tenfold increase from flows into ESG funds in 2018, according to Morningstar Inc. The shift to sustainable strategies will persist, as social and climatic issues continue to rise. There are also regulatory changes driving massive investment towards companies better prepared to tackle climate risk, as countries transition to a renewable, low carbon future.

Why are investors caring about this? Aside from concerns about environmental and social issues, investors are also looking at sustainable investing as a way to make longer-term strategic investment decisions. When ESG was first coined as a term in 2005, it was considered novel and perceived as coming at the expense of better returns. However, numerous studies have shown that companies that have adopted ESG policies have outperformed those that don’t. Companies that are thinking decades in the future and considering

The critical question we ask ourselves with any ESG strategy is can we trust the data. Quality, reliability and coverage of the data is what is needed to develop a robust ESG investment strategy. We’ve seen a lot of M&A activity in this sector as global providers look to build out comprehensive databases that enable providers to benchmark, amend and compare individually reported data points. For example, each year S&P Global conducts the Corporate Sustainability Assessment (CSA), an analysis of over 11,000 companies. The CSA has produced one of the world’s most comprehensive databases of financially material sustainability information and serves as the basis for the scores that govern S&P DJI’s ESG indices. I would argue that the direction ESG scoring is moving is more aligned to index strategies – transparent methodologies, removing human bias and judgement and limiting self-reported risks. The net result is a passive product that leverages big data from the world’s largest databases to deliver a more robust outcome at a lower cost. A If you would like more information on Kernel’s investment funds, please contact: Dean Anderson dean@kernelwealth.co.nz 021 828 427 WWW.GOODRETURNS.CO.NZ | 17

LEAD

Code breaches force retirement An adviser has been forced out of the profession following two Code Standard breaches. She tells her story to ASSET as a ‘lesson’ to colleagues in the industry. BY MATTHEW MARTIN

he long-serving financial adviser recently censured by the Financial Advisers Disciplinary Committee (FADC) tribunal says she wants to tell her story after the process left her frustrated, disappointed and ultimately forced her out of the profession. The woman, who cannot be named due to a suppression order, says her experience with the tribunal should be seen as a lesson to other advisers who may get too comfortable with long-term clients. In March this year, the FADC released its decision, after a hearing was held in December 2020, to censure the woman for breaches of two Code Standards, also deciding to suppress her name. Staff at both the Financial Markets Authority (FMA) and FADC spent a total of 1,684 hours on the case as well as spending $20,739 on the process. 18 | ASSET 03 | 2021

The adviser spoke to ASSET saying she did not want her name suppressed and would have been happy for it to be revealed as most people in the industry knew who she was anyway. “If I’d been used as a scapegoat and people could have learned from it that would have been okay. That would have made some sense. But it didn’t happen that way,” she says. In its decision, the FADC stated it had found the adviser had breached Code Standards 12 and 15 of the Code of Professional Conduct for Authorised Financial Advisers and she had failed to: (a) in the case of three clients, record in writing adequate information about a personalised service provided to a retail client (b) demonstrate adequate knowledge of the relevant legislative obligations which result from the term “personalised service”.

The FADC said her breaches of the Code were less serious than most cases that had come before the committee and there “... is no suggestion that the respondent has improperly benefited at the expense of her clients, or that any client has been disadvantaged”. Up until the decision, the adviser had never been censured in her almost 40-year career, but the FADC said the breaches were “not to be treated lightly”. “Record keeping is a fundamental duty of an adviser that underpins the supervisory regime established by the act and its importance cannot be minimised. It’s therefore important to sanction breaches where there are multiple instances of poor record-keeping,” said the committee in its decision. “There is a need to reinforce professional standards and ensure the profession remains conscious of the significance of proper records.”

‘If I’d been used as a scapegoat and people could have learned from it that would have been okay. That would have made some sense’ unnamed adviser

The committee said the breaches of the two Code Standards came down to a misunderstanding of personalised service. “Personalised service is a core concept in the act: it is a gateway to many of the act’s disclosure obligations (which, in turn, are central to the act’s scheme for informing and protecting the public). “A fundamental failure to understand what it means (and therefore when the ensuing obligations are triggered) means some disciplinary action is warranted,” the decision stated. But the adviser says right from the beginning she felt the process and investigation were rushed and at the time she had a lot going on in her life with the serious illnesses of both a close family member and a member of her staff. She says no time extensions were offered by investigators, putting her under a lot more stress during a very difficult time. “Being near to retirement anyway, I had not taken on any new clients for about five years. It always felt like they wanted to make an example of me, but I was determined they would not do that so I took it all the way expecting I would be able to tell my story. “In the end, it was the last straw. I decided not to go through the process to renew my licences, mainly because I was exiting [the industry] anyway.” She also wanted to exit the financial advice industry with her hard-earned

qualifications intact, but that was not to be so. She did not apply for a transitional licence under the new regulations introduced on March 15. As far as she is aware, she says investigators did not speak to her clients who also wanted to know if they could lodge a complaint against the FMA and tell them they were wrong to pursue her. “The whole process left a bad taste in my mouth – my integrity was being questioned and it has been tarnished. “This hurts. But I wasn’t going to let them tell me I had done wrong ... to defend yourself like this you need a lot of money. “My mother did not want to know what happened in this case and she died before the result.” She says some of her clients visited her after the decision was made bringing her flowers, food, coffee, kind words and encouragement. Being older people, she says none of her clients wants to go to another adviser and have to build up a new relationship. They say they also don’t want to go into a bank that may end up selling them a product they don’t need for a price they can’t afford. “I’m not a product pusher and never have been, it’s not about clipping the client’s tickets. I have been giving advice and life coaching for a long time and all I can do now is console them – I’ll have to retire at some stage, but I didn’t want to go out like this.” The now former financial adviser says she admits in hindsight her recordkeeping may not have been as good as it should have been – as highlighted in the FADC decision. “As a financial planner who has worked for the ongoing wellbeing of my clients, I would admit that my record-keeping was insufficient, as my relationships with those clients were 30 to 40 years in duration. “The familiarity I had with my clients was my undoing, but each and all of them were well served. “I could have done better, my comfort levels with my clients was probably my downfall, they [advice notes] were probably too rough, they were not prepared for an audit.” She still feels that her processes were in line with legislation and while she did have her day in court feels she has been misunderstood. “The financial services legislation is all about the sale, discharge or retention of financial products. It’s regulating the sale of products. “I think they [the FMA] presume that all service is about selling a product, an adviser raping and pillaging their clients

‘There is always a public interest test to ensure that we are deploying our resources appropriately’ Rob Everett

for their own financial gain, but for me, it’s never been like that – that’s never been my motivation. “I’m astounded by the bureaucracy and lack of comprehension of what a good holistic financial planner was doing. “It appears to me the FMA has developed a compliance model in tune with some compliance specialists.” According to an Official Information Act request made by ASSET, staff at both the FMA and FADC spent a total of 1,684 hours – around 210 working days – on the case. Costs for both organisations totalled $20,739. This was made up of travelrelated costs, transcription fees, courier costs and payments to committee members. The FMA and FADC do not charge hourly rates for in-house staff costs. In a statement from the FMA regarding whether it considered the time and money spent on the case was worthwhile, its chief executive Rob Everett responded with the following: “The FMA has a rigorous decision making and governance process around its enforcement activities, including those cases that are brought before the Financial Adviser Disciplinary Committee. “We focus on areas of compliance and conduct that: •

are likely to cause risk and harm to broader confidence in the markets

•

hold participants to account for failing to meet their obligations

•

send a strong deterrence signal to all market participants on the consequences for failing to comply with obligations

•

maintain public confidence that the law is being upheld.

“There is always a public interest test to ensure that we are deploying our resources appropriately.” A WWW.GOODRETURNS.CO.NZ | 19

REGULARS | LIFE INSURANCE

Claims survey highlights value-based insurance advice importance The latest trauma and mortality data give us a guide as to what’s most important in life and trauma advice. BY RUSSELL HUTCHINSON AND ED FOSTER

Introduction Gen Re kindly supplied their trauma claims survey, to give us an important update on the causes of trauma claims. This large multi-year study shows the major causes of claims for many lump sum benefits – including life, trauma and TPD. Trauma claims data shows what conditions are driving trauma claims – and the results highlight the most critical areas of product design from a consumer perspective and how important it is to 20 | ASSET 03 | 2021

treat male and female trauma advice quite separately. The results back up findings from a review of causes of early death conducted last month by our data scientist, Ed Foster, that show New Zealand could improve life expectancy substantially by focusing on a few key areas that cause hundreds more deaths than we should be experiencing. The overlap is considerable. Lastly, we consider the implications for financial advisers focused on

trauma, health insurance, and wellbeing programmes – how valuable these are to clients and which products and options to choose from.

Trauma Claims Study – how it was done and the major findings The New Zealand Individual Lump Sum Experience Investigation 2009-2014 was conducted by Gen Re. It accounted for more than 92% of all the participants in New Zealand’s Financial Services Council, which in turn accounts for

greater than 90% of all the insurance written in New Zealand. For trauma it accounts for more than 6,000 claims emerging from more than 2.6 million policy years of experience. There are some significant gaps. From the survey a significant number of claims had no recorded cause. Insurers are good custodians of their shareholders’ money and the interests of other policy holders – we have no doubt that a clear and valid cause was established at the time before a claim payment was made. However, some policy and claims administration systems have limited facility for recording claims information. In those cases, the claims cause has not been recorded. The following analysis excludes those records. Two charts are shown below. This illustrates the first, vital point. The experience of male and female lives is dramatically different. Although cancer is a major claims cause for both, respiratory and circulatory disorders (with a large contribution from heart attacks and strokes) make up a much larger proportion for men than for women. The variation in cancer experience is appreciable. This means that it is vital to consider the requirements of men and

‘New Zealand could improve life expectancy substantially by focusing on a few key areas that cause hundreds more deaths than we should be experiencing’

women separately when giving advice on trauma insurance. It also shows us where to focus our attention. How important is cancer? For both men and women this is the feature with overarching importance. Effective early identification and treatment for cancer should be a primary concern for advisers offering any form of advice on living benefits insurance, whether that is trauma, disability income insurance, or medical insurance. For men cancer accounts for just over 40% of recorded claims causes, for women, that number is just over 70% (see the orange line in the charts below). Now consider the other end of the spectrum. The item “other” accounts for just 2.93% of all male recorded causes of trauma claims, and about 2.4% for female lives. This category encompasses the vast majority of the long list of features present in most trauma contracts. Think of the typical (advised) trauma insurance contract. It is reassuring to see a long feature list, but to illustrate – perhaps thirty or forty features (rarely occurring conditions covered) are sharing in less than 3% of the experience. What practical impact does that have?

Take female lives where cancer incidence and treatment are major concerns for New Zealand. The study of causes of death (see next section below) show that we desperately need to improve in this area. If we did, we would save between 180 and 400 deaths each year that is a mark of how important cancer coverage is for women. For some of them, trauma coverage and non-pharmac drugs coverage will be the difference between life and death – enbling access to dozens of treatments that are Medsafe licensed but not funded.

Chart of recorded claims reasons Trauma Claims - Female Lives, by category, cause recorded 100% 90% 80% 70% 60% 50% 40% 30%

60%

1000

50%

800

40%

600

30%

400

20%

10%

200

10%

0 Infectious Disease

Blood & Bone Marrow

MOT

Mental Disorder

Musculoskeletal System

Digestive System

Endocrine System

0% Reproductive & Urinary System

MOT

Mental Disorder

Digestive System

Infectious Disease

Blood & Bone Marrow

Endocrine System

Musculoskeletal System

Reproductive & Urinary System

Disability

CIS

Other

Respiratory & Circulatory System

Nervous system

70%

1200

20%

0% Cancer

1400

CIS

80%

Disability

500

1600

Other

1000

90%

Nervous system

1500

100%

1800

Cancer

2000

Trauma Claims - Male Lives, by category, cause recorded 2000

Respiratory & Circulatory System

2500

Note CIS is carcinoma in situ these claims may only be receiving partial payments but they are cancer too.

WWW.GOODRETURNS.CO.NZ | 21

REGULARS | LIFE INSURANCE

What about life insurance? It seems like all complexity in life insurance advice boils down to simply buying the right amount. But does it? Analysis of the statistics for death during working life – early death – the kind that is most destructive because it robs families of a person in their prime – shows that the scope for improving life insurance advice remains every bit as significant as ever. Two areas stand out – the importance of complete coverage, aiming for no exclusions beyond the first 13 months, and the type of coverage recommended. To put those into context, we need to consider the facts. While New Zealand has excellent overall life expectancy at birth there are some major causes of early death where we perform poorly compared to countries we like to consider our peers. I had our data scientist, Ed Foster, take a look at each of the leading causes of death and identify those areas where substantial life expectancy improvements could be made. We focused our analysis on reducing deaths during working life. We define working life as being from age 20 to 64. There are 2,562,000 normally resident New Zealanders in that age range.

Cause of death

How many lives could be saved?

In 2019 there were 5,787 deaths in that age group. The top ten causes of death are: •

neoplasms (cancer)

•

cardiovascular diseases

•

self-harm and interpersonal violence

•

transport injuries

•

diabetes and kidney diseases

•

chronic respiratory diseases

•

digestive diseases

•

neurological disorders

•

other non-communicable diseases

•

unintentional injuries.

We compared New Zealand’s performance to the OECD average and then, where we already exceeded the average, to a country that is similar to ourselves in income per capita that has the best performance (lowest working life death rate) for the particular cause of death. There are substantial gains to be made in each area.

Lowest death rate in OECD

If we assume there are factors which are influenceable in bringing New Zealand’s mortality rates down to that of the average of the OECD, we can say that 254 deaths could be prevented annually with 87% coming from the female population. Mainly women that die, but need not, if we could adopt the measures and conditions common to the average for OECD nations. Turning our attention to the gap between the best performing country for each of the 10 causes of death, we can see that 2,049 lives could be saved annually but now with the majority (53%) coming from the male population. We see this switch from female for the average to male for the best driven primarily by cardiovascular diseases. Of the countries that excel under specific causes of death; Israel, Ireland and the Republic of Korea have higher life expectancies than New Zealand handing them more weight to any recommendations made based on their modus operandi. On the flipside Mexico and Greece have lower life expectancy values than NZ making them less favourable as examples to follow, so we replaced these with Japan for neoplasms and the UK for self-harm.

Lives lost gap v OECD best

Lives lost gap v OECD average

Total

Female

Male

Both

Female

Male

Neoplasms

Japan

508

407

101

179

Cardiovascular diseases

Israel

637

198

439

Self-harm and interpersonal violence

128

Transport injuries

Ireland

162

121

Diabetes and kidney diseases

Iceland

179

105

Chronic respiratory diseases

Republic of Korea

172

108

Digestive diseases

Israel

Neurological disorders

Republic of Korea

Other non-communicable diseases

Republic of Korea

120

Unintentional injuries

Israel

2,049

964

1,085

254

222

22 | ASSET 03 | 2021

‘Cancer is a salient example. New Zealand’s performance is slightly above the OECD average for men, but well below it for women’ Cancer is a salient example. New Zealand’s performance is slightly above the OECD average for men, but well below it for women. The female cancer deaths per year, which number 179, could be prevented if New Zealand were just able to bring our cancer experience up to the level of the average for the OECD. For your clients, improving treatment options through better coverage and claims payment could be vital. But for everyone, including vulnerable clients or Maori, even just lifting awareness of the need for regular check-ups would help a lot – the more we spread the word, the better. With cardiovascular disease we already perform above the OECD average, so we must aim higher. Were we to improve to the best in the OECD we could reduce working life deaths by 595 lives per year – nearly half of our current annual loss of life to this condition. It is a tough goal, but clearly achievable – after all, someone else does it. Self-harm and interpersonal violence is an area where there are significant reporting difficulties, but again clear opportunity for reductions. Our reference country in this case is the UK giving a potential gain of 128 lives lost annually. Transport injuries is a category where we should not be surprised that improvements are available – although not by as much as you might imagine. Our performance is already above the average for the OECD, but if we were to improve to the level of Ireland, a not entirely dissimilar country, we could save 95 deaths per year. With diabetes the potential gains to the best performer in the OECD would save 69 deaths per year. Overall, the available gains amount to around 1,000 deaths per year – almost 20% of our annual number of lives lost between age 16 and 65 each year.

Consider the benefits to communities, families, children, companies and the country as a whole of saving these lives, each year.

Implications for specific types of insurance within a total risk package Accident cover remains important – and may be a valuable add-on to family cover boosting cover levels to ensure effective cover for families against sudden loss of a loved one from one of the many transport and workplace accidents. Mental health coverage and wellbeing services – such as AIA Vitality, and other policy features such as Partners Life’s grief counselling are probably more immediately valuable than perhaps are realised. Early intervention in an area which accounts for a substantial portion of early deaths is vital. We can probably save a lot of lives doing this, so although paying claims is our business, preventing them is better for everyone. Insurers that have policy commitments to reduce financial stress – such as cover suspension and reinstatement features used by thousands during 2020 also support mental health and enable clients to retain cover. Some insurers are not good at proactively making customers aware of these other ancillary benefits. Advisers have a critical role to play in identifying when they could be helpful and alerting clients. Living benefits – such as income protection, trauma insurance, and medical insurance are really important. Specifically, the versions of those that provide access to specialists and tests to enable early detection, and non-Pharmac coverage to enable access to a greater range of treatments are valuable given the skew of claims towards cancers. This has probably become more valuable over the last five years as new treatments have dramatically lifted treatment prospects for many cancers.

Conclusions: Implications for insurance advice provision as a whole An illustration of how important small variations in the cancer definition can be is to consider how the wording could be 10% worse. A 10% worse cancer definition would, for example exclude melanomas between 1mm and 1.5mm in depth, contain other limits on melanoma, and limit the types of leukaemia covered. Those small definition differences

would be worth more than around 15 of the lowest scoring features – yet the temptation for the client to look at the long list, rather than listen to the adviser talking about the benefits of superior cancer, heart attack and stroke definitions is clear. Gen Re’s claims survey is an excellent antidote to that idea. But it needs someone – you, I hope – to tell the story. Most clients are not capable, without help, of working out what is more important about the product. The Australian Securities and Investments Commission specifically identified this kind of weakness in the advice generally available to consumers in the review of retail life insurance advice. Amongst other concerns they called out “Lack of strategic life insurance advice: where the adviser failed to add any meaningful value to their clients by: (a) helping them set an appropriate sum insured, balancing the competing priorities of underinsurance versus affordability; (b) testing the value of optional extras against the client’s ability to sustain the insurance over time by prioritising the essential and the non-essential …”

‘Most clients are not capable, without help, of working out what is more important about the product’ I feel that this probably goes to the heart of what it is to be an adviser. It is vital that in your recommendations the relative importance of these differences is not lost and the context of living in New Zealand is understood – our conditions and our hazards are taken into account. It is one of the fundamental reasons for seeing an adviser. If it’s just a question of regurgitating feature lists and policy wordings, then advice could easily be dispensed by a robot. A Grateful thanks to Gen Re for permission to use the statistics. Gen Re | Life/Health Region Australia/New Zealand. https://www.genre.com/knowledge/blog/ lump-sum-benefits-the-experience-in-newzealand-en.html For a full copy of the paper on death during working life including references to data sources, please contact Ed.Foster@chatswood.co.nz

WWW.GOODRETURNS.CO.NZ | 23

FEATURES | ADVISER PROFILE

Old hand hangs up hat After a 63-year insurance career Warren Duff has retired from the business that has been a huge part of his life.

n January 15, 1958, Warren Duff joined the National Insurance Company in Dunedin beginning what was to be a 63-year career in the insurance industry. “I had not made up my mind at 18 years of age for any career and insurance had a mild appeal. “After some five years, National promoted me to Rotorua as the company were opening a branch and were desperate for staff. They were long days and not what I enjoyed and after a reassessment of what I was there for, I called on Owen Longhurst, manager at Colonial Mutual Life.” Longhurst said Duff was probably too young at age 25 to sell life insurance but he was prepared to give him go. “Those first few months were desperate as I did not know what I was doing, then CML invited me to a course in Wellington where I met Raymond Benedict Creevey. “Ray was a big writer and he discussed a number of pointers with me which I could understand. One was to call on all the people with ‘provided’ homes such 24 | ASSET 03 | 2021

BY MATTHEW MARTIN

as teachers, farmworkers and railway employees and offer them cover to secure a home for a potential widow.” So, Duff decided to call on workers at Turangi where the dam was being built. “I could not keep up with the business as cover on the person’s life deducted from wages was very popular ... on one trip I completed 17 sales in two days. “This led me to other areas such as the prisons at Rangipo and Hautu where the wardens all had provided homes, it was business galore.” It was at this time that Duff filed his first claim for a death “... and that cemented the popularity of the plan design because prospects could see the plan at work”. However, Colonial needed Duff to move to Hawke’s Bay and so he was transferred as a manager to Hastings where the local branch was "... indeed very sad". After 17 years in management, he decided it was time to return to the road so Duff formed a brokerage business – Hawke’s Bay Insurers – where he applied the techniques he had used years before, but this time on farm managers and the like.

“One day a young man called into the office to insure a boat. “He accepted my quote then I asked him his occupation, he was the farm manager of a large station in the bay. I pointed out his exposure and he agreed to cover on his life and paid the $40 premium deposit. “An hour later he was dead. He had swerved to avoid hitting a person on a pedestrian crossing, hit a lamppost and was killed. I still had the proposal on my desk. “Colonial paid the claim, and it reinforced what I was doing in the business as offering protection where it never existed. The widow was able to purchase a home that she never knew was in her husband’s estate. The policy was in force for say one hour.” Duff then moved into partnership cover and again witnessed how important life insurance was when he arranged cover for two men in the deer processing business. “A month later one was accidentally killed in the bush, mistaken for a deer. The business continued with a large injection of cash, [his] widow was bought out and the business prospered.”

‘I could not keep up with the business as cover on the person’s life deducted from wages was very popular ... on one trip I completed 17 sales in two days’ His next step was a move into business life insurance where he had more success. “I recall canvassing a horse breeder one day and enquired how he was going to replace his star stallion when the horse died. “He had never thought of this but listened to what I had to say. I left with a cheque for $9,600 to place in escrow to provide funds for the replacement of his stallion. “Then there was the time when in a small country town I called on the local teacher but alas he had a brother who worked at Government Life, as it was then. “As we were walking along the path, I spied his new Honda so enquired how he was going to replace it when it was time for a trade. “He agreed and placed $50 per month into an escrow account to use to purchase his replacement car. I wrote a lot of business with this technique.” Duff’s records show he has processed 179 death claims, but there could be more as clients occasionally moved to other parts of the country.

“I was told by a retired manager at Colonial that my claims would now exceed $1 billion through death, maturing endowment, superannuation payments as well as surrenders. “I do not have details of all these claims but can say I am delighted to have played a part in many people’s welfare.” Duff was also a member of the Hawke’s Bay branch of the LUA and a strong believer in the association he feels should still be in business today and be a better option than all the legislation “... that is killing the profession”. “We had wonderful conferences where organisers went to great expense to get the best speakers in the business to address us. I would never miss these events. “I have been fortunate in being able to attend conferences in Bali, Acapulco, Melbourne, Sydney, and all New Zealand cities to hear the best in the business address us, simply to be remotivated and come away with at least one idea. “This was the best avenue to remain enthused and on track.” In his later years, Duff spent more time working with fire and general insurance, where he originally received his grounding in the business. Over the years Duff has received 29 inhouse, national and international awards for production, quality of production and persistency. “Sadly they are now placed in a container under the billiard table as they only relate to my work. No one else is interested in the past.” For Duff, the latest change to regulations were enough for him to hang up his boots for the final time. “It looks like they are charged with rooting out problems where there are none, I just don't want a bar of their agreements so retired on March 31, after 63 uninterrupted years in the business. “Sadly, the life insurance industry is seen as ‘not fit for purpose’, and definitely unpopular with the Government. “Consider the number of Mutual Life offices that have closed in New Zealand – estimated at over 20 – I doubt if one remains, it’s just too hard to do business in New Zealand. “I know how hard it was for the building society offices to exist. “For 31 years I was a director of HBS and we could not continue due to the taxation applied by the government, so the industry, in essence, closed down. “It is sad for the life offices to exit the business after trading for more than a century. They provided an excellent avenue for people to save as well as have protection.

“The current situation we have in the country where there is no money for homes is caused by the interference over the years from people who do not understand the savings business.” But Duff says overall, he’s had a wonderful life in the world of insurance. “Going into a business with a ballpoint pen as plant, no stock to control and thousands of people to see. “I hope the public note the TV advertisements for the skill and assiduity of the representatives is a service rapidly approaching something of the past. The best-laid plans of mice and men cannot be purchased over a TV screen.

‘Sixty-three years in the one occupation is something I can write on my CV if ever called on, I doubt if it will be equalled, but this story might prompt comment’ “Sixty-three years in the one occupation is something I can write on my CV if ever called on, I doubt if it will be equalled, but this story might prompt comment.” Duff has retired to his lifestyle property in Mandeville, North Canterbury. A WWW.GOODRETURNS.CO.NZ | 25

FEATURES | SPONSORED CONTENT

Investing in real estate: beyond residential and retail With real estate’s Covid-related challenges in the news lately, Shannon Murphy sat with Shane Solly, Portfolio Manager of the Harbour Real Estate Investment Fund, to discuss where he sees opportunities in a sector with increasing dispersion of returns. BY SHANNON MURPHY AND SHANE SOLLY

Murphy: When we’re talking about investing in real estate, many of us think mostly of offices and retail. What sorts of real estate do you look at? Solly: Offices and retail are a part of the sector, but there are many other types of real estate which can add diversification to a portfolio. For example, industrial real estate is an increasingly disrupted space. Manufacturing, distribution centres, transport logistics, data centres (for example Amazon Web Services) and cold storage are all benefiting from automation and business change. They also tend to have longer lease terms, 26 | ASSET 03 | 2021

between four and 20 years, and therefore lower volatility in cashflows. Examples of the types of real estate Harbour invests in include childcare centres, land lease communities, healthcare and industrial logistics (dark stores and grey stores). Murphy: What are dark and grey stores? Solly: With the rapid increase in online sales and home deliveries, businesses have had to rapidly adapt their distribution channels, to deliver great outcomes for consumers and keep costs low for retailers.

When people buy their groceries online, sometimes their groceries come from their local supermarket, but they may come from a dark store or a grey store. Dark stores are industrial warehouses dedicated to rapid dispatching of online orders – they are not open to the public, they feature high product racking and often robotics and automated product picking. As a result, they have very few people working in them and often have low levels of lighting – hence the term dark store. To keep costs down low and be super-efficient

‘Shopping isn’t going anywhere, but there has been a strong shift to omnichannel retailing, which is important to note when selecting real estate investment opportunities’ these dark stores are massive – some are more than 50,000m2 in size (more than 3x the size of Eden Park). Grey stores can look a lot like a normal supermarket – but, again, they are not open to the public. Team members physically pick and pack products for grocery deliveries. Murphy: What about classic retail, like shopping malls? They were already under pressure pre Covid-19. Solly: Covid has increased the bifurcation of shopping locations. Retailers are separating into high end locations to showcase their products and brands at one end; at the other end convenient locations are key, and where you can easily get into stores grab what you need and get out – like the large format locations where home goods retailers sit with large car parks. This is a challenging environment for locations that don’t meet either end of the split. Shopping isn’t going anywhere, but there has been a strong shift to omnichannel retailing, which is important to note when selecting real estate investment opportunities. Murphy: What is omnichannel retailing? Solly: Omnichannel means retailers sell products to consumers in store and online. The move to omnichannel means retailers need to have great logistics and distribution networks, so

that all the packages we order turn up on time. According to data from 2019, e-commerce requires three times more logistics space than bricks-and-mortar sales do. To do this, logistics providers like Mainfreight need to be located close to large populations in large efficient industrial warehouses, which allows efficient product racking and high levels of automation including robotics. This changes the way retailers use their physical stores – they become more of a place for retailers to reinforce their brands and tell a story, rather than sell on the spot. A great example of this is an Apple Store. In these spaces, people learn about the products, and people visit for the experience of being in an Apple Store. Apple does not actually mind whether you buy the product in store or online. Murphy: What changes has Covid meant for commercial property? Solly: Covid has accelerated trends that were there before Covid, like flexible working for office tenants and the importance of online e-commerce for retailers. For investors, it’s highlighted that not all real estate securities are the same and that there is a need for diversity of security holdings across industry exposure like office, retail, industrial and different geographies. It has also highlighted that the debt levels in real estate securities cannot be so high that a drop in rental will reduce ability to pay dividends. Murphy: Do you think businesses will have to change the way they use office buildings now that working from home has become more the norm? Solly: Covid has meant many people have learnt that they can work from home to a degree with technology like Teams and Zoom making it easier to share and communicate. For some office workers in process-type roles, they may continue to work from home. But for most businesses, having people in the office will remain key to building their culture and sharing ideas. But there is no doubt many businesses will retain flexibility for people to work out of the office, meaning they may need to allow for less people in their office at one time. Against this, businesses need to make sure they have a great space to attract their teams back into the office. Interestingly, in NZ we have seen a number of office users (including central government) grow through Covid to the point where they actually need more space, not less. Murphy: Property or real estate stocks have lagged the recovery in equity markets – why is that?

‘Real estate stocks offer an attractive 3.5% tax-paid income yield, with the yield potentially increasing at 2-3% over the next few years’ Solly: Real estate stocks offer an attractive 3.5% tax-paid income yield, with the yield potentially increasing at 2-3% over the next few years. But yes, they have lagged the recovery in returns of other growth assets. Real estate stocks own physical property like office towers, shopping malls, industrial warehouses and hospital buildings. With tenants unable to access these buildings due to Covid containment lockdowns, there have been concerns about how much rental income real estate stocks would collect and, as a result, the ability of real estate stocks to pay income dividends to investors. What has actually happened is that the degree of rental income has been higher than expected and real estate earnings and asset values have held up better than many investors had expected. On average, over the last 10 years, NZ property securities have delivered slightly less than NZ equities per annum. But a larger proportion of the real estate securities returns is from regular dividend income, and property securities tend to have less ups and downs than equity stocks. We are seeing an increasing dispersion of returns in real estate stocks, so active management is key to ensure diversification, and to take advantage of technological disruptions and shifting business needs. For people with a greater need for near term income, or less ability to withstand movements in their nest egg, property securities may be a good investment option for them. A

This does not constitute advice to any person. www.harbourasset.co.nz/disclaimer If you would like more information on the Harbour Real Estate Investment Fund, or any other Harbour Fund, please contact: Shannon Murphy, Investment Specialist Shannon.murphy@harbourasset.co.nz (09) 365 1925

WWW.GOODRETURNS.CO.NZ | 27

REGULARS | INVESTMENT COMMENTARY

The next regulatory rounds As NZ plays regulatory catch-up with other developed world countries David van Schaardenburg looks at further alterations which could meet and even exceed the investor experience overseas.

ronouncements over the last 12 months from the Financial Markets Authority (FMA) have more often than not been focused on the new financial adviser rules. But the increased allocation of their resources dedicated to the oversight of investment management entities hints at likely new rounds of regulations relevant to the activities of New Zealand based professional investors.

Where might the FMA’s next investment focus be While New Zealand and New Zealand based investors became full participants in global capital markets in the mid1980s, oversight and regulation of New Zealand’s professional investors and financial advisers has notably lagged other developed world economies. Hence the regulatory catch up that has been occurring since the Securities Commission morphed into the FMA a decade ago. An example of a huge leap forward (“catch-up”) in the last decade has been the Financial Markets Conduct Act which amongst numerous positive (for investors and their advisers) new rules have been: •

fuller and consistent disclosure of fund fees

•

standardisation of disclosure of key fee, return and portfolio structure information.

28 | ASSET 03 | 2021

BY DAVID VAN SCHAARDENBURG

However, for the benefit of their investors, in my opinion there are still a number of important areas where New Zealand based funds management firms and their funds require further or altered regulation – in part to catch up with the investor experience in other developed economies but in some instances to maybe improve on them.

Fund returns advertising and promotion What does the past tell us about the future? In my career in funds management, past returns have been both equally useful and misleading as to the merits of a fund or its fund manager. This problem is exacerbated when looking at fund returns over short-term time frames. Frankly, when does a fund manager advertise the merits of a fund when they’ve done poorly? Never. So we know from the start that any fund return advertising is going to be selective in terms of either or both the investment time frame or the fund chosen. If you manage 20 funds there is bound to be several that have done well over some time frame. In their latest KiwiSaver report (March 2021), Morningstar agree with the need to use longer-term time frames in fund assessment: “It is most appropriate to evaluate performance of a KiwiSaver scheme by studying its long-term returns. Over

10 years, the …” By this statement it’s not unreasonable to presume that Morningstar believe a 10 year plus track record is more valuable in fund assessment than shorter-term periods. While not noted in Morningstar’s report, given KiwiSaver investors most often have multi decade investing timeframes, knowing what are the longterm return implications of each fund category is in most circumstances one of the most important decision inputs a KiwiSaver investor can have. For example, over the 10 years to March 2021, the average KiwiSaver growth fund has returned a 157% cumulative return post fees pre-tax (annualised fund returns ranging from 8.1 to 10.7% excluding one outlier) versus a conservative fund average of 75% cumulative return (annualised fund returns ranged 5.4 to 6.8%). My recommendation – promotion of fund returns should be over at least a five year period with two additional data points – what the fund’s market benchmark returned over that same period and what the previous five year fund versus benchmark returns were.

The DIMS anomaly Over the last decade anecdotally the funds invested via discretionary investment management services (DIMS) has grown enormously. While there is not official data of the quantum of funds advised under DIMS,

'My recommendation – cap the financial incentive that can be created from performance fees in retail funds to remove the risk of moral hazard and potential for undue portfolio risk'

‘Frankly, when does a fund manager advertise the merits of a fund when they’ve done poorly?’ I understand that near $100 billion is now invested via DIMS. This makes this sector by asset size larger than the KiwiSaver industry ($80 billion) and retail unit trusts ($42 billion) the latter having not grown in aggregate funds under management in the two years to December 2020 (source: Reserve Bank). The traditional large brokerage firms have led the DIMS growth charge but many smaller investment advisory firms are also DIMS providers. The attraction for advisers to use DIMS is in their flexibility both investment, client relationship and fee wise and the lesser level of cost disclosure versus managed funds. In essence DIMS cuts out the retail fund manager. Much work has occurred in the last five years to improve and standardise the disclosures made in the offering documents and regular client communications made by KiwiSaver and unit trust providers. As a trustee of two different trusts who each have used two differing large scale DIMS providers, the relative reduction, non-standardisation, extra complexity and reduced clarity of fee and return reporting under DIMS is noticeable. Including that they are not required to fully disclose in $ or % terms all the revenues they actually earn from the client account. My KiwiSaver/unit trust provider must give me one percentage number

as to what they think they will charge in totality before I invest and then annually report one percentage number as to what they did charge. Given the size and growth rate of investor funds via DIMS, client disclosure levels need to markedly improve. My recommendation – standardisation of reporting of all revenues a DIMS provider may get from a client … before and after they invest … expressed in simple terms as one number.

Performance fees The history of performance fees in New Zealand retail funds over the last 10 years has been chequered. The odds have tended to favour the manager through either easy to beat benchmarks, or through taking additional risks (high frequency trading, security price manipulation, leverage, speculative investing, lack of security diversification) which if they work mean the fund manager earns a bonus for the extra risks taken but if not, the client, typically a retiree or near retiree suffers the burn from a poor decision. A dimensional study referred to funds management performance fees as resembling a call option – the manager gets paid a portion of the investor’s profits on the upside but do not generally share in the down side. So when millions of dollars are at stake it’s hard for performance fees NOT to create a moral hazard for the 30 something portfolio manager. My recommendation – cap the financial incentive that can be created from performance fees in retail funds to remove the risk of moral hazard and potential for undue portfolio risk.

Investment security restrictions In other markets the range of investments that can be legally made by retail funds is more restrictive than in

New Zealand. This is in part due to their standard daily liquidity requirements. For example, US mutual funds can’t borrow money nor can they invest in illiquid investments which tends to rule out such funds investing directly into property or more exotic investments. These restrictions were put in place in the aftermath of the 1929 crash but still have their merits today in ensuring retail fund managers ensure their portfolios are liquid … in all market environments. With ESG investment considerations becoming more important, requiring retail funds to invest “morally” could become the standard. So no investment by such funds in companies which are involved in nuclear weapons, cluster bombs, slavery, or excessive environmental damage. The latter might include blockchain currencies like Bitcoin given the electric power consumption required to harvest them. My recommendation – make a basic ESG requirement for security selection mandatory for all retail funds. Following my last column titled “A bond is broken” just how much of a problem low long-term future returns from cash and bonds has been and will be in the future for New Zealand investors was highlighted in the recent Morningstar report with: - the average KiwiSaver allocation of 43.9% ($35 billion) to such assets. This large defensive allocation makes no sense given the multi decade investment timeframe of most KiwiSaver members - the average return over the last 10 years from KiwiSaver growth funds of 9.9% versus only 5.8% for conservative funds. This unduly high allocation to low return assets by long-term investors (KiwiSaver members) in my opinion reflects a collective failure by financial advisers and KiwiSaver managers to better educate their clients to make more rational long-term investment decisions. A David van Schaardenburg is an independent investment analyst. WWW.GOODRETURNS.CO.NZ | 29

Mindful Money awards Mindful Money held its inaugural ethical investment awards late month. Here are some pics and full coverage will be in the next issue of ASSET.

30 | ASSET 03 | 2021

01 The award winning team from Pathfinder Asset Management celebrate success. 02 Harbour Asset Management executive director Ainsley McLaren holds on tightly to the firm's award while talling to Cecilia Tarrant from NZ Green Investments. 03 Tatiana Mes from Mercer presents an award. 04 Former Good Returns journalist Daniel Smith was a finalist in best media category. 05 Ethical Financial Adviser of the year winner Rodger Spiller with his wife Chellie Spiller.

There’s no substitute for boots on the ground. When it comes to investing in a company, the most valuable insights are often gained from visiting their premises and meeting face-to-face. At Milford, we’re able to do just that, despite fi ckle Covid travel rules. With offi ces in both Sydney and Auckland, our investment experts can conduct in-depth, in-person research wherever opportunities arise.

Talk to us today and see how our Trans-Tasman Equity Fund and Dynamic Fund could help you.

0800 662 975 wholesale@milfordasset.com KiwiSaver | Investment Funds Past performance is not a reliable indicator of future performance. Read the relevant Milford Product Disclosure Statement as issued by Milford Funds Limited at milfordasset.com.

WWW.GOODRETURNS.CO.NZ | 31

REGULARS Name

NZ Insurance Cash AMP ARS-Cash AMP KiwiSaver Cash Fund AMP NZRT Cash Fund AMP Prem PSS OnePath NZ Cash AMP PSS Select Cash ANZ Default KiwiSaver Scheme-Cash Aon KiwiSaver ANZ Cash Aon KiwiSaver Nikko AM Cash ASB KiwiSaver Scheme's NZ Cash BNZ KiwiSaver Cash Fund Booster KiwiSaver Enhanced Income Fidelity Life Super-Super Cash Portfolio Fisher TWO KiwiSaver Scheme-Presv Kiwi Wealth KiwiSaver Scheme Cash Mercer KiwiSaver Cash Milford KiwiSaver Cash NZ Defence Force KiwiSaver Cash OneAnswer KiwiSaver-Cash Fund SIL 60s + Sup Cash Fund SIL 60s + Sup Cash Fund Summer New Zealand Cash Westpac KiwiSaver-Cash Fund

Latest 1Yr 3Yr 5Yr Size Morningstar Transaction Return Return Return $M Rating Exit price % Overall 2.05 1.56 1.55 1.64 1.53 1.5 15.83 14.95 1.53 1.21 1.56 2.83 3015.85 --1 -1.45 2.3 2.3 1.05 1.46

----------------0.11 0.84 0.61 0.61 0.13 0.78

----------------1.04 1.59 1.47 1.47 0.86 1.52

----------------1.41 1.82 1.72 1.72 -1.82

5.08 96.11 80.27 2.76 0.80 17.60 5.64 2.48 665.31 234.68 33.78 4.78 31.12 300.16 26.82 14.89 2.91 62.66 1.69 1.69 3.85 485.66

-----------------------

---8.10 ---5.66 ---- 17.40 13.10 14.53 14.88 47.25

2 3 3 4

1.64 1.48 1.48

--12.62 6.22 12.62 6.22

8.16 12.68 12.68

3 3 3

4.05 3.56 9.56 -8.79 1.69 1.69

---7.75 ---7.25 ---9.38 ---- 11.65 12.20 14.57 14.93 30.06 13.65 13.75 -- 19.71 13.65 13.75 -- 19.71

3 3 1 -3 2 2

---20.77 19.83 28.61 19.95 15.63 15.63

NZ Insurance Equity Region Australasia AMP ARS-NZ & Australian (multi-manager) AMP ARS-NZ & Australian (Value) AMP NZRT Australasian Shares OneAnswer KiwiSaver-Australasian Share

5.06 5.89 1.96 2.82

NZ Insurance Equity Region Australia AMP KiwiSaver Australasian Shares Summer Australian Equities Summer Australian Equities

----

NZ Insurance Equity Region NZ AMP Prem PSS ACI NZ Shares AMP Prem PSS ACI NZ Shares Index Fidelity Life NZ Shares Portfolio Fidelity Life Super-Super NZ Share SIL 60s + Sup NZ Share Fund Summer New Zealand Equities Summer New Zealand Equities

NZ Insurance Equity Region World AMP Prem PSS ACI Global Shares Index AMP Prem PSS FD Intl Share Fund 1 Value Mercer KiwiSaver Shares NZ Defence Force KiwiSaver Shares OneAnswer KiwiSaver-Intl Share OneAnswer KiwiSaver-Sustainable Int Shr SIL International Share Summer Global Equities Summer Global Equities

3.26 1.88 --2.84 3.07 5.43 1.73 1.73

---11.04 13.57 19.19 13.63 11.94 11.94

---13.31 14.13 16.19 14.13 ---

8.58 10.65 42.89 19.53 67.46 17.07 11.31 26.21 26.21

3 2 3 3 4 4 4 3 3

--------------

7.60 3.64 4.60 5.87 8.37 12.14 16.11 10.19 3.43 25.96 72.62 31.71 226.65

5 4 2 2 3 3 4 3 2 -3 3 5

NZ Insurance Equity Region World - Hedged AMP ARS-International Shares (Growth) AMP ARS-International Shares (Passive) AMP ARS-International Shares (Value) AMP KiwiSaver International Shares AMP KiwiSaver Passive International AMP NZRT International Shares AMP NZRT Passive International Shares AMP Prem PSS ACI Global Shares Index Hdg Fidelity Life International Fidelity Life Super-Sup Intl Fidelity Life Super-Super Aggressive Fisher FuturePlan - Intl Coms Fisher TWO KiwiSaver Scheme-Eq

2.3 2.5 2.01 1.75 1.84 2.13 2.2 3.42 3.54 --4.83 7151.41

--------------

NZ Insurance Equity Region World Non-PIE TOWER EnRoute Gold - Intl Companies Fd TOWER Investment Account Int'l Companies

29.27 2.66

24.97 9.77 11.63 24.79 9.59 11.42

2.37 0.84

4 3

4.73 7.25 8.75

3 5 3

NZ Insurance Equity Sector Global - Real Estate AMP ARS-Listed International Property AMP KiwiSaver Property OneAnswer KiwiSaver-Intl Property

4.97 1.35 1.67

--5.99

--7.90

--6.30

NZ Insurance Equity Sector NZ - Real Estate AMP ARS-Listed NZ & Australian Property MFL Property Fund OneAnswer KiwiSaver-Australasian Prpty Summer Listed Property Summer Listed Property

4.76 5.63 2.72 1.48 1.48

32 | ASSET 03 | 2021

---3.48 ---- 551.67 2.90 14.35 11.10 33.77 3.58 13.25 -8.48 3.58 13.25 -8.48

2 3 5 3 3

Name

NZ Insurance Global Bond

Latest 1Yr 3Yr 5Yr Size Morningstar Transaction Return Return Return $M Rating Exit price % Overall

AMP ARS-International Fixed Interest AMP KiwiSaver International Fxd Intr AMP NZRT International Fixed Interest AMP Prem PSS PIMCO Global Fixed Interest AMP Prem PSS SSgA Global Fixed Int Index OneAnswer KiwiSaver-Intl Fxd Int Summer Global Fixed Interest Summer Global Fixed Interest

2.7 1.12 1.31 2.55 2.16 1.89 1.12 1.12

-----0.83 2.09 2.09

-----4.07 4.12 4.12

-----2.80 ---

0.73 1.14 1.14 -3.22 2.8

------------22.66 12.40 13.78 22.70 12.42 13.78

1.56 1.15 2.02 3.19 6.26 2.59 1.00 1.00

3 2 3 4 3 3 4 4

5.58 61.41 126.10 119.91 26.20 21.23

-------

NZ Insurance Miscellaneous AMP ARS-UK Cash Booster KiwiSaver Capital Guaranteed FANZ Lifestages KiwiSaver Income Kiwi Wealth KiwiSaver Scheme CashPlus Westpac KiwiSaver-Capital Protect Plan 4 Westpac KiwiSaver-Capital Protect Plan 5

NZ Insurance Miscellaneous Non-PIE TOWER Vital Fund

1.25

2.36

17.85 1.76

0.20 0.19

0.72 0.72

0.90 0.85

0.05 0.15

---

------------------------------------27.88 --17.83 9.90 11.60

507.11 40.55 335.18 39.93 172.31 535.00 216.58 209.90 93.84 1325.62 2016.00 264.85 453.20 38.70

3 2 3 2 5 4 5 3 3 4 4 4 -3

----------------------------------14.04 10.93 11.95 8.43 8.43 12.53

133.81 21.57 11.34 5.03 35.92 1095.51 830.12 60.74 892.52 2.05 2.89 296.69 99.92 149.16 184.49 7.26 5.70 1.80 48.16 219.16 3098.71 37.47 27.60 233.65 2475.36 638.96 634.99 162.14 5.71 299.36 134.62 1120.57 2058.53 510.57 622.49 79.64 686.42 122.33 122.33 1978.14

3 3 1 2 3 2 2 3 3 1 2 2 3 3 4 3 1 1 2 4 4 5 4 5 4 4 4 5 2 4 3 5 4 3 5 3 4 3 3 4

NZ Insurance Mortgages Non-PIE TOWER EnRoute Gold - Fixed Income TOWER Investment Account - Fixed Income

NZ Insurance Multisector - Aggressive AMP KiwiSaver LS Aggressive Fund AMP KiwiSaver Nikko AM Growth AMP NZRT AMP Aggressive AMP PSS Select Growth Booster KiwiSaver Geared Growth Booster KiwiSaver High Growth Booster KiwiSaver Socially Rsp Inv Hi Gr FANZ Lifestages KiwiSaver High Growth Fisher FuturePlan - Growth Generate KiwiSaver Focused Growth Fund Kiwi Wealth KiwiSaver Scheme Growth Mercer KiwiSaver High Growth Milford KiwiSaver Aggressive NZ Defence Force KiwiSaver High Growth

2.12 1.57 4.38 2.39 3.34 2.21 2.68 1.64 4.31 2.3 --1.36 --

NZ Insurance Multisector - Balanced AMP ARS-Balanced AMP Ethical Balanced Fund AMP KiwiSaver AMP Global Multi-Asset AMP KiwiSaver AMP Income Generator AMP KiwiSaver ASB Balanced AMP KiwiSaver LS Balanced Fund AMP KiwiSaver LS Moderate Balanced Fund AMP KiwiSaver Mercer Balanced AMP NZRT AMP Balanced Fund AMP NZRT AMP Global Multi-Asset AMP NZRT AMP Income Generator AMP NZRT AMP Moderate Balanced AMP NZRT ASB Balanced Fund AMP NZRT Mercer Balanced AMP NZRT Nikko AM Balanced AMP NZRT Responsible Investment Bal AMP PSS Lifesteps Consolidation AMP PSS Lifesteps Progression AMP PSS Select Balanced ANZ Default KiwiSaver Scheme-Balanced ANZ KiwiSaver-Balanced Aon KiwiSaver ANZ Balanced Aon KiwiSaver Russell Lifepoints 2035 Aon KiwiSaver Russell Lifepoints Bal ASB KiwiSaver Scheme's Balanced BNZ KiwiSaver Balanced Fund Booster KiwiSaver Balanced Booster KiwiSaver Socially Rsp Inv Bal Fidelity Life Balanced Fidelity Life Super-Super Balanced Fisher FuturePlan - Balanced Fisher TWO KiwiSaver Scheme-Bal Kiwi Wealth KiwiSaver Scheme Balanced Mercer KiwiSaver Balanced Milford KiwiSaver Balanced Fund NZ Defence Force KiwiSaver Balanced OneAnswer KiwiSaver-Balanced Summer Balanced Selection Summer Balanced Selection Westpac KiwiSaver-Balanced Fund

2.67 1.43 1.22 1.33 1.43 2.15 2.06 2.34 3.81 1.22 1.34 2.7 2.68 3.14 3.49 1.44 2.17 2.37 2.29 2.24 2.34 32.89 11.71 12.3 2.4 1.89 2.27 1.78 5.8 -5.37 6664.58 --2.9 -2.37 1.42 1.42 2.3

----------------------------------10.25 7.30 8.31 8.16 8.16 8.53

----------------------------------10.75 8.11 8.15 --9.02

Name Westpac Retirement Plan - Balanced Port

Latest 1Yr 3Yr 5Yr Size Morningstar Transaction Return Return Return $M Rating Exit price % Overall 4.59 11.13 7.25 7.80 89.29 3

NZ Insurance Multisector - Balanced Non-PIE Sovereign - Colonial Invstrbds - Beaver TOWER EnRoute Gold - VIP Balanced Fund TOWER Investment Account - VIP Bal Port TOWER VIP Managed Bond

0.5 30.33 2.98 17.1

8.81 12.48 12.29 12.19

6.77 7.90 7.73 7.69

7.25 7.96 7.76 7.71

3.47 3.25 1.80 2.56

3 5 4 3

--------------5.01 3.86 5.81 4.88

--------------5.81 4.46 5.50 5.08

--------------6.46 4.67 4.91 5.11

25.08 1315.77 0.90 1220.66 4.83 78.51 4118.07 919.26 220.90 121.63 16.37 725.20 340.70 1194.38 168.56 7.67 506.71 349.85

4 3 2 5 3 5 3 3 2 4 1 4 4 4 5 2 4 4

----------------------------19.04 14.83 14.95 18.07 15.12 15.12 11.72 15.49 14.24

----------------------------12.79 8.68 9.59 10.77 9.80 9.80 -9.98 8.81

----------------------------13.04 10.01 9.74 11.25 9.81 9.81 -10.66 9.53

51.48 321.49 41.96 31.75 890.83 102.10 281.89 303.09 20.31 19.95 30.10 0.15 231.75 217.39 2770.05 191.01 12.23 23.54 59.09 4047.74 1027.69 452.06 5.93 176.19 2824.06 720.20 995.43 166.57 2380.57 35.84 600.06 535.60 95.16 95.16 46.18 2133.86 115.77

2 3 4 2 2 2 3 2 4 2 2 1 3 4 4 5 2 3 4 3 4 3 2 3 5 4 4 3 5 3 4 5 3 3 -4 3

11.48 8.38

8.93

1.21

------------

35.22 23.54 441.83 627.35 38.49 110.54 319.28 186.88 18.60 18.86 3.34

3 2 2 3 3 2 1 3 3 3 1

NZ Insurance Multisector - Conservative AMP KiwiSaver ANZ Conservative AMP KiwiSaver Default (Default) AMP PSS Select Income ANZ Default KiwiSaver Scheme Cnsrv(Dflt) Aon KiwiSaver Russell Lifepoints 2015 Aon KiwiSaver Russell Lifepoints Cnsrv ASB KiwiSaver Scheme's Cnsrv (Default) BNZ KiwiSaver Conservative (Default) BNZ KiwiSaver First Home Buyer Fund Booster KiwiSaver Default Saver Fisher FuturePlan - Capital Prot Fisher TWO KiwiSaver Cash Enhanced(Dflt) Kiwi Wealth KiwiSaver Scheme Default Mercer KiwiSaver Conservative (Default) Milford KiwiSaver Conservative Fund NZ Defence Force KiwiSaver Conservative OneAnswer KiwiSaver-Conservative Westpac KiwiSaver Default

1.25 1.89 1.88 2.04 10.94 11.46 2.04 1.48 1.23 1.42 1.28 2.05 --1.98 -1.99 1.41

NZ Insurance Multisector - Growth AMP ARS-High Growth AMP KiwiSaver ANZ Balanced Plus AMP KiwiSaver ANZ Growth AMP KiwiSaver ASB Growth AMP KiwiSaver LS Growth Fund AMP KiwiSaver Nikko AM Balanced AMP NZRT AMP Growth AMP NZRT ANZ Balanced Plus AMP NZRT ANZ Growth AMP NZRT ASB Growth AMP NZRT Nikko AM Growth AMP PSS Lifesteps Growth ANZ Default KiwiSaver Scheme-Balanced Gr ANZ Default KiwiSaver Scheme-Growth ANZ KiwiSaver-Balanced Growth Aon KiwiSaver Milford Aon KiwiSaver Nikko AM Balanced Aon KiwiSaver Russell Lifepoints 2045 Aon KiwiSaver Russell Lifepoints Growth ASB KiwiSaver Scheme's Growth BNZ KiwiSaver Growth Fund Booster KiwiSaver Balanced Growth Fidelity Life Growth Fidelity Life Super-Super Growth Fisher Funds Growth KiwiSaver Fund Fisher TWO KiwiSaver Scheme-Gr Generate KiwiSaver Growth Fund Mercer KiwiSaver Growth Milford KiwiSaver Active Growth Fund NZ Defence Force KiwiSaver Growth OneAnswer KiwiSaver-Balanced Growth OneAnswer KiwiSaver-Growth Fund SIL 60s + Sup Balanced Fund SIL 60s + Sup Balanced Fund Summer Growth Selection Westpac KiwiSaver-Growth Fund Westpac Retirement Plan - Dynamic Port

2.53 2.77 1.6 1.54 2.15 2.38 3.04 3.5 1.6 1.52 1.55 2.45 2.36 2.46 2.5 4.93 23.77 11.95 12.74 2.49 2.14 2.39 6.07 -2.96 2.43 2.15 -4.97 -2.54 2.68 5.82 5.82 1.22 2.48 5.46

NZ Insurance Multisector - Growth Non-PIE Sovereign - Colonial Invstrbds - Stag

0.57

NZ Insurance Multisector - Moderate AMP ARS-Conservative AMP KiwiSaver ASB Moderate AMP KiwiSaver LS Conservative Fund AMP KiwiSaver LS Moderate Fund AMP KiwiSaver Nikko AM Conservative AMP NZRT AMP Capital Assured Fund AMP NZRT AMP Conservative AMP NZRT AMP Moderate AMP NZRT ASB Moderate AMP NZRT Nikko AM Conservative AMP PSS Lifesteps Maturity

2.62 1.29 2.04 2.04 1.3 2.85 3.24 2.6 1.29 1.29 1.92

------------

Returns are calculated to 30/04/21. Returns are calculated before tax, 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.com.au. Please note the Morningstar Data in the July issue was incorrect and should be ignored.

For more information call 0800 888 361 Name AMP PSS Lifesteps Stability AMP PSS Select Conservative ANZ Default KiwiSaver Scheme-Cnsrv Bal ANZ KiwiSaver-Conservative Balanced Aon KiwiSaver Russell Lifepoints 2025 Aon KiwiSaver Russell Lifepoints Mod ASB KiwiSaver Scheme's Moderate BNZ KiwiSaver Moderate Fund Booster KiwiSaver Moderate Fisher Funds Conservative KiwiSaver Fund Fisher TWO KiwiSaver Scheme-Cnsrv Generate KiwiSaver Conservative Fund Kiwi Wealth KiwiSaver Scheme Cnsrv Mercer KiwiSaver Moderate Milford KiwiSaver Moderate NZ Defence Force KiwiSaver Moderate OneAnswer KiwiSaver-Conservative Bal Summer Conservative Selection Westpac KiwiSaver - Moderate Westpac KiwiSaver-Conservative Fund

Latest 1Yr 3Yr 5Yr Size Morningstar Transaction Return Return Return $M Rating Exit price % Overall 2.11 ---5.74 2 2.02 ---7.81 2 2.12 ---- 88.40 4 2.16 ---- 1512.07 4 11.13 ---- 24.01 4 12.05 ---- 30.47 5 2.21 ---- 2246.63 4 1.69 ---- 684.90 5 2.03 ---- 216.76 3 1.89 ---- 1052.52 3 2.15 ---- 179.89 4 1.61 ---- 477.94 4 ----- 959.22 3 ----- 183.39 4 1.18 ---- 40.30 --7.26 5.66 6.05 6.95 3 2.18 9.07 6.99 6.54 234.59 5 1.11 5.08 --- 11.44 -1.54 8.31 6.73 6.86 769.01 5 1.96 5.32 5.34 5.40 2997.87 3

NZ Insurance NZ Bonds AMP ARS-NZ Fixed Interest AMP KiwiSaver NZ Fixed Interest AMP NZRT NZ Fixed Interest AMP Prem PSS ACI NZ Fixed Interest Fidelity Life NZ Fixed Interest Fidelity Life Super-Super Fixed Int OneAnswer KiwiSaver-NZ Fixed Interest SIL 60s + Sup NZ Fixed Interest SIL 60s + Sup NZ Fixed Interest Summer New Zealand Fixed Interest Summer New Zealand Fixed Interest Summer New Zealand Fixed Interest Westpac Retirement Plan - Accum Port

------0.88 0.82 0.82 1.17 1.17 1.17 -0.61

------4.22 4.14 4.14 3.55 3.55 3.55 1.29

------3.65 3.49 3.49 ---1.35

4.81 3.87 7.02 9.60 4.43 1.02 8.65 5.64 5.64 6.89 6.89 6.89 13.59

3 2 2 3 2 -4 3 3 3 3 3 1

0.38

-0.44

1.91

1.87

0.19

1.15 1.64 1.38 -2.21 1.38 1.02 1.04

-------1.04

-------1.85

-5.07 -- 2063.83 -2.22 -- 332.79 -- 10.66 -- 23.58 -- 98.91 2.21 177.93

NZ OE Cash AMP AIT NZ Cash - UT35 AMP Capital NZ Cash Fund AMP PUT Select Cash ASB Cash Fund BT Enhanced Cash Fund Fisher Cashplus Fund Milford Cash Nikko AM NZ Cash

---------

NZ OE Equity Region Australasia AMP AIT Australasian Shrs-Multi Mgr-UT07 BT PS Australasian Diversified Share Castle Point Ranger Fund Devon Alpha Fund Devon Dividend Yield Devon Trans-Tasman Fund Forte Equity Trust Harbour Australasian Equity Harbour Australasian Equity Focus Fund Harbour Australasian Equity Income Milford Trans-Tasman Equity Mint Australasian Equity Fd (Retail) Nikko AM Concentrated Equity OneAnswer SAC Equity Selection Pie Australasian Dividend Growth Pie Australasian Emerging Companies Pie Australasian Growth 2 Fund Pie Australasian Growth Fund QuayStreet Altum

4.12 3.32 2.55 2.01 1.92 4.52 2.32 3.82 2.51 2.19 3.9 4.11 2.9 2.99 3.95 5.34 2.97 7.96 1.73

----------20.44 10.90 14.36 14.95 39.73 32.35 60.48 29.69 13.34

----------15.54 13.55 8.37 10.14 18.51 20.13 26.03 19.32 6.40

----------17.26 14.96 13.49 9.65 18.07 16.09 22.73 12.35 8.74

10.83 47.80 248.65 113.67 30.17 69.07 28.32 314.43 24.30 55.45 849.54 312.32 50.60 13.16 201.05 130.27 469.86 119.40 71.11

2 3 5 2 1 2 3 3 4 2 4 4 3 2 5 4 5 5 2

3.43 1.56 5.55 2.44 1.42 1.35 2.84 4.45 1.84

--------------10.53 2.08 10.46 5.25

-------4.80 7.79

313.63 15.95 88.26 188.90 375.87 175.88 702.15 21.37 64.96

3 3 4 5 4 -5 1 3

NZ OE Equity Region Australia AMP Capital Australian Share Fund Devon Australian Fisher Funds Australian Growth Fund Fisher Funds Premium Australian Fund Milford Australian Absolute Growth Fund Milford Australian Equities Wholesale Milford Dynamic OneAnswer SAC Australian Share QuayStreet AU Equity

NZ OE Equity Region Emerging Markets AMP AIT Emerging Markets - UT65

AMP Capital Emerging Markets Share

Latest 1Yr 3Yr 5Yr Size Morningstar Transaction Return Return Return $M Rating Exit price % Overall 1.49 ---- 43.39 --

NZ OE Equity Region Europe Pie Growth UK & Europe

1.9

44.72 15.04

114.64

NZ OE Equity Region NZ AMP Capital Ethical Leaders NZ Shares AMP Capital NZ Shares Fund AMP Prem PUT ACI NZ Shares AMP Prem PUT ACI NZ Shares Index Fisher Funds NZ Growth Fund Fisher Funds Premium New Zealand Fund Fisher Trans Tasman Equity Trust Forsyth Barr New Zealand Equities Harbour NZ Index Shares Fund Milford NZ Equities Wholesale Fund Nikko AM Core Equity OneAnswer SAC NZ Share QuayStreet NZ Equity Russell Investments NZ Shares Simplicity NZ Share Smartshares NZ Core Equity Trust

3.21 4.02 4.14 3.12 14.3 3.41 8.79 4.04 2.16 4.54 2.94 6.83 3.75 2.25 1.51 1.93

---------19.19 10.58 11.99 14.80 13.33 10.24 14.23

---------17.91 11.12 14.40 14.36 14.32 -13.46

---------19.76 15.07 14.83 15.70 14.94 -14.71

49.11 505.72 3.26 3.15 301.13 250.80 77.72 82.22 244.22 861.23 39.35 66.28 162.48 280.08 626.83 105.71

4 4 2 2 5 5 3 4 1 5 3 3 4 3 3 2

2.08 1.74 1.96 2.81 2.12 3.5 2.77 3.22 2.41 2.61 2.54 2.62

------23.66 19.69 35.07 12.84 17.29 31.09

------17.88 13.42 15.78 10.11 10.52 19.25

-------13.97 15.83 10.64 12.42 19.28

597.11 82.46 4.07 2.86 23.50 168.82 1115.58 275.45 191.79 352.17 101.11 278.16

3 -2 3 1 4 5 4 4 2 2 5

-------------26.81 36.52 17.44 15.52 28.13

-------------14.38 13.39 13.57 8.77 9.61

-------------13.12 15.70 12.12 10.08 13.63

11.46 26.19 82.54 496.33 81.50 357.00 48.06 5.04 561.83 72.87 108.96 347.57 139.11 1106.21 41.75 40.07 0.83 102.13

2 2 3 2 2 1 4 3 3 3 5 5 3 4 4 3 1 3

--7.78

-1.53 -- 232.63 6.11 352.21

4 3 2

NZ OE Equity Region World 2.81 1.16 1.39 2.31 4.43 -1.91 3.35 3.35 1.16 1.16 1.16 3.41

NZ Insurance NZ Bonds Non-PIE Sovereign - Colonial Invstrbds - Fx Int

Name

1.75

1.51

AMP Capital Core Global Shares Fund AMP Capital Global Companies AMP Prem PUT FD Intl Share Fund 1 Value AMP Prem PUT SSgA Global Shares Index Elevation Capital Global Shares Fund Fisher Funds Property and Infrastructure Milford Global Select Wholesale Fund OneAnswer SAC International Share Pie Global Growth QuayStreet International Equity Russell Investments Global Shares T.Rowe Price Global Equity Growth

NZ OE Equity Region World - Hedged AMP AIT Global Equities-Multi Mgr-UT28 AMP AIT Global Infrastructure - UT04 AMP Capital All Country Glb Shares Idx AMP Capital Core Hedged Global Shares Fd AMP Capital Ethical Leaders Global Shars AMP Capital Global Listed Infrastructure AMP Capital Global Shares Fund AMP Prem PUT SSgA Global Shares IndexHdg ASB World Shares BT PS International Diversified Share Fisher Funds International Growth Fund Fisher Funds Premium International Fund Fisher Global Fund Milford Global Equity Nikko AM Global Equity Hedged Pathfinder Global Water Pathfinder World Equity Fund Russell Investments Hedged Global Shares

1.69 3.23 1.35 2.12 2.32 1.96 4 3.44 2.25 2.61 3.57 3.77 8.16 2.2 2.84 2.76 2.27 2.76

NZ OE Equity Sector Global - Real Estate AMP AIT Global Property - UT54 AMP Capital Global Propty Securities Fd OneAnswer SAC International Property

4.14 1.78 1.68

--5.95

NZ OE Equity Sector NZ - Real Estate AMP Australasian Property Index Fund BT Property Fund Mint Australia NZ Rl Estt Invm (Ret) OneAnswer SAC Property Securities

2.91 5.8 2.61 4.78

------1.20 13.43 10.03 2.88 14.31 11.07

180.61 35.16 82.64 170.18

1 3 3 4

1.27 2.13 2.6 1.09 1.99 2.47 2.42 1.12 1.11 1.29 1.35 1.2

---------2.02 0.70 1.26

---------4.93 3.93 4.28

---------4.05 2.67 4.13

44.83 6.00 109.52 82.21 3.22 82.95 169.56 71.05 842.15 59.93 2.78 683.03

1 2 2 2 3 3 4 4 5 5 3 5

0.86 1.17

-3.45

-2.87

-3.00

97.16 4.07

---

NZ OE Global Bond AMP AIT Fixed Interest Income - UT36 AMP AIT Global Bonds-Multi Mgr-UT13 AMP Capital Etcl Ldrs Hdgd Gbl Fxd Intst AMP Capital Global Short Duration AMP Prem PUT SSgA Global Fixed Int Index BT PS International Diversified Bond Fisher BondPlus Fund Fisher Funds Income Milford Global Corporate Bond Fund Nikko AM Global Bond OneAnswer SAC International Fixed Intrst Russell Investments Global Fixed Int

Name NZAM Global Growth Salt Long Short Fund

Latest 1Yr 3Yr 5Yr Size Morningstar Transaction Return Return Return $M Rating Exit price % Overall 1.48 ---- 19.70 -1.9 20.49 7.08 7.76 52.43 --

NZ OE Multisector - Aggressive AMP AIT Aggressive Portfolio - UT31 AMP AIT eInvest - Aggressive - MDF7 AMP AIT Growth Portfolio - UT03 AMP Capital Ethical Leaders Growth AMP PUT Select Growth

2.58 1.87 2.42 3.67 2.29

------

61.24 6.75 25.11 10.91 19.77

1 3 1 2 2

1.62 2.17 2.44 1.39 1.21 2.19 2.27 2.06 2.83 2.27 2.23 2.17 2.82

---------11.90 8.48 7.65 11.78

---------8.16 6.98 6.87 8.00

---------7.90 7.53 6.99 8.37

34.12 47.77 73.08 87.09 158.88 38.64 440.46 470.93 1358.52 62.28 282.55 56.46 585.66

2 1 3 1 2 1 4 3 5 3 2 2 3

1.75 1.78 1.82 1.23 1.78 1.97 1.21 2.13

----5.75 4.55 2.41 3.98

----5.35 4.88 4.70 4.37

----4.71 5.30 5.19 4.39

1.74 74.87 154.27 555.25 22.40 124.71 293.25 292.89

1 3 2 5 3 3 3 3

2.41 1.78 2.57 2.83 2.11 4.17 4.89 2.57 2.83 4.09 2.37 2.88

-------14.89 18.00 14.91 9.84 14.71

-------9.44 10.61 9.46 7.84 9.49

-------9.50 11.00 9.41 8.70 10.00

77.13 10.64 281.74 160.72 166.61 13.80 1650.16 48.65 38.78 56.06 296.56 132.51

1 2 3 4 3 2 5 3 4 3 2 3

1.37 1.47 2.73 1.97 2.02 1.86 1.91 1.06 1.89 1.12 2.02 1.79

---------5.23 9.02 7.68

---------5.77 6.84 6.24

---------5.17 6.32 6.32

8.29 36.30 6.55 11.62 248.88 827.42 623.16 179.77 2586.17 262.66 25.36 977.58

2 3 2 1 4 3 3 4 5 2 4 4

1.92 1.73 1.29 1.72 1.46 1.95 1.16 1.12 1.2 1.1 1.25 1.9 1.43 1.25 1.11 1.27

--------2.79 0.64 1.68 0.75 2.67 -0.04 -1.25 0.80

--------4.53 4.30 4.41 4.08 3.31 3.54 -1.78

--------4.75 3.93 4.36 3.53 3.73 3.43 -2.13

15.43 1953.76 445.50 86.25 155.38 255.10 178.09 467.94 886.82 117.71 293.75 15.41 423.47 205.63 410.24 4.79

2 4 2 3 3 4 3 4 5 5 5 3 3 3 3 1

NZ OE Multisector - Balanced AMP AIT eInvest - Balanced - MDF5 AMP AIT Moderate Portfolio - UT01 AMP Capital Ethical Leaders Balanced AMP Capital Global Multi Asset Fund AMP Capital Income Generator Fund AMP PUT Select Balanced ANZ Invmt Fds Balanced ASB Balanced Milford Balanced Fund OneAnswer MAC Balanced QuayStreet Balanced QuayStreet Socially Responsible Inv Westpac Active Balanced Trust

NZ OE Multisector - Conservative AMP PUT Select Income ANZ Invmt Fds Conservative ASB Conservative Milford Conservative OneAnswer MAC Conservative QuayStreet Conservative QuayStreet Income Westpac Active Conservative Trust

NZ OE Multisector - Growth AMP AIT Balanced Portfolio - UT 02 AMP AIT eInvest - Growth - MDF6 ANZ Invmt Fds Balanced Growth ANZ Invmt Fds Growth ASB Growth Fisher Multi Sector Fund Milford Active Growth OneAnswer MAC Balanced Growth OneAnswer MAC Growth OneAnswer SAC Balanced Growth QuayStreet Growth Westpac Active Growth Trust

NZ OE Multisector - Moderate AMP AIT eInvest - Conservative - MDF2 AMP AIT eInvest - Moderate - MDf3 AMP Capital Ethical Leaders Conservative AMP PUT Select Conservative ANZ Invmt Fds Conservative Balanced ASB Conservative Plus ASB Moderate Harbour Income Milford Diversified Income Fund Mint Diversified Income OneAnswer MAC Conservative Balanced Westpac Active Moderate Trust

NZ OE NZ Bonds AMP AIT NZ Fixed Interest - UT60 AMP Capital NZ Fixed Interest Fund AMP Capital NZ Short Duration BT Corporate Bond Fund Fisher New Zealand Fixed Inc Trust Forsyth Barr New Zealand Fixed Interest Harbour NZ Core Fixed Interest Harbour NZ Corporate Bond Milford Trans-Tasman Bond Nikko AM NZ Bond Nikko AM NZ Corporate Bond OneAnswer SAC NZ Fixed Interest QuayStreet Fixed Interest Russell Investments NZ Fixed Interest Simplicity NZ Bond Westpac Active Income Strategies Trust

NZ OE Miscellaneous AMP Capital Commodities Nikko AM Income

© 2016 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 general advice and has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 and/or Morningstar Research Limited (subsidiaries 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 Product Disclosure Statement (in respect of Australian products) or Investment Statement (in respect of New Zealand products) before making any decision to invest. Neither Morningstar, nor Morningstar’s subsidiaries, 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. Please refer to our Financial Services Guide (FSG) for more information www.morningstar.com.au/fsg.asp

WWW.GOODRETURNS.CO.NZ | 33

TOP 10

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

01 Almost half of NZ's advisers face deregistration The situation is urgent for the 50% of advisers who have not yet been linked to a FAP, and they only have 14 days to make it right.

02 Five KiwiSaver providers lose default status: Two new ones added The Government has slashed the number of KiwiSaver default providers from nine to six with five of the existing providers being removed from Dec 1.

03 How three sacked KiwiSaver default providers reacted Three default providers have names starting with A, but they did not make the A-list in the recently announced KiwiSaver shakeout.

04 The death of the single adviser FAP Consultant Tony Vidler says we might be seeing the death of the single adviser FAP.

05 MBIE defends KiwiSaver shakeup MBIE has defended its shake-up of the KiwiSaver default schemes, against industry voices who have accused the Government of a risky fee-focused approach.

Keep up with the news at

GOODRETURNS.CO.NZ

34 | ASSET 03 | 2021

06 Axed KiwiSaver funds haven't done a good job Booster managing director Allan Yeo says retaining KiwiSaver is reward for the firm's engagement with members and low fees.

07 Bye bye big banks – New KiwiSaver default fund providers celebrate It's been a day of celebrations for KiwiSaver default providers, especially for the two new fund managers – Simplicity and Smartshares.

08 Fisher Funds – 'not a cut-price fund manager' Fisher Funds chief executive Bruce McLachlan says he is both surprised and disappointed they could not retain their default provider status.

09 Rival Wealth takes on the Auckland market Rival Wealth is expanding its business and has appointed a general manager to head up its brand new Auckland office.

10 [The Wrap] What we learnt from the great KiwiSaver shakeout There’s something very passive about the active shakeout of KiwiSaver default funds.

26 July 2021 | AUT Events Centre, Auckland

17TH ANNUAL

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A vision for the future of New Zealand’s financial markets

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Financial Markets Authority

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Market conduct and surveillance Fintech CoFI Amendment Bill Sustainability and climate risk Cryptocurrencies and digital assets A new dawn of financial market regulations

PHIL SOLARZ

Head of Surveillance,

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NZ RegCo

Assistant Governor/GM Governance, Strategy and Corporate Relations,

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Financial Markets Authority

NZX

Specialist Lead, Fintech,

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CEO,

See full details at conferenz.co.nz/FMLAW WWW.GOODRETURNS.CO.NZ | 35

Join us to obtain these benefits: - weekly ‘Bring in the Experts’ webinar series - liability programme for members including professional indemnity insurance - guidelines for disclosure statements - regional roadshows & networking - obtain the Trusted Adviser mark - personal CPD recording programme - and much more...

JOIN Financial Advice NZ Your Professional Body We are your professional body, here to help you. Please visit us online, or contact us directly info@financialadvice.nz | 0800 432 101