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AUGUST 2015

HOW TO EXPLAIN RISK TO CLIENTS

Catering for changing habits

Unpicking commission structures

Insurers' department of 'no'

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HOW TO EXPLAIN RISK TO CLIENTS

04 EDITORIAL Risky business 07 OPINION 08 PEOPLE New appointments

10 NEWS FROM NEW ZEALAND 11 NEWS FROM AUSTRALIA

How to quantify investment risk for clients is something that many advisers struggle with. But it has been suggested that recent regulatory moves to standardise the way risk is reported may just be causing more confusion. Susan Edmunds looks at how advisers can explain risk to their clients.

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REGULARS

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{OPEN TO QUESTION} { INVESTMENT }

{ INSURANCE }

{ ASSET ADVISER }

06 What is investors' biggest risk?

18 Commission reforms examined. 20 Who isn't willing to offer cover? 22 Adding value at claims time

24 Relationships key to sustainable advice business 26 Kiwi consumer behaviour changing

28 Building and growing an income portfolio 30 Pieces fit together for Jigsaw

UP FRONT

{ FROM THE EDITOR }

INVESTOR EDUCATION, AVOID RISK

WHEN YOU THINK ABOUT THE RISK OF an investment, what do you consider? Advisers would probably come up with a number of things: the credit risk of a product, the risk of a particular investment not meeting their client’s needs, the risk of inflation eroding its value or the risk of volatility. But clients often have quite a different understanding. Ask them about the risk of an investment and they will probably say something along the lines that riskier investments are more likely to lose you money. For many, that translates – roughly – to when a market has a bad patch “and the balance I see online or on my statements goes down is a sign of a risky investment and I (maybe) don’t like it.” But advisers need to find a way to communicate the other risks to their clients. Sure, your balance might go down over the next few months but what about the risk to your long-term balance if you pull the money out and put it in a conservative fund? What about the risk of solidifying what are otherwise just on-paper losses? What about the risk of getting to retirement without enough money in the bank because you were .G W OODRETURNS.CO.NZ

not willing to take a bit more volatility to achieve better returns? For retired clients, what about the risk that the return on your investments will not keep up with inflation and your money will run out before you do? These are questions of investor education. Recent research showed that the majority of New Zealanders aged over-55 think “most” people should avoid risky investments. Considering that the majority of those people could well have another 30 years of investing life ahead of them, that statement should be challenged. The survey respondents were most happy with the idea of their money being in bank accounts or term deposits – despite the fact they thought an “average” return should be somewhere around 9%. Those products are delivering about half that at present. The third most popular place for their investments was residential property – perhaps reflecting the fact that most New Zealanders do not see it as “risky”, having not yet experienced a correction in the market of any severity. Risk is something that should be added to the wish list of financial literacy. Let’s try to educate investors that while some risks can be bad, many are good and it is worth working out which are the most important risks for their specific circumstances. For a long-term investor, how much of a “risk” is volatility, really? It may be that a downturn is just an opportunity to buy more of what you were buying anyway, at a cheaper price. For advisers, it’s a question of working out a client’s ability to handle risk as well as their willingness. If they are able to deal with some volatility but a little shaky on the reality of seeing a downturn, it will be your job to ensure you manage the risk of a client freak-out. In the long run, that may work out to be the riskiest risk of all.

Susan Edmunds Editor

HEAD OFFICE 1448A Hinemoa Street, Rotorua PO Box 2011, Rotorua P: 07 349 1920 F: 07 349 1926 E: editor @assetmagazine.co.nz PUBLISHER Philip Macalister EDITOR Susan Edmunds SUBEDITOR Phil Campbell CONTRIBUTORS Russell Hutchinson, Tony Vidler, Damien Grant, Helen Twose, Michael Naylor DESIGN Jonathan Harding ADVERTISING SALES 07 349 1920 027 437 7527 SUBSCRIPTIONS Dianne Gordon P: 0800 345 675 E: subs@assetmagazine.co.nz ASSET is published by Tarawera Publishing Ltd (TPL). TPL also publishes online money management magazine Good Returns www.goodreturns.co.nz and The NZ Mortgage Mag All contents of ASSET magazine are copyright Tarawera Publishing Ltd. Any reproduction without prior written permission is strictly prohibited. ISSN 1175-9585

OPEN TO QUESTION

BEN BRINKERHOFF

ALISTAIR BEAN

GRAHAM ANSELL

CONSILIUM

ALISTAIR BEAN AND FINANCIAL ASSOCIATES

ANZ GENERAL MANAGER OF INVESTMENT MANAGEMENT

WHAT DO YOU THINK IS THE BIGGEST RISK TO MOST NZ INVESTORS AT THE MOMENT?

The biggest risk facing Zealand investors is not having the money they need when they need it. I believe that’s the truest definition of risk and far more important and encompassing that volatility or market conditions. And the risk arises primarily from poor planning. This was highlighted in the FMA Media release showing that almost half of 50-year-olds have yet to figure out how they will reach their retirement goals and four out of 10 retired without a financial plan. This endemic failure to address the simple questions of sustainable lifestyle, contingencies, appropriate asset allocation and estate documents leave New Zealanders open to the real risks which are never about markets, but always about the personal and often unpredictable circumstances of life.

The constant misinformed media headlines resulting in an immediate loss of value to assets and investments. The panic and cost created by knee-jerk over reaction to short-term transitional market activities loses significant wealth to clients, institutions, economies and nations alike, particularly for those clients, institutions, economies and nations that are investing for the medium to longer-term. China's GDP might be decreasing, but their GDP is trillions, a reduction in GDP means they are still generating trillions. On any given day, the 6 o'clock news will report a "crash" on the sharemarket when either it has dropped say a whole "11 points" in one day, or has risen for three straight days previously totalling say 125 point cumulative increase and then drops 45 points on the following day. If the media were held financially accountable for misinformation, as AFAs are, then perhaps they would perform more prudent research.

The thing that concerns me is what people are investing in and what other people are putting their clients into. Because interest rates are so low and the equity market and property market are seen as so expensive people are out there searching for that extra bit of yield and bringing low-grade credit into their portfolios. They don’t understand the underlying structures of what they are investing in. People need to be aware that if they take risks it should be in high-quality equities not low grade bonds. The FMA is out there capturing all sorts of things but they are not capturing some of the rubbish people are putting their clients into.

WHAT SHOULD ADVISERS DO ABOUT IT? Run through “lifeboat” drills to explain to clients what might happen. You don’t start doing lifeboat drills once the ship has struck a leak. You do them while you are still safe at harbour.

WHAT SHOULD ADVISERS DO ABOUT IT? Advisers, fund managers and others in the profession could be more vocal in response to incorrect statements and also continue, as we do, with regular communication and education for clients.

WHAT SHOULD ADVISERS DO ABOUT IT? Advisers need to explain that the reality is we are going to go through a period and it could be extended when returns are a whole lot lower than we have come to expect. That will put pressure on. But good sound investing is the way to handle that.

OPINION

{ ROSS ASSET MANAGEMENT }

OFFICIAL SANCTIONS LITTLE USE TO INVESTORS A Government sanction is no guarantee of getting your money back in a dodgy scheme, writes Damien Grant.

ANY LAVISH PRAISE ON Wellington but I’ve often found it an uninviting little town. Not the weather, as global warming has made it more pleasant, or the cute narrow streets, book shops and elegant cafes that can make it easy to whittle away an afternoon. The closed, insular little world that is the real Wellington is filled with self-important, self-anointed elite with a sense that they are at the centre of something. Thus, it was with some degree of petty schadenfreude back in 2011 when I attended a meeting of those investors who had been scammed by the: David Ross-run Ponzi scheme known as RAM. Here were several hundred middle class and wealthy punters who had invested with Ross smugly confident that their connections had given them an edge on the provincials, or worse, those yapping Jaffas north of Huntly. ACTUAL INVESTMENT They were wrong. Ross was a conman. 627 investors lost over $114 million, more if you count what they thought was their actual investment. Ouch. Still, these weren’t Greek pensioners struggling to pay for their ouzo. It was hard to feel too sorry for them and here is the kicker: many of these investors felt confident that they would get their money back because David Ross was sanctioned by the government. And he was. Twice over. Ross was a chartered accountant registered by the FMA as a financial adviser. Surely, there would be some redress? Well, no. To be fair, his stealing wasn’t done in his capacity as a chartered accountant, so it isn’t reasonable to blame the Institute for his defalcations; there is no

was detected, but the fact that the FMA was willing to grant registration to the guy running a massive Ponzi should make it clear that their registration system is worthless. To prove the point, last year the FMA approved another Ponzi scheme, a $9 million fraud in Christchurch trading as Arena Capital. This is despite, according to The Press in Christchurch, the FMA being warned by the Companies Office that a convicted fraudster was involved with the company.

{ DAMIEN GRANT } These weren’t Greek pensioners struggling to pay for their ouzo. doubt his credibility, of that body gave him some credibility but not as much as his being registered by the FMA. Again, to be fair, he was only registered shortly before the fraud

REPAYING PROFITS The investors in RAM were recently dealt a bitter blow by the Wellington High Court when it ruled that those who had extracted their money from David Ross would not be forced to repay their original capital. They will need to repay back any profits, but this is expected to be minor in most cases. Many of the victims of the David Ross fraud were drawn into it on the recommendations of friends and family and the insular nature of Wellington appears to have benefitted Ross in this respect. However the Arena fraud was more troubling because many investors appeared to have done their homework and placed a reliance on the FMA’s registration. This proved a mistake. A common trait with these sorts of frauds is small investors who have worked diligently to accumulate their capital but have a naiveté on how to manage it. This isn’t surprising; they typically only make a very small number of investments and rely on friends, advisers or, worse, the government for advice and guidance, which might seem like a sensible precaution. It isn’t. Damien Grant is a liquidator at Waterstone Insolvency.

ASSET UPDATA FRONT ADVISER

a new appointment email details { PEOPLE } Ifandyoua have picture to editor@goodreturns.co.nz

Trevor Slater

SLATER STEPS DOWN Financial Services Complaints Ltd (FSCL) general manager Trevor Slater has announced he is leaving his role. He has been with FSCL since it opened its doors in 2010. FSCL said it was now well established as a specialist financial dispute resolution scheme and the time had come for it and Slater to part ways. Slater does not plan to leave the financial services sector. FSCL said he was “looking forward to his next challenge, wherever that may take him”. FSCL chairman Kenneth Johnston said Slater had earned the respect of scheme participants, in particular for his work educating them on the benefits of robust internal complaints processes, and how external dispute resolution works. Johnston said Slater’s skills as a mediator, conciliator, educator and mentor of staff would be missed.

The increased range of regulatory actions illustrates the significant broadening of the FMA’s remit under the Financial Market’s Conduct Act and the increased range of powers and regulatory tools now available to the conduct regulator. As the FMA transitions into the FMC Act environment, Moffatt decided that this was the right time for a new challenge outside the FMA and she will finish her role in September. Paul O’Neil will become acting director of enforcement and investigations, reporting to chief executive, Rob Everett. Everett and the FMA Board said they wanted to acknowledge the significant contribution and leadership role that Moffatt had played in the FMA’s establishment years.

GREVILLE MOURNED Former head of AMP Capital Roger Greville is being remembered as a “good bugger” who lived life to the full. Greville died in Queenstown in early August after a skiing accident. Murray Gribben, who also previously held the role at AMP Capital, said Greville was a good friend. “He was very straightforward about everything he did. He never left you wondering about what he was doing and what he wanted to do,” he told media. There were plans for former colleagues to meet to commemorate Greville’s life.

Andrew Barnes

MOFFATT LEAVES FMA

BARNES HANDS OVER CHIEF EXECUTIVE ROLE

FMA enforcement boss Belinda Moffatt is leaving the regulator. She has been at the helm of the enforcement team for three and a half years. Moffatt joined the FMA in March 2012, in the establishment phase of the new regulator, with a mandate to complete the finance company investigations and build the FMA’s enforcement capability. The legacy finance company investigations are now complete and a wide range of enforcement activities have been undertaken under Moffatt’s leadership, across a range of financial services issues.

Complectus group has appointed Grant Kemble as chief executive, assuming responsibility for day-to-day management from Andrew Barnes. The group includes Perpetual Guardian, Guardian Trust, Covenant Trustee Services and Foundation Corporate Trust. Barnes will remain managing director and focus on large-scale business innovation, acquisition and philanthropy. Kemble joins Complectus from Russell McVeagh, and is a non-executive director of Airways New Zealand. He said: “I have worked with Andrew and Complectus for some time. Andrew

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is an innovator and entrepreneur who has a clear and progressive vision for the fiduciary sector in New Zealand and is leading change of a kind we have not seen before. The opportunity to contribute to the realisation of his vision for service innovation and expansion – not only locally but on a global scale – was too good to pass up.” Barnes said: “Grant’s years of experience in complex business transactions and advisory matters, as well as his governance background and long-standing relationships with regulators, make him the ideal person to lead Complectus into its next phase.”

Randall Clement

SALT ADDS GRADUATE Salt Funds Management has employed Randall Clement as an operations analyst. Clement graduated from the University of Auckland specialising in finance and received the Financial Markets Authority Honours/Masters Prize last year. He had a first career as a design engineer.

Managing director Matthew Goodson said: “We are delighted to employ someone of Randall’s calibre. Salt has grown rapidly over the last two years. From day one, we have been committed to ensuring that we have deep levels of resourcing and Randall’s appointment reflects that continuing commitment.”

and fixed income teams. Morales has more than seven years’ experience with global custodial banks covering fund management, investment and treasury operations, risk management and project management. Before joining Harbour, Morgan was with JP Morgan Chase for two years, with a focus on cash forecasting, pooling and management, FX modelling and reconciliations.

BRUCE KERR STEPS DOWN

Cheryll Morales

HARBOUR APPOINTS ANALYST Harbour Asset Management has appointed Cheryll Morales as a specialist operations analyst. She will provide investment operations and administration support for the equity

He replaces Mark Collins from October 12. Travaglia has experience in sales and third-party distribution. He is currently the head of client and broker engagement at AIG. Before AIG, he had senior management positions at OPI NZ, Activa Health and AMP. NZHL chairman Neil Richardson said the calibre of applicants for the CEO role was very high, but Travaglia’s breadth of experience and expertise was a perfect match for the role. “We were very pleased with the quality of applicants for the position of CEO and are delighted to have appointed Julian as we enter into a new phase of growth and development in our business.”

Julian Travaglia

NZHL APPOINTS CEO NZ Home Loans has appointed Julian Travaglia as its new chief executive.

Bruce Kerr has resigned as head of Workplace Savings NZ. He made the announcement at the organisation’s conference. He said he needed to focus on his licensed independent trustee duties.

UP FRONT

{ NEWS FROM NEW ZEALAND }

Personalised DIMS nod for two advisers Two advisers have been authorised to provide personalised discretionary investment management services. Under the Financial Markets Conduct Act, all providers of class DIMS must be licensed. But those who provide a personalised service under the Financial Advisers Act can continue to do so with approval from the Financial Markets Authority. They had to submit an updated ABS by May 31 and have until December 1 to update their client documentation. It had been suggested that few AFAs would be up to the standard required. The FMA confirmed it had approved two applications, one from Christchurch adviser Alistair Bean. It had taken more than two years to reach the point of approval, he said, including many discussions and meetings about how it should be approached. “There had been many sleepless nights but then when I sat down to do it, it took under three hours.” One 90 minute phone call with the FMA

Alistair Bean followed, and a wait of six weeks while the FMA reviewed his business and made further calls. Bean said he would not have been able to continue with his business without the authorisation to provide personalised DIMS. He uses a OneAnswer wrap platform but not model portfolios. “I could not do what I do without being authorised to make decisions on clients’ behalf. I survey my clients every year and they tell me straight out the reason I was employed is that we don’t have to make the decisions. Otherwise why would we use a financial adviser?”

But Murray and Weatherston say the lack of information on how to deal with clients who do not want a full investment plan is one of the industry's biggest problems. “AFAs are willingly compliant with regulatory requirements but the confusion created by the numerous changes, and sometimes incomprehensible guidance, has caused some advisers to mitigate potential compliance risks by deselecting certain types of consumer and reducing the type of advice being offered,” their submission says. They also want the FMA to have less influence on the Code Committee, which administers advisers' code of conduct.

Murray Weatherston

Submission slams FMA SiFA has entered a searing submission in response to the Financial Advisers Act review issues paper. In it, Robert Oddy and Murray Weatherston say the financial advice regulation regime has limited access to advice, guidance to advisers has been at times incomprehensible, the FMA has too much control over the Code Committee and that treatment of QFEs has been unfair. They want regulation rewritten to clearly focus on consumers and make it easier for them to access advice. They say regulation has driven many independent advisers out of the market or into the hands of QFEs and more are likely to follow. Many feel QFE advisers unfairly get an easier time from regulators.

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Investors jump on to ETFs New Zealand investors are switching on to exchange-traded funds, ASB Securities managing principal Angela Busby says. ASB would not reveal the total number of investors who have invested in ETFs through its channels, or the level of funds under management. But the bank said the number of clients trading ETFs between the 2014 financial year and 2015 had increased by 40%. The value of the ETFs traded increased 80% year-on-year. There had also been a 27% increase in the number of ETF trades, of which more than 70% are now traded online.

UP FRONT

{ NEWS FROM AUSTRALIA }

Call for insurers to help advisers

on advisers including their work history, as well as making some functionality enhancements to continue to make the online site state of the art. “Adviser View will become the pre-eminent online site for Australians looking for financial advice, their first port of call for trusted information, connection and ideas exchange on all things financial,” Spiers said. More than 78,700 Australians have visited the online site with more than 62,200 searches completed. The majority of these searches have been for the name of a particular planner (32,100), followed by location searches (26,000) for someone accessible and local and speciality searches (3,600) where consumers are looking for a specific skill.

Independents earn more Australia’s Assistant Treasurer, Josh Frydenberg, wants the life insurance industry to help advisers adjust to slashed upfront commissions, a result of the recent Trowbridge report. He said the government expected cost savings to insurers to be passed on to customers. The Trowbridge reforms would mean all parties had to compromise, he said. “Neither side got everything they wanted, but by coming to the table, each side was able to obtain a better outcome for their members than they would have in isolation. I am very conscious of the challenges posed by industry reform of this scale, particularly as a result of the many discussions I’ve had with advisers since being appointed Assistant Treasurer. If there is a message I can provide the life insurers in this room, it is that advisers are looking to you to help them transition and navigate these significant reforms.” He said ongoing co-operation was necessary.

Advisers employed by non-aligned practices earn more than those in aligned groups, a new survey shows. The survey by Money Management showed more than half earned less than A$110,000. The survey found that non-aligned planners were more likely to earn in excess of A$190,000, with twice as many reporting their income exceeded A$500,000 a year, compared to their peers working for aligned groups. Most felt they deserved more, and the greater proportion of those working for non-aligned firms believed their salary should be more than A$190,000 a year (21%), than their aligned peers (18%).

Clients review their advisers

More than 2000 Australian consumers have given testimonials of their financial advisers, via the BT Financial Group Adviser View website. So far, they are reporting positive experiences, giving them an average rating of 4.89 out of 5. “Adviser View lets consumers do the talking on their advice experience and to vote with their fingers,” says Mark Spiers, General Manager, Advice, BT Financial Group. “We have given Australian consumers of advice a voice and this is translating to greater confidence.” Adviser View will soon include more information

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PROFILE

{ INSURANCE }

SEA CHANGE FOR INSURANCE BOSS AIA’s new boss Natalie Cameron was given just three weeks’ notice that she was required across the Tasman.

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PROFILE

IA chief executive Natalie Cameron said the deadline she was given to pack up her life in Melbourne and move her family to Auckland was so tight that they almost forgot the cat. She has replaced Wayne Besant, who has moved to the company’s Vietnam office. Cameron says the move was too good an opportunity to turn down, though she had just three weeks to send all her possessions across the Ditch, find a home and get started at the New Zealand division of the company. She accepted even before she had had a chance to discuss it with her husband, Iain Sibbald. “When they asked me I straight away said, 'yes' but then thought, ‘oh my God…’ I called him and said ‘how about moving to New Zealand in a few weeks?’” Cameron says. “He’s quite entrepreneurial, a true small-business person, he hates working for other people. I’m the more conservative of the two of us so when he heard we could move country and do something else, Iain said 'yes' straight away. I hope he wasn’t surprised, but he was happy that I had got to that stage in my career.” Cameron has two children, aged 2 and 7, and says it was a big change to take the eldest out of school in Australia and move to a new home in Milford. But she says, gesturing to her floor-toceiling windows with views out over Takapuna beach to Rangitoto, “It’s not hard to settle in, in this environment.” INTERESTING, DIVERSE The 38-year-old started her career in a Melbourne law firm, where she worked in the insurance division. “No one wakes up in the morning and thinks they want to be in insurance but it kind of creeps up on you. I got to know some interesting people and factually interesting situations, as well. It’s a really interesting and diverse area.” Cameron took a leave of absence from the firm for a year and went to work at the Australian regulator, ASIC. She was then asked to interview for a relatively junior legal job at AIA. “I thought I’d done the law firm and the Government, I might as well do an actual insurance company. I thought I’d go back to the firm and end up going down the partnership route if that worked out.” But she soon found she loved working at AIA. “It was a really lovely company, it was the first time I was in a really great team environment and I wasn’t billing anyone by six minutes, I could actually talk to people. It suited my personality, I think, to be part of a team.” She became the general counsel aged 30, then at 35 was asked to take on the chief operating officer role, before a restructure of the business put her in charge of AIA’s group business in Australia. “I thought I was going to be a lawyer my whole life so it was a bit of a leap of faith … I went into operations and it ended up being just one of the best jobs I’ve ever had, it was so heavily peoplefocused. Making minor adjustments to the way people focused their efforts could make a big difference to the outcome.”

We’ve got a big opportunity in probably being less of a follower and more of a leader in our products. TRUE BELIEVER For the first time, Cameron came face-to-face with claimants. “We did quite a bit of work at the time on finding what the end customer wanted and trying to tailor our service around that. I became a bit of a true believer and, suddenly, realised what it was we were there for. After all those years advising on technicalities I realised we were playing an important role in people’s lives and had an even greater passion for it.” While running the group business, Cameron also met advisers. “That was distribution for the first time,” she says. “I got to spend time with them and they’re just really great people, often working in insurance because they believe in it not just because they’re making money.” Then the phone call came in early April to tell her there was an opportunity across the Ditch. “They said ‘there’s a job going’. There were a number of changes at the time. Wayne had done five years here and did an excellent job and we all knew he’d be asked to do a bigger role.” Cameron thinks the similarities between the Australian and New Zealand markets might have worked in her favour. She had got to know former Telecom chief executive Theresa Gattung through the AIA board in Australia. “She talked quite a bit about New Zealand.” NZ WELCOMING She also already knew many of the New Zealand AIA leadership team and had worked with them on projects. “These guys were colleagues already so it was really exciting. I had to rock up here and be a CEO for the first time. I arrived here thinking ‘is everyone going to make fun of my Australian accent’ but they’ve been extraordinarily welcoming.” Cameron is aware that regulatory change may be on the horizon but can see a number of opportunities for the company to tackle. “It’s not been a long time so far but we have started our strategy planning cycle,” she says. “We’ve been growing well and I think Wayne did an incredible job of diversifying into other channels. What we need is to be more creative and gather some scale in some of those channels. Every now and then someone will say, ‘Look the IFA market is not growing’, or health, or group. It’s not got the growth you’d expect but there are lots of opportunities, I think.” The company’s Financial Services Network channel is one. Staff advisers target migrants from China who already have good awareness

of the AIA brand. “We’ve got a big opportunity in probably being less of a follower and more of a leader in our products. I think it’s been growing steadily but there’s potential for a quantum shift. To do that we need to make sure we have the service right and have the best product and make sure we refresh our practices and our assumptions. There’s certainly room for growth. Our market share is still not dominant in any of the spaces so there’s potential there.” FINANCIAL EDUCATION Cameron would also like to see an industrywide focus on improving financial literacy and education among consumers. “I’d love to see renewal of the adviser force and renewal of significant growth in people taking up insurance across the board. I think there’s a lot of focus at the moment on potential regulatory reform and there isn’t a great deal of regulation that facilitates financial services, not a lot in the way of tax incentives. “I come from a market where if you get your insurance through superannuation in the group space it’s really tax effective; where if you buy health insurance there’s Government drives to incentivise people to do that. When I bought health insurance in my 20s it was because it was cheaper to buy health insurance than to pay the penalty the Government put on me if I didn’t have it.” But she said Australia should not necessarily be seen as the standard to look at. Some regulation – such as disclosure requirements – seemed heavy handed and New Zealand could take lessons in what not to do, too. “I think New Zealand avoids making the mistakes Australia does in regulation terms.” Cameron says the IFA market will continue to be a big focus for AIA. “It’s a really huge part of our business in Australia and it is our bread and butter here as well. I think if we do the right things by our customers, whether they are advisers or the end policy-holder, we’ll be able to grow.” CLOSE TO HOME Although she has a number of goals for the business while she is here, the move is paying personal dividends, as well. Sometimes, Cameron can see her kids playing on the beach from her desk. “I’m seeing my family way more now than I was in Australia. It feels like quite a luxury to get to work so close to home.” Now all she needs is a chance to catch her breath and settle her feet under the desk. “It was a fast turnaround,” Cameron says. “So fast that I almost left the cat. But it was a soft landing. I was intensely driving in a certain direction with my career and my work and suddenly to find myself here in this environment with a completely different role, really, it was like a sea change for me. “But my family are happy and I get to spend more time with them and I’ve got this amazing new opportunity and a company full of people who are quite spirited and dynamic and full of great ideas and see the potential for the company into the future.”

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{ INVESTMENT }

IS RISK JUST A

NUMBER?

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LEAD STORY

ow do you start talking to your clients about investment risk? Do you point to a risk indicator number between one and seven in a product disclosure statement, use historical charts showing the pattern of a particular investment class returns over previous decades, or use “what if?” scenarios to try to shed light on what might happen? Explaining risk to clients, and how they can use the right level of it to get the best returns possible for their investments, can be a minefield for advisers. Under the Code of Conduct, advisers are duty-bound to ensure their clients receive “suitable” advice for their circumstances and take risks that are appropriate for them. But many clients have unrealistic expectations of the returns they can get, are unreasonably optimistic about the outlook for their investments and need better returns than low-risk investments can give them. Many turn out to be not as willing to handle a downturn as they claimed to be, when they are actually faced with one. The Financial Markets Authority said in its recent Investor Capability Strategy that research shows New Zealanders do not have a good understanding of such basic investment concepts as risk versus return. At the same time, investors are searching

for higher yields without understanding the potential risks involved. As part of the moves to tackle this, the Financial Markets Conduct Act has introduced a risk indicator component in the standardised product disclosure documents required of managed funds. It runs from one to seven and measures the volatility of a fund’s unit price over the past five years. Fund managers have to recalculate this indicator on an ongoing basis. Moves are also being made to require such providers as KiwiSaver funds to report information about their products in standardised ways so that investors can make comparisons. But would a new investor looking at a risk indicator or details of a KiwiSaver fund understand what is being communicated, or how encountering such volatility with their own money might feel? Adviser Simon Hassan is not sure. He said his impression of the risk indicator was that it was “a bit foreign” and used language that would not come naturally in his conversations with clients. “It seems to aim to terrify people about high-risk investments and I suppose there is some sense in that because people have optimistic biases and tend to think things will go better than they do.” He said he would try to assess a client’s risk profile by reading his/her style and tolerance for risk in general terms. Then, he would refer

them to a chart showing the long-term returns of various asset classes. “I’ll show them that shares are terribly uncertain in the short-term but if you are invested for 15 years or longer there is a good chance that you will do better than in other things,” Hassan says. “If you want to avoid risk that’s a great idea in the short term, but in the long term you could lag well behind inflation. I use descriptions like, ‘you can expect a loss one year in three in a riskier investment, if that’s frightening to you then you probably shouldn’t go there because you’ll be tempted to come out at the wrong time’.” He said it was important for advisers to make sure that they were speaking their clients’ language and not describing the risk of a product with terminology or jargon they would not understand. Richard James, chief executive of NZ Funds, said the FMA’s intention to educate investments on the fundamentals and quantify and standardise the data available to them to enable them to make comparisons was appealing at first glance. But he said more consideration was needed. The concepts of risk, return and diversification were highly complex and nuanced, he said. “While some risks are quite intuitive, other risks can be quite counter-intuitive,” James says. “For example, the concept of an asset becoming more risky as its price appreciates and vice versa. Contrary to what academia might espouse, risk is not a number and, in my view, we should not try and turn it into one. Or at least not one that is to be used as a foundation in investor decision-making. It needs to be phrased in concepts investors can understand. If you say 'this has a standard deviation of 14.3 so in a 1c deviation event it's going to... your eyes start to glaze over.” He said risk could only be turned into a number after the fact and that was of little relevance to investors. “Because asset price volatility tends to be episodic, ex-post risk measures can in fact be highly misleading.” James said the focus should be on trying to help investors mitigate risk, not quantify it. He said a risk indicator determined on the basis of a five-year period was likely to be problematic. Based on the last five years, most funds would show very little volatility at all. But if those same investments were given a rating based on 2005 to 2010, they would look to be very risky. But he said there were variables when it came to the investors themselves, too. “Encouraging and facilitating product comparability, whether it is on the basis of fees, past returns, risk measures or some other dimension has two primary shortcomings.

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First, investors don’t generally own one product and the risks of a portfolio are not the simple sum of the component parts – correlation being one of the highly complex concepts that investors cannot be expected to comprehend,” he said. “Second, comparability of performance is only really useful if risk is taken into account and that is very difficult to achieve in a manner that is readily comprehensible to investors – try explaining a Sharpe or Sortino ratio to a non-numeric person. Presented with return comparisons, investors will tend to focus on the highest or lowest near-term returns. It is a fact that investors are inclined to buy high and sell low, and, according to the many studies that behaviour costs investors several per cent per annum, a far greater impost than the fee burden. Facilitating and promoting quantitative product comparison exacerbates those negative behaviours and has the inverse effect of that intended – it diminishes the quality of decision-making.” He said it would be more relevant for risk to be assesed on a portfolio basis, rather than product by product. Adviser Stephen O’Connor said advisers should educate their clients about risk, as it was their job. “Unless they have had significant exposure to investment, they will have no concept of what risk is and generally have unrealistic expectations of returns,” O’Connor said. “It is a matter of sitting down and talking them through what risk is, and trying to get them around to the idea that risk is more about uncertainty of return, and not being able to meet objectives.” O’Connor assesses clients’ ability to assume risk, and their ability to do so. “They are completely different things. They can have a very high ability to take on risk but may be unwilling.” He said those who had a large amount of money behind them were most able to

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While some risks are quite intuitive, other risks can be quite counterintuitive. – Richard James

handle risk but, ironically, had to take the least because they were most likely to meet their objectives, anyway. Risk assessments were becoming more common practice as O’Connor had to reevaluate some of the projections made on clients’ portfolios. “We are having to talk about it at the moment, particularly where we have to sit down and recalibrate projections made in the past based on different market conditions. We have to reassess whether they are realistic now that returns are a bit lower.” That could mean considering whether clients could handle a bit more risk for better

return. “People are naturally averse to losing money,” O’Connor said. “The risk assessment gets them in the appropriate portfolio so they do not run for the hills if the market turns. Then we are there to keep them on track so they do not get caught by the risk of jumping ship.” The FMA and Commission for Financial Capability released research that showed only a quarter of those who responded to the survey had completed a risk profile questionnaire. Most had their money in term deposits and savings accounts. FMA director of primary markets and investor resources Simone Robbers said: “What we want to do is encourage people to understand their tolerance for risk.” She said there was an opportunity to encourage people to think about spreading risk, especially if they needed to make their money last through retirement. Commission for Financial Capability group manager of investor education David Boyle said: “The challenge is that people get to retirement and think that’s it, the money had to be protected entirely. In a low interest rate environment the fear I have is that if you don’t take some level of risk given the length of time you might be retired, the money won’t last as long as they do in a way that will manage their lifestyle.” Advisers have set obligations to consider client risk profiles and capability. The Code of Conduct, which outlines the obligations of the country’s authorised financial advisers, spells out that they must take into account a client’s risk profile. Code standard eight, which covers the suitability of advice, says an adviser must make reasonable inquiries to ensure they have an up-to-date understanding of the client’s financial situation, needs, goals and tolerance for risk. This will usually mean a written report on the client’s risk profile and ability to handle risk, and a clear explanation to the client of the risks that particular products might carry.

LEAD STORY

That has led many advisers to stick closely to age-linked risk profiles, fearing being accused of placing their clients in inappropriate investments if they opt for riskier products. But the FMA said it would not penalise advisers for putting clients in risky products, but they would need to be able to show why that product was appropriate for the client, and that the risks had been communicated. Many advisers use a questionnaire to take clients through the process of determining their risk profile. Risk profiling specialists Finametrica produce a 25-question psychometric test, which produces a score between zero and 100. Co-founder Paul Resnik said most people had a good idea of their own capacity for risk. Scores generally distribute across a bell curve. Resnik said such tools were useful because they helped advisers overcome their own biases. “If it’s an articulate, urbane male they are more likely to assume him to be more risk tolerant compared to a mousy-looking female,” Resnik said. “Advisers can be over-confident.” Once a risk profile was determined, he said advisers should then link that back to the sort of portfolio to which it would translate, and the returns that would create. “Is it going to earn enough so there’s enough money in the bank? Can you cope with the volatility it delivers? If you are 90% in equities, that is going to drop by 50% every 10 years; can you live with that? The collaborative nature of this is your protection.” Boyle said most advisers would have a clear

understanding of risk and how it would work for their clients. “The challenge is that for a lot of mums and dads and investors, to try and describe risk is quite challenging because it is relative to the requirements, length of time and the circumstances of the individual.” He said, when he was working in investments, he would use a system of “now risk” and “later risk”. “When you look at cash and fixed interest, there’s very little now risk – when you put your money into cash and term deposits you put it in for a year or six months or whatever, you take it back out it’s pretty much worth what it was worth before. You got a little bit of return on it; you can pretty much buy the same goods because inflation hasn’t eaten it away. But if you leave it there for 20 years, it has a lot of later risk. Not volatility but to the buying power of the money,” he said. He said advisers would have the job of managing clients’ behaviour as well as the portfolio risk. “[In a downturn] advisers have to work even harder to convince them that if they take the money out today they are not just realising the loss today but also affecting the long-term recovery from that loss. I think there is still quite a lot of work to be done. You can get people to complete risk questionnaires and that’s all good but when the negative returns start to happen, people will say I don’t like that at all and get out at the bottom and invest in conservative funds, limiting their ability to recover.”

Communicating and demonstrating risk should be advisers’ third advice priority, behind assessing their clients’ circumstances and objectives, Boyle said. “What risk means, how it works, so that when it happens they have it in their notes, in their reports, so they can remind them they talked about this day and here it is. And if markets have gone down, it is not a bad time to put more money in because it is cheaper.” Ben Brinkerhoff, of Consilium, said there was still more work advisers should do when it came to explaining risk to their clients. “They have been trained that risk equals volatility,” Brinkerhoff said. He said they would need to work out three things: the client’s risk tolerance, risk capacity and their required return from their investments. “Advisers are so enslaved to risk tolerance. A highly volatile portfolio is risky but it’s more likely to grow their purchasing power. I’m not arguing we should all be in volatile portfolios but once they understand what the required return is they can have an intelligent conversation on whether they should be taking more risk or not. The other risk is not achieving goals or not having the money when they want to spend it. If you’re investing for 30 years there is not a lot of risk in volatility.” Brinkerhoff said if doing a risk profile questionnaire was a key part of an adviser’s value proposition they would be replaced by roboadvisers quickly. “If they are a behavioural counsellors helping investors achieve their goal and getting people to act appropriately, that’s a job that can’t be outsourced.”

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{ COMMISSION }

INSURANCE REFORMS COSMETIC OR PRACTICAL?

Will New Zealand cope with proposed financial advice sector controls? And are comments alarmist? Dr Michael Naylor discusses how pending reform can be handled. does not decrease adviser income. It needs to be noted that the general insurance sector has had lower upfront commissions and higher trail commissions for decades, with no adverse impact on the number of industry participants. Pre-reform, Australian and UK levels of upfront commission were far lower than current New Zealand levels for personal risk insurance.

{ DR MICHAEL NAYLOR }

ome controls on the maximum levels of commissions in the financial advice sector are likely, a current review by the Ministry of Business Innovation and Employment (MBIE) indicates. These controls have recently been imposed in the UK, Australia and Singapore. Some sectors of the New Zealand insurance adviser industry have made alarmist comments about the impact of commission controls on adviser profits and consequently the number of industry participants. Given that New Zealand is heavily underinsured in the area of personal risk, it is vital that any reform of insurance commissions

COMMISSION STRUCTURE In theory, a decrease in upfront commission and an increase in trail commission can be structured so that business income is unaffected. Assessing the impact of a change in commission structure on the profits, the cash-flow and the value of an insurance business can, however, be complex. As a guide for industry I have created a spreadsheet which will allow users to adjust the key variables and assess the impact on their business of differing commission structures. Key variables to be considered are: ▶ The level of upfront. ▶ Level of trail. ▶ Number of years trail is paid. ▶ Rate of policy lapse. ▶ Amount of fees paid. ▶ Cost of setting up a policy. ▶ Cost of maintaining a policy on the books, including client reviews. ▶ Discount rate applied to income derived in future years. ▶ Number of policies sold per year. ▶ Multiple used to value a business from

trail commission or profit. The example provided in this article shows that for an 8% per year lapse rate, a four-year trail, and a 4% discount rate, then 220% upfront plus 6% trail, gives the same annual profit as 100% upfront, 40% trail and a $165 annual fee. This shows that a reformed commission structure could have little impact on sector profitability Two things stand out. Firstly, when we include a business valuation based on a trail multiple, the low upfront/high trail model has a consistently higher valuation, whether based on trail commission or profit. A realistic valuation, however, will also depend on book quality and factors such as goodwill, brand, liabilities, work in progress and earn-outs. It can be argued that a higher trail model provides more of an incentive for an adviser to retain existing clients and improve the book’s quality. This will increase policy maintenance costs, but should decrease the lapse rate and allow an annual fee to be charged. This improved book quality will allow sale at a higher multiple and will increase the valuation gap between the two commission structures. The table uses an optimistic multiple of 3, whereas it is common for an undeveloped book to struggle to obtain a multiple of 2. NEW ENTRANTS Secondly, a move to a lower upfront and a higher trail has a substantial impact on income

PRACTICE MANAGEMENT Average policy size

$200,000

Average annual premium per policy

$2,000

Number of policies sold per year

Lapse rate per year

Discount rate

4 Overall income Structure 1

Structure 2

Upfront commission

220%

100%

Trail commission

40%

Years trail

Fee per policy per year

$150

Per policy set-up cost

$1,200

Per policy maintenace cost p/a

$30

$100

Valuation multiple

Policy value

$9,000,000

Upfront commission per policy

$4,400

$2,000

Trail commission policy year two

$120

$800

Total trail commission per policy

$434

$2,893

Total upfront commission all policies

$198,000

$90,000

Average income per policy

$4,834

$5,043

Average profit per policy

$3,623

$3,806

Total profit all policies

$152,526

$155,019

Business value based on trail

$47,962

$426,332

Business value based on profit

$457,578

$620,075

earned by new entrants, as trail takes time to accumulate. The tables below show that, even if the higher trail model ends up providing a higher profit in the long run, it can be up to seven years before a new entrant pulls ahead of the high upfront model, and the initial year differences are substantial. The tables show upfront, trail and fees income by year of policy origin. Some later figures

for high upfront are negative because policy maintenance costs exceed trail plus annual fee. The same variables are used as in the first table. This shows that serious consideration is required around the transition period to a reformed commission structure and a pathway created for new entrants. This may involve borrowing from future commission to fund the initial entry. The spreadsheet is available as a downloadable

template, allowing advisers to play around with the variables and analyse the impact of possible changes to the commission structure on their business. This should enable industry participants to give feedback to MBIE on what changes are possible to commission structure without advisers affected by any decrease in profitability. Michael Naylor is a senior lecturer in Massey University's school of economics and finance.

Dr Michael Naylor is a senior lecturer in finance and insurance at Massey University

Newpark Group - Expert Advice without the Price 019

INSURANCE

{ UNDERWRITING }

WHICH INSURERS ARE GETTING BUSINESS ON THE BOOKS? The big differences in underwriting performance by insurers

{ RUSSELL HUTCHINSON }

ome insurers are wasting a third of the applications they could have brought into force. That great waste – of client time, adviser time, and money all around – is often hidden by complex processes and rationalisations but the simple fact is that some insurers are much worse at getting business on the books than others. Although many share reinsurers, and you would expect insurers to even out over time, the differences can be startling. I was startled. An adviser I know shared a long time series

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of underwriting performance between the five insurers he uses most frequently. With data going back a couple of years, covering a substantial number of cases (enough to make odd clusters of bad luck disappear – but I cannot tell you more to protect their privacy) I found it hard to argue with his conclusions. The first conclusion is this: when I talk to him about product, price, and service he says, “Forget it … the first thing I talk about to clients is which insurer will even let you have cover”. He calls his spreadsheet the list of who is “best at issuing cover”. It was awful and surprising at the same time. INSURER’S DEFINITION First consider his description. He said “best at issuing cover” – his phrase, not mine, but I think we should pause for a moment. Not “best at underwriting” because that’s an insurer’s definition of the process – and he deals with customers. He also doesn’t say “most generous” because he isn’t counting that. He’ll fight as hard as anyone I know to get a client to accept a loading – he really wants them covered – and whether the cover is loaded, he counts that as “issued” in his numbers. He also ignores all the business which is in underwriting waiting to be issued. So his ratios are strictly based on issued versus

deferred, declined, or withdrawn. To highlight the difference between the insurers, we’ll talk about the issued rate for the worst company as a percentage of the best. For every 100 policies issued by one company, the worst only manages to issue 62. Yes, the cases were similar; no, there wasn’t any other apparent reason for a long-run variation in what was submitted. Consider the length of that wretched application form and how soul-destroying it is to know if you are filling one in for that company where the chances are so much lower. A one in three chance that it is wasted effort. Those are dreadful odds. “We try to talk clients out of choosing them.” I asked him whether that’s good financial advice. He swore, and then told me that it was simply good advice – financial or otherwise. “How much of your life do you want to spend filling in forms?” Are you sure? I asked him. He’s sure. The gap in the numbers was too big and too persistent for comfort. Also, out of five underwriters, there weren’t three that were similar and one laggard: they were scattered out between the best and the worst. FINANCIAL DRAG The impact on clients and the business is a

INSURANCE

To be fair to insurers and the underwriters I know and have worked with over the years, I want to state clearly that I know the underwriting process is difficult. heavy financial drag when the companies at the bottom half of the range are chosen. Clients who complete one form with one company are often hard to convince to complete another if the original application drifts into limbo, or a series of requests for additional information. Each client lost through this process is probably gone from the business. They are as likely to blame the adviser as they are the company. To the customer it is all one. For my part I know I am impatient and would probably take the same view. To be fair to insurers and the underwriters I know and have worked with over the years, I want to state clearly that I know the underwriting process is difficult. Between reluctant doctors, incomplete answers, incomplete requirements, product profit challenges, claims experience, and some unhelpful and unrealistic advisers there are some very large obstacles to the quick and easy process we would all like to have. MEDICAL HISTORY Some of this is a product of some seemingly regional differences. Here in New Zealand (and Australia) we rarely ask for blood or other tests.

In North America the requirement for tests is set at a much lower threshold. That may reduce the need for the long forms which are a kind of lengthy memory test of medical history we force every client to go through. But the best insurer in this set had similar requirements to the worst. So the laggards must have some process issues which are unique to them. Plainly some combinations of computer systems, management skill, and underwriting staff operate better than others with the process as it exists. But maybe, rather than try to put lipstick on the pig, we should be trying to envision a completely new process. Although we like to pretend that it is very scientific the answers on the application form are only a proxy for the real state of the client’s health. Likewise the assessments of the underwriter are only a form of categorisation that is roughly right in aggregate, but at the level of each individual cannot be accurate for more than a minority of cases.

smoker, plus-50 non-smoker, and plus-50 smoker, and deferred. Could we not find a better way to assign clients to these buckets? A little more inaccuracy might be a fair trade for a process which could be completed in seconds or minutes rather than days and weeks. Life insurers have not been flattered by the change in the wider commercial world. When telephones took weeks to be connected life insurance forms were shorter – I remember when they were two sides of a page. But now our forms are longer and almost everything else in life can happen in less than a day. Our customers have to fill in complicated forms to get a home loan, their nearest point of comparison – and usually have an answer by the next business day. I asked my adviser friend what was worse than a life insurance application and he said, “A building consent”. Ouch.

FIVE CATEGORIES A very large majority of life insurance business falls into one of five main categories: non-smoker,

Russell Hutchinson is director of Chatswood Consulting and director of Quality Product Research.

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PAA NEWS

{ PAA }

If the advice is right, the price is right Advisers really come into their own when it comes time to claim. But how well do new clients understand that?

he value of advice as perceived by consumers is an ongoing topic for the insurance industry. A quality process that ensures the right questions are asked, the appropriate options are considered and an informed decision is made, of course, delivers considerable value. But it’s not always easy communicating that value with clients new to advice. Often value is perceived more clearly when related to a specific experience – and for insurance, often that something specific is claims. A recent white paper commissioned by AIA and produced by The Beddoes Institute showed that advice clients believe effective claims management is where insurers and advisers can add the most value. “Clients need to know that it will be easy for them to make a claim and be confident that the insurer will be helpful, will manage the claim empathetically, and will support them in recovery with rehabilitation if needed,” the report said. We spoke to a number of New Zealand advisers about their views on how well new clients understood the value of advisers at claims time and the role of effective claims management in driving value in the relationship. Overall, from the views we canvassed, new clients (unless they have had a negative claims experience in the past) aren’t focused on, and have little understanding of, the benefits of advice at claims time. An opportunity for advice? How can advisers focus new clients on the value of the adviser relationship at claim time – as experienced by existing clients – to grow the advice pie?

Katrina Church, Insurance People PAA, Insurance Adviser of the Year Does what happens at claim time come up in your discussions with potential clients?

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While we often achieve great claims results as an industry, I think one area for focused improvement is in how we communicate the process and issues toclients at claims time.

Before a claim happens, clients often don’t have a great deal of understanding about the value we can add. We don’t shout from the rooftops often enough about the difference we make at claim time – and if we’re not doing this, then how can we expect our clients to know the difference? Countless examples exist of advisers making a huge difference at claims time. We can achieve a lot and regularly do. In our business we recently achieved more cover for a client when she was terminally ill, and in another case facilitated a meeting between insurer and client in which we identified a single piece of information the insurer did not have (which made all the difference), and got the claim paid. In my opinion, the skill and knowledge advisers bring to the claims management process is often where we add the greatest value. What do you believe clients expect from their adviser at claim time? Communication. If we step the client through the process with close communication, it alleviates stress and confusion. While we often achieve great claims results as an industry, I think one area for focused improvement is in how we communicate the process and issues to clients at claims time. If a client understands that our role is to be their advocate and to work alongside them, they will often feel safer; will trust the process which helps to get claims over the line. Explaining what a client can expect or what they are entitled to makes a huge difference.

John Schell, SurePlan

{ JOHN SCHNELL }

Does what happens at claim time come up in your discussions with potential clients? Clients are often focused on price and top-level issues like, “we want to make sure we are okay if our spouse dies”, so often the clients' focus needs to be broadened so that they can gain an

PAA NEWS

understanding of what risks they face; how to cover them efficiently, and ultimately how things work when on that unfortunate occasion a policy is called into action. Many clients I speak to have not made a claim, and don't understand that a claim is a real possibility in the future. Talking through the process and the support that will be available helps them deal with some of the grisly realities that need to be discussed and understood. A claim isn't always the end of a life, but often the continuance of it and that transition can be tough. An adviser knows that they will be the person there for them if that day comes. It’s a big responsibility, and drives a strong relationship. What value does an adviser offer clients at claims time? In the last claim we had here at SurePlan Financial, David Buckleton from my team provided more than just insurance assistance: “I sat by the claimant’s bed as he dealt with the loss of a limb. While aiding him to fill out his forms, I helped keep his spirits up as we focused on some of the awesome prosthetics he had found on the internet”. This is just one example of how an adviser does so much more than just providing the right policy. It is about someone on your side taking care of your needs as a person. What kind of experience do you think clients should expect at claims time? The clients I’ve helped though claims are generally facing life-changing challenges. They are scared and often don’t know how to ask for help. Families can react naively, or fail to grasp the full scope of the struggle. An adviser has been there, seen it all, and can help clients with confidence. That calm and the focus on future positives while not shying from reality, helps the client see clearly and make good choices.

Onny Faleafa, Nest Insurance Does what happens at claim time come up in your discussions with potential clients? Some clients place a high importance on claims management; some just want the cheapest option and no advice. If people were educated on the benefits of having an adviser – better cover in place, suited to needs and better result at claim time I think many of those would likely change their mind, instead of trying to complete the process without speaking to an adviser first. Thinking specifically about claim time, what value does an adviser offer? The advice given at the front end will be tested in the event of a claim, so the absolute first

thing of course is good advice upfront, making sure that cover is suitable for the client and supplying information to the clients to avoid non-disclosure. Then at claim time it should be a smooth process that the adviser assists with to make the client experience seamless. The insurers that I have had claims with have all been fantastic and have been a key partner in the process. What do you believe clients expect from their adviser at claim time? I set the expectation that I will be there to help and assist my clients at claim time; some don’t expect it but I make it clear that that is an important part of my job. In my experience with major claims, clients like having someone that they are familiar and friendly with to ask questions and manage the process. My clients are always very thankful of the work that I do around claims, and for me it is so rewarding.

Reagan Bax, Apex Consulting Does what happens at claim time come up in your discussions with potential clients? I would say they don’t consider it at all and are usually more focused on price. I am sure each adviser explains that they help at claim time, but it’s not really until claim time that the client really sees just how much an adviser can help them. What do you believe clients expect from their adviser at claim time? Clients often don’t know what to expect at claim time but they probably think it’s easier than it can be with some income protection claims and trauma claims. An adviser can really help here with support and explanation of what if going on, as well as speeding up a claim and making sure it goes through. A good result at claim time can help spread word of mouth about how helpful the adviser was. As a guide for industry I have created a spreadsheet which will allow users to adjust the key variables and assess the impact on their business of differing commission structures. • What are your views? If existing advice clients view claims management as the area in which advisers add the most value, how can this be translated to the new client experience? What are you doing in your business to bring the value of advice at claims time to life for those who have yet to experience its value? We’d be interested in your thoughts.

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{ RELATIONSHIP BUILDING }

PROVIDING SUSTAINABLE LONG-TERM ADVICE CRITICAL A closer client-adviser relationship is helping to add advice delivery value and removing a perception that fees are too high. By Renato Mota

recent study commissioned by IOOF found that greater activity by financial advisers does not necessarily translate into a greater perception of value from clients. In recent times, the search to provide value to clients has become a priority, with those advice businesses engaged in ongoing advice relationships continually challenging their client value propositions and method of advice delivery. Mainstream media coverage of financial services issues has created a perception that ongoing fees from financial advice are generally too high. In fact, 82% of advisers feel their ongoing fees are either currently under pressure or are expected to be under pressure within the next three years – a view confirmed by research from the Financial Services Council. Unfortunately, this has been at the expense of the value of financial advice, which is often overlooked as people underestimate the complexities involved. In order to demonstrate value add, increasingly more advisers choose to focus on increasing the number of client contact points, enhancing client access to business websites, offering additional products or services and spending more time on the investment management function. However, greater activity does not necessarily translate into a greater perception of value. So how do clients define a successful ongoing financial planning experience? IOOF, together with training consulting and mentoring business Effortless Engagement, recently surveyed 192 advisers across 58 practices and over 312 ongoing fee-paying financial planning clients

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across a range of demographics and regions, to determine the answer. The research concluded that the clients’ expectations had not changed despite industry efforts to enhance client value propositions and illustrate the value of advice. The core measure of whether the ongoing financial planning experience is successful remains the achievement of lifestyle goals and objectives. Additionally, the research uncovered that while most advisers were comfortable with explaining the value from an initial meeting, it was harder to articulate the value the client received from an ongoing relationship. While this presents challenges for financial planners, we believe that this is very good news. This is because the opportunity to more closely align the client’s desired outcome and the ongoing proposition of advice businesses exists today and presents more opportunities for advisers than before.

RESEARCH FINDINGS ➤ 76% of clients agree that a successful ongoing financial planning experience is measured by their ability to achieve what’s most important to them – their core lifestyle goals and objectives. ➤ 60% of clients did not know or were unable to answer if they were on track to meet their defined goals. Almost half of all advisers surveyed (48%) said they did not know and/or lacked either the system or information to make a determination if their clients were on track to meet their own defined goals. ➤ Investor investment experience regardless of the way the investment portfolio was implemented returned a high level of satisfaction. This supports the current trend of advisers increasingly embracing investment solutions that allow them to outsource their investment management function to become more efficient – such as fund-based model portfolio solutions. These statistics should cause advisers to evaluate their own business practices. If the majority of clients and almost half of advisers are unable to determine whether a client has had a successful ongoing financial planning experience (or is on track to do so), then the probability of discontent amongst clients is likely to be high. Consider this. Clients who feel that they are on track: ➤ Are more than twice as likely to feel as though they are receiving value for money (89% versus 42 %). ➤ Six times less likely to consider seeking alternative advice within the next three years (5.3% versus 0.9%). ➤ Almost three times more likely to refer within the next 12 months

PRACTICE MANAGEMENT

METHOD OF INVESTMENT IMPLEMENTATION

LEVEL OF SATISFACTION

(7.2% versus 2.6%) compared with clients who were either unsure or felt they were not on track. With the core measure of success in the eyes of clients being the achievement of their lifestyle goals and objectives, clearly altering the perception of clients away from price, product and performance measures towards the activity consistent with their desired outcome is essential.

WEALTH ADVICE DELIVERY Traditionally, providing regular investment and superannuation advice has been at the heart of ongoing client/adviser relationships. It has often been a significant component of an advice business’ ongoing revenue and what the majority of clients felt that their ongoing fees were paying for. The philosophy and methodology used to provide and execute ongoing investment advice in the form of portfolio construction has continued to evolve within the advice community: In some part to deliver more robust and reliable outcomes, in other parts to continually provide a perception of value to the end client. Of clients surveyed, the method of investment portfolio implementation (for their core investment/superannuation wealth) varied. Clients were asked to consider their recent investment experience over the previous 12 – 24 months and rate their overall level of satisfaction, which is outlined in the graph above. Interestingly, regardless of the method of portfolio implementation, there was a relatively high level of satisfaction. In other words, it was not a concern to the investor whether the adviser recommended direct investments, a carefully constructed model portfolio, a multimanager/fund of funds or a combination of methods. The relatively strong and positive level of satisfaction amongst clients may be attributable to the quality of advice provided. It is also important to note, however, that satisfaction levels may be high because of the positive returns produced by investment markets during the period leading into the research period. These satisfaction levels appear to suggest that this area of ongoing advice is well received by clients. It is, of course, what clients essentially feel they are paying for with their ongoing fees as detailed earlier. With the core measure of success for clients being their ability to achieve their goals and objectives, clients were asked if they understood (or knew) the investment return required to meet their financial planning objectives. Almost two thirds of respondents suggested they either didn’t know or weren’t sure. On that basis, how are clients and their advisers measuring a successful investment experience? If ongoing investment advice is not centred around specific investment objectives consistent with the client’s planning needs, then the measurement of success is likely to be built around traditional performance measures, including performance against investment indices, markets and/or performance versus peers. This will continue to place pressure on advice fees. Rather than undertaking time-consuming portfolio implementation and complicated investment approaches, ensuring clients understand their core investment objective and then linking the investment solution towards the achievement of the desired outcome will assist in focusing the mind of clients (and advisers) on what is most important. The measure of success then rests not only with investment performance, but with the achievement of the client’s desired outcome.

PREMIUM ONGOING OFFER In accordance with the research and methodology, we believe that the premium ongoing advice offer of the future will be a value driven model and therefore be dependent on a coaching relationship linked to a desired end outcome. A premium ongoing advice offer may include specialisation within specific market segments, continual coaching towards the client’s desired objective and will have advisers positioned as coaches rather than technicians. We also believe that businesses will evolve to embrace an objective method of assessing whether clients are progressing towards their desired objectives. Systems will be designed to provide both clients and advisers with continual access to information, enabling the evaluation of critical advice areas, including the client’s cash flow strategy, wealth strategy and contingency strategy. This will enable the provision of quality advice that meets the needs of the client and is linked to a desired outcome. Ongoing evaluation of the client’s progress against that original objective and using an effective and efficient method of portfolio implementation and execution are crucial to building a sustainable financial planning practice. Renato Mota is general manager of distribution at IOOF.

Renato Mota is a wealth management specialist with IOOF in Australia.

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MARKETING

{ GROWING A BUSINESS }

Kiwis buy services

differently now Word of mouth marketing is still effective in New Zealand, but 81% of Kiwis are using digital services which have overtaken mainstream media, writes Tony Vidler.

dvisers who do not have a mobile communication strategy are ignoring a change in consumer behaviour that will have substantial long-term repercussions, Association of Financial Advisers CEO Brad Fox has warned. Fox is partly right. Given he was introducing a newly released whitepaper called Connected Convenience which focussed on only one aspect of digital marketing, his comment is understandable. The digital marketing landscape is immense and the focus of this whitepaper is to understand buyer behaviour in particular. The changes in buyer behaviour in recent years are, however, far more profound than the shift from desktops to tablets, and

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research revealing that everyone under the age of 30 owns a smartphone. Hello? Who didn’t know that? To be fair I didn’t realise that only 68% of Australians my age owned a smartphone – I thought the number would be much higher. Nevertheless, I feel comfortable asserting that the overwhelming majority of the target market customers here in New Zealand for the overwhelming majority of financial advisers in this country have smartphones and tablets, or both. RAPID ADOPTION Kiwis have always been rapid technology adopters, and the rapid adoption of smartphones and tablets is proving to be no different. With a population of around

4.5 million in New Zealand we manage to have over five million mobile phones in total and approximately 64% of the working age population have a smartphone. Within three years predictions are that over 90% New Zealanders will have a smartphone. So Fox is right. A mobile communication strategy matters for anyone in business. In the financial advice business in particular we need a clear plan at the very least for: ▶ Using SMS in our client communications. ▶ Capturing and recording SMS messages in CRMs. ▶ Capturing key information from mobile phone conversations. ▶ Having a multi-screen website strategy (mobile/tablet/PC). ▶ Monitoring internet mentions of our brand. ▶ Client access to secure sites or apps. ▶ Managing privacy, identity and cyber-threat issues. ▶ Distributing content and general consumer engagement. An adviser could choose not to have SMS conversations with clients. That would be a plan. It certainly wouldn’t be a client-centric plan if that happens to be a medium which clients opt to use; however, it is a plan. A digital marketing strategy is, however, far broader than just considering mobile use; the more one considers digital use, the more complex the landscape becomes. Here is one professional agency’s effort at explaining the scope of possible digital marketing: Ref: Gartner Digital Marketing Transit Map https://www.gartner.com/technology/ research/digital-marketing/transit-map.jsp If, like most advisers, you are already time poor in running a small business, this definitely becomes overwhelming. The first step in making sense of the digital landscape is to make decisions about what you are trying to achieve. Only then can you realistically determine where your limited time, effort and money are best allocated to get a return for your business. A relatively simple list of objectives for example might be: ▶ Manage the customer relationships with speed while capturing the interaction for compliance purposes. ▶ Interact with customers in the mediums or forums they prefer. ▶ Be prominent in search results for my target market customers and their primary needs. ▶ Create business efficiency and leverage by adopting low cost/ customer content distribution tactics and service functions. In plain English that might sound like: “I want to get to as many people as possible, for the lowest cost possible per time, and make them feel like they are getting really quick attention in the way they want to communicate. I want ideal customers to find me and think. ‘You’re awesome – I’ll choose you’… and I need to

MARKETING

be able to keep a track of it all electronically in case someone complains later”. DIGITAL REALM From there it becomes a lot easier to work out which particular tactics in the digital realm are able to help you achieve the primary objectives. Using the above example, it would suggest that the adviser focus upon having: ▶ A robust CRM system which supports the ability to upload a wide variety of digital files. ▶ A branded email marketing platform, working with the CRM system. ▶ Strong focus upon target market customers, and understanding their digital channel use and preferences. ▶ Selected social media channels that are preferred by target market customers for content consumption and interaction; and/or; ▶ Mobile communication strategy. ▶ Search engine optimisation: good selection and use of keywords and phrases across the entire digital presence. All of this thinking and strategising, however, will only be effective in achieving the desired outcomes if we have a good understanding of the changes in consumer buying behaviour that actually matter though. In research conducted in 2013 it was found that 94% of New Zealand users look for products and product solutions online, and 68% in total do so from mobile devices. The stuff that really matters to us though is: ▶ 81% use digital information sources now. It

has completely overtaken mainstream media. ▶ 86% of New Zealanders go online to find specific information. ▶ 66% will source specific information via a social media site. Yet, despite this prevalence to go online and look for oneself, Kiwis place higher trust in what their friends and colleagues recommend. In fact, Kiwis trust their friends and peers more than most other countries in the world, except for people in Manukau for some reason. It is a bit of an oddity, but the reported levels of trust among Kiwis were highest in Wellington and lowest in Manukau. Go figure. BUYING BEHAVIOUR Piecing together the different research, it highlights just how much New Zealand consumers’ buying behaviour has changed in the last five years. The typical consumer purchasing financial advice now is far more likely to: ▶ Ask their friends and colleagues who they recommend. ▶ Shortlist their friends and colleagues' suggestions. ▶ Google the suggested names … from their mobile. ▶ Eliminate several contenders because they don’t “look right”. (This is where the completed Linkedin profile, good SEO, a content rich website and so on, all begin to earn their keep). At this point they are likely to be about 75% of the way to deciding who they

should talk to. Then they will initiate a low level general inquiry via email or your website contact form … and it will be relatively innocuous (such as a request for information; subscribe to a newsletter; etc). They will form a view on the business on the basis of how helpful and prompt it is. If they don’t like it, they will disengage and start again with a new name. SERVICE FUNCTIONS How we position ourselves online, and how well we interact with the innocuous requests from strangers, together with how we handle the daily customer service functions with existing clients are more important than ever before. They all blend together to determine whether that ideal new client will in fact choose us, because that prospect is more than 75% along the buying journey before we even know of their existence. The changes in consumer behaviour extend well beyond their adoption of mobile. The marketing ecosystem is complex, and mobile is only one part. It matters, but not anywhere near as much as what people say about you when asked by other people. Word-of-mouth marketing matters most in New Zealand, but mobile connects to the internet to verify that the friends’ recommendation was worth following up. There is no doubt, though, that how Kiwi consumers buy services has fundamentally changed. Tony Vidler is the expert in professional services on creating strong personal branding and target marketing positioning. www.financialadvisercoach.com

027

INVESTMENT

{

}

Building and growing an income portfolio There is opportunity to expand income portfolios beyond fixed interest, writes Simon Pannett.

{ SIMON PANNETT }

lients seek financial advisers’ expertise with various objectives in mind. Many seek the financial confidence of a plan which charts how their assets can fund their income needs. Retirees with KiwiSaver balances and an aging population are likely to expand this cohort. We believe high quality dividend stocks can play a valuable role in a delivering income. They can enhance current yield, provide inflation-combating growth in future income and bring diversification benefits to a wider income portfolio. Before elaborating on these assertions, let’s challenge the premise of using incomeproducing assets to fund spending needs. Investors with regular income requirements could simply sell units in funds, bond or shares to create their own “income”. On the surface, investors should be indifferent over the composition of their

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returns, whether through capital gains or coupons and dividends. The lower volatility of high quality incomegenerating assets compared with growth equities, however, provides a key attraction. They generally have more stable capital values because investors have a more certain anchor for valuation than provided by growth equities which can have a less clear path for earnings. Further, capital gains can be considerably less predictable, and more volatile, than the income component of investments. A strategy of harvesting actual income, rather than relying on capital gains, may reduce the chance of an investor selling units following a capital loss and thus crystallising paper losses which potentially sets them

on a permanently lower wealth and income trajectory. Further, clients simply have more comfort spending the tactile component of their return and are less likely to fall foul of behavioural finance pitfalls. In short, we do agree with using income assets for income needs. So, it would seem, does industry naming conventions. Gone are the days when an ‘income fund’ was simply the more conservative sister of a ‘balanced fund’. So, what are the virtues of high quality income producing equities? Yield: In New Zealand it is often possible to construct a diversified portfolio of high quality equities with a dividend yield that is higher than those available on corporate bonds. Using the set of significant but stable dividend yielding equities selected by the

Dollar Value of Dividends on Initial $100 Investment (Figure 1)

Source: Harbour, Bloomberg. Prior to the inception of the Harbour Australasian Equity Income Fund, returns have been simulated using the Fund’s quantitative screen.

INVESTMENT

High quality dividend paying equities play a valuable role in an income solution Harbour Australasian Equity Income Fundâ€™s screening process, this was the case for 60% of the time in the last decade and over 90% since the GFC. This analysis was performed on a net yield basis with retirees in mind. The numbers are even higher for those who receive benefits of imputation credits. Growth in yield: A high yield is attractive for clients wishing to maximise their current income. Other clients, and perpetual trusts, may wish to grow their income with inflation over time. This is impossible for buy-and-hold corporate bond investors who do not reinvest part of their coupon. Dividends, on the other hand, tend to grow with company profits, allowing investors to harvest a growing dollar value.Figure 1 compares the dollar value of a dividend stream from an initial $100 investment in the Harbour Australasian Equity Income Fund (as a representation of high quality income producing assets) to the equivalent income stream from the ANZ Investment Grade Bond Index. Low correlations with corporate bonds: While the returns from bonds and dividendpaying equities are influenced by changes in

Volatility of Yield Buckets (Figure 2)

Source: Harbour, Bloomberg. Yield buckets created monthly and volatility measure monthly from Jan 2000 â€“ Jun 2013.

interest rates to varying degrees, they are also impacted differently by a multitude of such other factors as a regulatory change that makes a business more stable but less profitable. This differing return pattern confers diversification benefits when combined that are likely to result in an enhanced risk-adjusted return profile. Diversification benefits can be eroded by reaching for speculative grade fixed interest securities. Reset securities, for example, have proven to be more correlated with equities than bonds in times of stress. Conversely, be wary also of highest yielding equities. Indeed, these could be the companies with an arbitrary dividend payout policy in excess of free cash flow. Our analysis shows these securities can experience high volatility, especially if they are forced

to subsequently cut dividends. ETFs that mechanistically select the highest trailing yield are susceptible to this volatility. In making a case for high quality dividend paying equities, we do not seek to discredit the role of corporate bonds. Far from it. Indeed, income equities, and other income yielding assets owe their role in a broader income portfolio because of the relatively short duration and generally high credit quality of New Zealand corporate bonds that have historically provided the asset class with a very low volatility. Simon Pannett CFA is an investment analyst with Harbour Asset Management www.harbourasset.co.nz/disclaimer Harbourâ€™s research is available on their website, see: www.harbourasset.co.nz

029

KIWISAVER

{ WORKPLACE SAVING }

PIECES STARTING TO FIT FOR JIGSAW Husband-and-wife team Sharon Giblett and Barry Brown combine their human resources and financial services skills to offer a one-stop shop for businesses, helping both employees and employers. By Helen Twose

hen Sharon Giblett won her first job in the KiwiSaver industry she wasn’t even in the job market. “I was actually looking for a job for my sister,” the Wellington-based financial adviser says. She was scrolling through the job listings when she hit upon a role advertised by ASB seeking someone interested in educating employers and their staff on the ins and outs of KiwiSaver. “It was an area that I was very passionate about and I’d already been running seminars for my clients talking to them about KiwiSaver and going around and getting them involved in it," Giblett says. “And I had this moment where I thought, ‘wow, to get out in front of a large organisation’s client base and be able to promote KiwiSaver to the masses and doing it through the education component’.” Giblett was no financial markets newbie, though. Her work has always been in the financial services industry in one form or another, she says, “right from day one when I started in the BNZ as a receptionist”. “Although I wasn’t in the banking side of things, [I was] obviously still working for an industry player.” She progressed into funds management, “falling” from one role to another through her career, each time progressing into a slightly different area of the finance industry. In 2004 that experience culminated in her striking out on her own and setting up Diamond Financial Services. Her first marketing effort was taking a stand at a women’s lifestyle expo in Wellington. “That was what launched me and gave me leads to follow and people to talk to really and it just started from there.” She didn’t set up to target women specifically, happily working with men to sort out their finances, but Giblett found her own personal experiences meant she had a natural affinity with the situations of her female clients. OPPORTUNITY “I do find that even in a relationship that a woman can be the driver, so that’s always been a good opportunity for me,” Giblett says. “Women go through, I think, more unique challenges than men. “We often face childbirth, a lot of women are single and remain single throughout their entire lives and that brings with it different challenges as well.

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KIWISAVER

“How do you support yourself? What kind of lifestyle do you see for yourself when you are older, perhaps, maybe into retirement years? Will you have a child? Will you be a single parent? “You may go through relationships and still end up in that role. “There're a whole raft of things, responsibilities I suppose, that we have as women and that’s not to say that there are men that don't have those challenges, too, but I think it’s more so for women and I think the time out that we often have for having children and things like that impacts on our ability to earn money. “We still have pay gender gaps and things like that as well so there are a lot of challenges around that.” But in 2008 that chance sighting of the ASB job advert took Giblett in a new career direction. KiwiSaver was still fresh into the market and Giblett’s new job at ASB took her into everything from big corporate businesses through to one-man-bands from the top of the South Island, up to the Hawke's Bay and across to Taranaki. “I’ve stood on factory floors and I’ve stood in boardrooms,” she says. “It was fun, it was amazing. I got to meet some amazing people and see some amazing businesses in action. “It was very inspiring, actually.” Giblett says education around KiwiSaver was really lacking at the time, which presented its own challenges. Employers were split between seeing KiwiSaver as a positive thing and those who were ambivalent about the benefits for their staff. BROKEN PROMISES There was also a distrust of the governmentinitiated scheme from those that had seen past superannuation promises broken. For a person who describes herself as a shy at heart – as a schoolgirl she says she would be filled with dread at the prospect of answering a teacher’s question – presenting to a crowd was challenging. “You would never have got me standing up in front of a group of people but over the years I’ve developed that skill, so for me it’s still a learning experience every time I get up and speak in front of some people.” When the role at ASB came to an end with changes in the bank’s wealth division Giblett already had her next move lined up. Husband Barry Brown’s background in recruitment gave the pair an opportunity to join together in business. “There were a lot of synergies between our roles, the kinds of people we were dealing with in companies, often talking to HR managers, senior executives in companies,” Giblett said. They already worked informally together when Giblett ran Diamond Financial Services before her move to ASB. She had helped a number of staff at a recruitment firm Brown owned at the time to sort out their finances and KiwiSaver.

UNIQUE MODEL Brown and Giblett sat down with a big sheet of paper to map a plan for a business that could combine their respective skills in a new and unique business model. The result was Jigsaw Solutions Group, which the couple launched a little under two years ago. “Jigsaw is essentially recruitment and retention specialists and we help businesses from woe to go with anything to do with their people, whether that’s attracting good people, motivating them once you’ve got them, keeping the good ones there – so all the parts that that takes.” There are four parts to the business, says Giblett: traditional recruitment; career management; training and development; and the financial services side, which is operated through Jigsaw Financial solutions, a wholly-owned subsidiary of the Jigsaw group. Giblett runs the financial services side, offering a full financial planning but also crossing over with her husband to present employee benefit advice and training solutions for financial literacy. It sees Giblett, an accredited Sorted financial education presenter, back in front of groups of staff talking about all the pieces to the personal financial puzzle. “A lot of research supports why it’s important to utilise the workplace space to do that.” She said a Canadian study showed employees were spending up to an hour of work time dwelling on their or an extended family’s finances. “That can have a huge impact on an employee’s ability to do their best for their employer, for the business.” When businesses want to retain good staff often they need to look beyond pay to other benefits, she says. Coming out of the global financial crisis, pay increases weren’t the norm so employers looked around for ideas for what they could be doing to maintain staff loyalty. “Doing extra things like this is a very active thing that an employer can do and be shown to be caring about their staff in a different way.” Nearly two years down the track Brown and Giblett’s new business is beginning to gain momentum. “I guess the challenge is that it is a unique business model. “As far as we know there isn’t another business offering something like this; sometimes it’s getting people to understand what we are offering and how we can add that value.” It’s a departure from the traditional recruitment or financial services model, which operate very stand-alone, she says, whereas they can work with a client right from the when they join the firm, continuing to offer advice on team management and looking after employees on an individual basis. “And that’s actually where we get the

most enjoyment ourselves; when we’ve been able to get to know a business really, really well and the people that make that business. “Then we actually felt like we’ve become an extension of their business.” PLANNING STRUCTURE Giblett still sees individual clients in the manner of a run-of-the-mill financial advisory service, but has taken the opportunity with the new business to establish a planning fee structure. “Once again it’s different this time and that is probably one of the challenges – I think it is still not the norm in New Zealand.” She says a lot of people have still got the do-it-yourself mentality or feel if they ignore it long enough then “she’ll be right”. “The fact that somebody actively makes the choice to pay the fee, for me at least, I know that they’re serious about investing as much time into the process as what I am.” Under the new business model Giblett gets the variety and balance of helping individual clients secure their financial future as well as providing financial education seminars. Even though one of the initial goals of KiwiSaver was to improve financial literacy among New Zealanders she still encounters a large degree of misunderstanding. Common themes, she says, are the belief that it is government guaranteed; and that it works like a savings account. A lot of people don’t understand risk and how it applies to them, evidenced by the large numbers still in default funds, she says. RETIREMENT SAVINGS Giblett says many have gone into KiwiSaver without taking the time to understand how much they are saving, how much will be available in their retirement and how that will impact their life in retirement. She says advisers have a role to play, alongside the Commission for Financial Capability, in talking to clients about what their future will look like. “I think once again we’ve got a very narrow, short-term view. “People aren’t actually looking far enough into their future.” For Giblett and Brown the future could hold an expansion of their business – adding new staff and taking it to other regions around New Zealand. Giblett is relishing the opportunity to get in front of more workplaces and help staff with their financial struggles. She sees the evidence of her work at the local supermarket, which puts its staff through a financial literacy series, when she goes in for weekly shop. “They tell me that they’ve sat down and changed something to do with their KiwiSaver or they’ve been and made a change with their budget or they’re not eating as many muffins and pies at morning tea now and saving more. “Those things really make a difference and that’s really rewarding for me.”

ASSET ADVISER

{ MANAGED FUND PERFORMANCE TABLES } Name

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

New Zealand Insurance Fund Cash AMP KiwiSaver Cash Fund 1.4085 3.33 2.97 3.01 AMP Prem PSS OnePath NZ Cash 1.5081 3.51 3.09 3.13 AMP PSS Select Cash 1.4267 3.30 2.85 2.85 ANZ KiwiSaver-Cash 1.2501 3.83 3.24 3.18 Aon KiwiSaver ANZ Cash 14.5386 3.18 2.76 2.78 Aon KiwiSaver Nikko AM Cash 13.4964 3.61 3.38 3.36 ASB KiwiSaver Scheme's NZ Cash 1.3571 3.73 3.21 2.95 Asteron Rtrmnt Savings Plan Deposit 10.4745 3.95 3.66 3.46 Asteron Super Yield Deposit Fund 10.5006 3.96 3.67 3.46 Asteron Superplan 2000 Capital Fund 2.1988 3.69 3.60 3.46 Asteron Superplan Capital Fund 2.6098 3.13 3.07 2.93 Grosvenor KiwiSaver Enhanced 1.4284 3.64 3.31 3.40 Income Fund Mercer KiwiSaver Cash -3.73 3.30 3.37 ANZ Default KiwiSaver Scheme-Cash 1.3417 3.70 3.21 3.21 SIL 60s + Sup Cash Fund 2.0835 3.16 2.62 2.63 SIL Cash Plus 2.0835 3.16 2.62 2.63 OneAnswer KiwiSaver-Cash Fund 1.3008 3.68 3.12 3.04 Staples Rodway KiwiSaver Conservative -3.40 3.36 3.14 Fisher TWO KiwiSaver Scheme-Presv 2703.08419 3.63 3.44 3.28 Westpac KiwiSaver-Cash Fund 1.3077 3.61 3.19 3.04 New Zealand Insurance Fund Cash Non-PIE Fidelity Life Cash Portfolio 3.1959 1.96 1.81 1.79 New Zealand Insurance Fund Equity Region Asia Pacific SIL 60s + Sup Pacific Basin Share 2.0013 18.12 9.95 6.64 SIL P/R Pacific Basin Fund 2.0013 18.12 9.95 6.64 New Zealand Insurance Fund Equity Region Australasia Aon KiwiSaver Milford 2.5971 14.50 17.91 15.18 Asteron Superplan 2000 Trans Tasman 3.4679 18.11 19.94 14.40 Fund Asteron Superplan Trans Tasman Fund 4.3903 17.30 19.18 13.66 Grosvenor KiwiSaver Socially Rsp Inv Gr 1.4633 17.90 12.79 8.52 Grosvenor KiwiSaver Trs-Tasm Sm 1.1653 3.44 5.70 3.16 Coms Shr Milford Active Growth KiwiSaver 2.60945 14.88 18.22 15.36 OneAnswer KiwiSaver-Australasian Share 1.3839 12.67 19.95 15.55 Smartshares Smartkiwi Growth Fund 1.16391 14.85 16.62 10.98 New Zealand Insurance Fund Equity Region Emerging Markets Fisher FreedomPlan - Emerg Mkts 2.61584 18.25 9.46 2.19 Fisher FuturePlan - Emerg Mkts 2.61584 18.25 9.46 2.19 New Zealand Insurance Fund Equity Region Europe Asteron Superplan 2000 European Fund 2.5254 30.85 23.92 13.04 Asteron Superplan European Fund 2.9705 30.21 23.16 12.29 New Zealand Insurance Fund Equity Region North America Asteron Superplan 2000 Nth Amrn Fd 2.467 27.62 21.97 15.14 Asteron Superplan North American Fund 3.5085 27.67 21.40 14.50 New Zealand Insurance Fund Equity Region Australasia AMP Prem PSS OnePath NZ Shares 1.8854 8.26 17.48 14.31 New Zealand Insurance Fund Equity Region NZ Asteron Rtrmnt Savings Plan NZ Equity 3.2908 18.48 20.23 14.62 SIL 60s + Sup NZ Share Fund 4.3442 11.86 19.37 15.29 New Zealand Insurance Fund Equity Region NZ Non-PIE Fidelity Life NZ Shares Portfolio 5.1622 15.74 14.40 8.99 New Zealand Insurance Fund Equity Region World AMP Prem PSS FD Intl Share Fund 1 Value 1.2163 25.02 20.20 10.97 AMP Prem PSS FD Intl Share Fund 1.3518 35.33 21.49 12.96 3 Growth Asteron Rtrmnt Savings Plan Intl Eqty 2.7403 27.66 21.01 12.69 Asteron Superplan 2000 Aggressive Fund 1.9572 19.56 14.31 9.00 Asteron Superplan 2000 Global Fund 2.2087 26.34 20.17 12.23 Asteron Superplan Aggressive Fund 1.8462 19.05 13.70 8.39 Asteron Superplan Global Fund 2.6058 25.99 19.38 11.44 Grosvenor KiwiSaver International Share 1.6555 21.72 18.64 10.52 SIL 60s + Sup International Share Fund 3.0543 35.52 22.56 14.43 SIL International Share 3.0543 35.52 22.56 14.43 OneAnswer KiwiSaver-Intl Share 1.5979 36.26 23.27 15.03 OneAnswer KiwiSaver-Sustainable 1.6258 31.71 19.03 11.65 Growth Fisher FreedomPlan - Intl Coms 2.69319 10.03 14.44 9.50 Fisher FuturePlan - Intl Coms 2.69319 10.03 14.44 9.50 Fisher TWO KiwiSaver Scheme-Eq 3586.03479 12.74 15.65 10.32

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70.15 4.46 1.41 225.64 3.41 1.48 329.70 3.39 4.21 3.48 23.46

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

18.43

12.77 2.53 0.89 1.33 24.59 23.44 24.73 254.63

---------

3.76

0.17 3.11

---

100.87  6.03



25.72  16.01  4.79



379.28  19.40  28.32  1.65 23.31

---

2.10 16.50

---

1.95 16.20

---

4.50



1.61 1.98

 

2.81



6.22



6.35



4.26 0.75 3.69 5.70 34.57 7.40 0.77 14.01 35.48

        

4.44



3.22 29.85 59.00

  

Latest 1 Yr 3 Yr 5 Yr Size Morningstar Transaction Return Return Rating Return $M Overall Exit Price % New Zealand Insurance Fund Equity Region World Non-PIE Fidelity Life Aggressive 3.1839 20.53 15.14 6.74 5.23  Fidelity Life International 2.3097 20.30 16.61 8.16 3.85  New Zealand Insurance Fund Equity Sector Global - Real Estate OneAnswer KiwiSaver-Intl Property 1.2959 13.59 13.99 14.31 7.95  New Zealand Insurance Fund Equity Sector NZ - Real Estate MFL Property Fund 3.4748 16.07 16.67 16.15 500.48  OneAnswer KiwiSaver-Australasian Prpty 1.5502 19.61 17.07 17.30 12.11  New Zealand Insurance Fund Global Bond AMP Prem PSS Blackrock Global Fixed Int 1.8438 6.54 5.58 5.69 2.27  AMP Prem PSS PIMCO Global Fixed 2.1268 6.58 6.36 7.69 2.43  Interest AMP Prem PSS SSgA Global Fixed 1.8393 7.31 5.55 5.72 8.93  Int Index Asteron Rtrmnt Savings Plan Intl Fx Int 3.1787 5.53 5.44 5.72 1.28  Asteron Superplan 2000 Global Bond Fund 2.8209 4.72 4.86 5.34 1.09  Asteron Superplan Global Bond Fund 2.6699 4.76 4.85 5.34 1.66   OneAnswer KiwiSaver-Intl Fxd Int 1.5795 6.86 4.72 5.31 2.54 New Zealand Insurance Fund Miscellaneous Westpac KiwiSaver-Capital Protect Plan 1 2.0084 21.44 19.61 13.64 12.00 -Westpac KiwiSaver-Capital Protect Plan 2 1.8031 21.45 19.61 13.64 10.16 -New Zealand Insurance Fund Miscellaneous Non-PIE Fidelity Life Options Portfolio 4.2922 5.13 6.76 5.08 20.20 -New Zealand Insurance Fund Mortgages Non-PIE Fidelity Life Mortgage 3.8534 4.03 3.42 3.07 2.21 -New Zealand Insurance Fund Multisector - Aggressive AMP KiwiSaver LS Aggressive Fund 1.2848 8.30 13.99 10.18 222.86  AMP PSS DynamicMkts Growth 1.6308 7.84 12.76 9.57 4.04  AMP PSS Select Growth 1.5388 7.88 12.93 9.69 33.98  Aon KiwiSaver Russell Lifepoints 2045 7.2529 19.00 18.63 13.09 11.29  Fisher Funds Growth KiwiSaver Fund 1.662 15.01 15.60 11.00 978.65  Grosvenor KiwiSaver Geared Growth Fund 1.727 21.73 16.37 9.89 5.72  Grosvenor KiwiSaver High Growth Fund 1.3074 16.14 14.47 8.85 137.85  Mercer KiwiSaver High Growth -15.59 16.38 11.67 89.97  Fisher FreedomPlan - Growth 2.48178 10.62 12.68 8.42 7.65  Fisher FuturePlan - Growth 2.48178 10.62 12.68 8.42 78.35  New Zealand Insurance Fund Multisector - Aggressive Non-PIE AMP PRP Dynamic 1.893 8.22 12.10 8.34 112.77  New Zealand Insurance Fund Multisector - Balanced AMP KiwiSaver LS Balanced Fund 1.4401 7.42 10.53 8.57 657.00  AMP KiwiSaver LS Moderate Balanced 1.4399 7.08 9.35 7.72 423.38  Fund AMP KiwiSaver Fisher TWO Balanced 1.5229 9.40 10.83 8.39 23.96  AMP PSS DynamicMkts Balanced 1.6891 6.88 9.51 7.87 3.26  AMP PSS Lifesteps Consolidation 1.6303 6.61 8.44 7.08 7.66  AMP PSS Lifesteps Progression 1.7064 6.88 9.59 7.93 3.53  AMP PSS Select Balanced 1.6366 6.89 9.61 7.94 49.79  ANZ KiwiSaver-Balanced 1.582 13.93 12.87 10.75 1140.93  Aon KiwiSaver ANZ Balanced 21.6471 12.54 12.57 10.95 22.30  Aon KiwiSaver Russell Lifepoints 2025 7.7868 13.86 13.35 10.64 13.59  Aon KiwiSaver Russell Lifepoints Bal 7.773 16.71 15.37 11.66 53.07  ASB KiwiSaver Scheme's Balanced 1.5173 14.88 12.63 10.03 702.27  Asteron Rtrmnt Savings Plan Mgd Neutral 3.0035 16.55 13.90 10.54 16.54  Asteron Super Yield Managed Fund 15.2179 16.56 14.31 10.60 20.84  Asteron Superplan 2000 Balanced Fund 2.371 15.53 13.35 9.97 10.14  Asteron Superplan Balanced Fund 3.0169 14.77 12.55 9.16 68.67  Grosvenor KiwiSaver Balanced Fund 1.5247 12.69 9.63 7.48 303.16  Milford KiwiSaver Balanced 1.74292 16.42 16.18 12.84 77.21  ANZ Default KiwiSaver Scheme-Balanced 1.5183 14.00 12.08 10.26 54.07  OneAnswer KiwiSaver-Balanced 1.6015 14.12 12.99 10.83 360.70  Smartshares Smartkiwi Balanced Fund 1.2929 10.03 11.00 7.81 8.86  Fisher FreedomPlan - Balanced Fund 3.4788 9.09 9.92 7.73 11.81  Fisher FuturePlan - Balanced 3.4788 9.09 9.92 7.73 135.66  Fisher TWO KiwiSaver Scheme-Bal 4176.89238 10.13 11.00 8.64 477.77  Westpac KiwiSaver-Balanced Fund 1.5137 13.81 12.65 10.23 858.68  Westpac Retirement Plan - Balanced Port 3.2168 12.57 11.39 8.94 100.81  New Zealand Insurance Fund Multisector - Balanced Non-PIE Fidelity Life Balanced 4.0239 11.76 9.66 6.88 156.15  Fidelity Life Ethical Portfolio 2.9184 15.99 11.97 8.13 1.00  New Zealand Insurance Fund Multisector - Conservative AMP KiwiSaver Default (Default) 1.4653 6.94 6.62 5.67 1220.89  Name

Latest 1 Yr 3 Yr 5 Yr Size Morningstar Transaction Return Return Rating Return $M Overall Exit Price %  AMP PSS Select Income 1.6783 6.53 3.38 4.45 2.52 ANZ KiwiSaver-Conservative 1.5213 9.54 7.65 7.20 464.60  Aon KiwiSaver Russell Lifepoints Cnsrv 8.4941 10.56 9.48 8.82 78.31  ASB KiwiSaver Scheme's Cnsrv (Default) 1.5331 8.66 6.91 6.32 2805.45  Fisher Funds Conservative KiwiSaver Fund 1.4066 8.82 7.96 6.97 344.31  Mercer KiwiSaver Conservative (Default) -8.61 8.06 6.82 901.65  ANZ Default KiwiSaver Scheme Cnsrv(Dflt) 1.5437 9.59 7.59 7.34 903.37  OneAnswer KiwiSaver-Conservative 1.5355 9.52 7.68 7.24 349.11  Smartshares Smartkiwi Conservative Fund 1.44232 6.01 7.09 5.79 3.94  Fisher FuturePlan - Capital Prot 1.17878 1.50 1.54 1.73 27.92  Fisher TWO KiwiSaver Cash 1.51955 7.84 6.78 6.36 603.88  Enhanced(Dflt) New Zealand Insurance Fund Multisector - Conservative Non-PIE Fidelity Life Conservative 4.1559 8.39 6.46 5.50 80.64 -New Zealand Insurance Fund Multisector - Growth AMP KiwiSaver LS Growth Fund 1.3356 7.93 12.61 9.50 500.40  AMP KiwiSaver ANZ Balanced Plus 1.7303 14.44 14.77 11.89 150.62  AMP KiwiSaver Nikko AM Balanced 1.5235 14.34 12.67 9.75 20.97  AMP PSS Lifesteps Growth 1.6356 7.42 11.59 8.97 0.89  ANZ KiwiSaver-Balanced Growth 1.5931 16.24 15.51 12.43 951.68  ANZ KiwiSaver-Growth 1.5885 18.33 18.03 14.05 1639.98  Aon KiwiSaver Russell Lifepoints 2035 7.5649 16.89 16.20 11.99 11.59  Aon KiwiSaver Russell Lifepoints Growth 7.6227 18.94 17.80 12.79 23.92  Aon KiwiSaver Nikko AM Balanced 15.5738 14.80 12.89 9.80 5.61  ASB KiwiSaver Scheme's Growth 1.4698 17.74 15.56 11.61 728.72  Asteron Rtrmnt Savings Plan Mgd Growth 3.0129 19.46 16.41 11.74 30.00  Asteron Superplan 2000 Dynamic Fund 2.3315 17.90 15.40 10.90 2.55  Asteron Superplan Dynamic Fund 2.6549 17.34 14.92 10.26 21.19  Forsyth Barr KiwiSaver Balanced Port 1.4691 17.54 10.66 7.71 14.15  Grosvenor KiwiSaver Balanced Growth 1.4731 14.42 11.95 8.17 150.53  Mercer KiwiSaver Balanced -11.64 12.27 9.33 225.49  ANZ Default KiwiSaver Scheme1.5031 16.24 14.47 11.75 64.33  Balanced Gr ANZ Default KiwiSaver Scheme-Growth 1.4816 18.17 16.84 13.21 54.42  SIL 60s + Sup Balanced Fund 3.6818 15.07 14.30 11.67 19.23  SIL Balanced Plus 3.6818 15.07 14.30 11.67 83.96  OneAnswer KiwiSaver-Balanced Growth 1.6158 16.37 15.63 12.55 331.27  OneAnswer KiwiSaver-Growth Fund 1.6058 18.36 18.12 14.11 240.57  Staples Rodway KiwiSaver Balanced -14.98 14.36 12.04 23.70  Staples Rodway KiwiSaver Growth -15.05 13.56 10.77 11.73  Westpac KiwiSaver-Growth Fund 1.5292 16.28 15.27 11.93 550.23  Westpac Retirement Plan - Dynamic Port 3.5748 15.08 14.08 10.83 106.59  New Zealand Insurance Fund Multisector - Growth Non-PIE Fidelity Life Growth 3.842 15.50 12.65 8.05 60.52  New Zealand Insurance Fund Multisector - Moderate AMP KiwiSaver LS Conservative Fund 1.5641 6.05 6.41 6.13 247.52  AMP KiwiSaver LS Moderate Fund 1.4864 6.59 8.01 6.99 292.17  AMP PSS DynamicMkts Conservative 1.6799 5.31 5.46 5.31 0.99  AMP PSS Lifesteps Maturity 1.6029 5.33 5.51 5.35 3.05  AMP PSS Lifesteps Stability 1.6673 5.92 7.06 6.29 5.46  AMP PSS Select Conservative 1.6708 5.35 5.53 5.35 10.76  ANZ KiwiSaver-Conservative Balanced 1.5595 11.71 10.28 9.05 541.22  Aon KiwiSaver Russell Lifepoints 2015 8.1114 10.86 10.27 9.18 5.22  Aon KiwiSaver Russell Lifepoints Mod 8.2277 13.44 12.33 10.23 15.19  ASB KiwiSaver Scheme's Moderate 1.5386 11.47 9.45 8.14 905.28  Asteron Rtrmnt Savings Plan Mgd Conserv 2.864 11.95 9.74 8.40 2.56  Asteron Superplan 2000 Conservative Fund 2.3205 10.95 9.15 7.88 3.07  Asteron Superplan Conservative Fund 2.5572 9.99 8.25 6.98 5.67  Grosvenor KiwiSaver Conservative Fund 1.5107 8.94 6.17 6.27 108.46  ANZ Default KiwiSaver Scheme-Cnsrv Bal 1.5349 11.73 9.74 8.80 19.32  OneAnswer KiwiSaver-Conservative Bal 1.5749 11.69 10.32 9.10 119.39  Fisher TWO KiwiSaver Scheme-Cnsrv 1.57554 8.16 7.52 6.88 104.45  Westpac KiwiSaver-Conservative Fund 1.4906 8.78 7.69 7.15 1704.94  New Zealand Insurance Fund NZ Bonds AMP Prem PSS OnePath NZ Fixed Interest 1.7634 8.70 3.68 5.73 2.33  Asteron Rtrmnt Savings Plan NZ Fixed Int 3.0515 8.89 5.15 6.49 1.45  Asteron Superplan 2000 NZ Bond Fund 2.6254 8.20 4.73 6.05 1.38  Asteron Superplan NZ Bond Fund 3.3531 8.25 4.74 6.08 7.00  SIL 60s + Sup NZ Fixed Interest 2.7482 8.44 3.46 5.35 3.07  OneAnswer KiwiSaver-NZ Fixed Interest 1.5485 9.19 4.07 5.89 5.20  SIL NZ Fixed Interest 2.7482 8.44 3.46 5.35 6.40  Name

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Latest 1 Yr 3 Yr 5 Yr Size Morningstar Transaction Return Return Rating Return $M Overall Exit Price % Westpac Retirement Plan - Accum Port 3.153 4.12 2.84 3.11 18.87  New Zealand Insurance Fund NZ Bonds Non-PIE Fidelity Life NZ Fixed Interest 3.8154 5.66 3.74 3.86 0.58  New Zealand Insurance Fund Unlisted and Direct Property - NZ Asteron Rtrmnt Savings Plan NZ Property 4.3565 ---- 1.14 -Fisher FreedomPlan - Property Fund 4.2696 9.25 9.20 6.23 0.87 -Fisher FuturePlan - Property 4.2696 9.25 9.20 6.23 7.73 -New Zealand OE Cash AMP Capital Cash Advantage Fund 1.37136 3.48 3.44 3.52 233.75 -AMP Capital NZ Cash Fund 1.63385 3.84 3.44 3.49 4109.34 -AMP Prem PUT OnePath NZ Cash 1.3374 3.46 3.04 3.05 3.46 -AMP PUT Select Cash 1.2853 3.27 2.80 2.80 3.59 -ASB Cash Fund -3.27 3.19 3.23 383.60 -Fisher Cashplus Fund 1.249 3.20 2.71 2.68 24.47 -New Zealand OE Cash Non-PIE AMP UT NZ Cash 1.7751 2.05 1.81 1.85 1.73 -New Zealand OE Equity Region Asia Pacific Non-PIE AMP UT Asian Shares 1.8396 26.58 17.63 6.95 1.50 -New Zealand OE Equity Region Australasia Devon Alpha Fund 1.5424 14.20 21.35 12.48 100.47  Devon Trans-Tasman Fund 3.3047 16.00 19.14 12.89 113.23  Harbour Australasian Equity 1.7005 10.46 20.58 14.02 104.76  Milford Active Growth 2.60275 14.75 18.11 15.30 658.38  Milford Trans-Tasman 1.86145 10.40 16.72 14.58 256.79  Mint Australia NZ Active Equity 1.9826 16.48 22.76 18.19 52.04  OneAnswer SAC Equity Selection 1.9168 7.99 16.74 13.64 18.91  Blueprint Australasian Shares 0.0126 ---- 0.15 -Pie Australasian Growth Fund 4.1678 25.09 25.55 25.57 69.39  Nikko AM Concentrated Equity 1.6589 24.99 21.43 13.06 2.11  Nikko AM Australasian Small Companies 1.6848 16.54 16.43 10.78 1.12  New Zealand OE Equity Region Australia AMP Capital Australian Share Fund 2.34034 8.03 9.71 6.66 34.13  Devon Australian 1.2856 14.31 14.82 -- 41.58  Fisher Funds Australian Growth Fund 2.7971 12.34 9.58 8.00 57.81  Fisher Funds Premium Australian Fund 1.2252 12.55 9.98 8.33 43.47  OneAnswer SAC Australian Share 3.629 4.53 10.72 6.43 37.81  New Zealand OE Equity Region Australia Non-PIE AMP UT Australian Shares 2.5016 5.05 8.04 5.28 1.56 -New Zealand OE Equity Region NZ AMP Capital NZ Shares Fund 2.30532 17.16 19.88 15.37 501.62  AMP Capital Strategic NZ Shares Fund 2.0767 19.48 20.96 14.88 164.68  Fisher Funds NZ Growth Fund 5.7369 8.90 17.82 16.70 121.37  Fisher Funds Premium New Zealand Fund 1.3492 9.57 18.04 17.00 52.15  OneAnswer SAC NZ Share 3.3825 12.30 19.67 15.50 88.92  Fisher Trans Tasman Equity Trust 3.8165 11.96 17.70 12.82 45.25  Nikko AM Core Equity 1.5286 18.85 20.81 14.89 16.68  New Zealand OE Equity Region NZ Non-PIE AMP UT NZ Shares 2.8023 13.56 16.72 12.41 2.81  New Zealand OE Equity Region World AMP Capital Core Global Shares Fund 1.28141 32.32 22.80 13.35 944.97  AMP Capital Core Hedged Global 1.19042 5.56 18.67 14.50 561.04  Shares Fd AMP Capital Emerging Markets Share 0.95721 9.79 9.08 4.96 101.59  AMP Capital Global Shares Fund 2.329 16.48 19.61 13.57 154.51  AMP Capital Resp Invest Leaders Gl Sh 1.4267 14.28 18.58 12.47 50.29  AMP Prem PUT FD Intl Share Fund 1 Value 1.2721 24.91 20.26 10.80 2.62  AMP Prem PUT FD Intl Share Fund 1.3891 34.87 21.34 12.77 2.37  3 Growth AMP Prem PUT SSgA Global Shares Index 1.683 30.53 20.93 12.86 5.05  AMP Prem PUT SSgA Global Shares 1.9484 14.31 20.60 14.90 5.70  IndexHdg ASB EasyFund World Shares Fund 1.3659 25.31 19.50 12.96 199.87  Elevation Capital Value Fund 1.5201 15.51 15.41 8.96 18.35  Fisher Funds International Growth Fund 1.6303 21.47 15.68 7.79 28.38  Fisher Funds Premium International Fund 1.6867 22.37 16.16 8.24 55.85  OneAnswer SAC International Share 1.8278 39.12 25.58 17.21 138.12  Fisher Global Fund 4.665 10.97 16.35 10.00 91.74  New Zealand OE Equity Sector Global - Real Estate AMP Capital Global Propty Securities Fd 1.52542 11.84 15.37 15.82 119.61  ASB EasyFund Global Property Fund 1.2693 22.17 14.06 12.83 91.58  Name

Latest 1 Yr Transaction Return Exit Price % New Zealand OE Equity Sector NZ - Real Estate AMP Capital Listed Property Secs Fd 2.23071 21.48 Mint Australia NZ Real Estate Investment 1.565 19.12 OneAnswer SAC Property Securities 2.7268 19.48 New Zealand OE Global Bond AMP Capital Hdgd Gbl Fixed Intrst Fund 2.18469 6.28 AMP Prem PUT Blackrock Global Fixed Int 1.7158 6.22 AMP Prem PUT PIMCO Global Fixed 2.1313 6.38 Interest AMP Prem PUT SSgA Global Fixed 1.7066 7.14 Int Index ASB EasyFund World Fixed Interest Trust 1.0853 4.30 Fisher BondPlus Fund 2.0065 5.46 New Zealand OE Miscellaneous Fisher Funds Property and Infrastructure 1.7915 14.17 Pathfinder Commodity Plus Fund 0.927 -0.02 Nikko AM Income 1.2276 7.99 New Zealand OE Mortgages Westpac Home Loan Trust 1 3.34 Westpac Mortgage Investment Fund 1 3.46 New Zealand OE Multisector - Aggressive AMP Capital Growth Fund 2.29701 9.79 AMP PUT DynamicMkts Growth 1.6614 7.77 AMP PUT Select Growth 1.4743 7.77 New Zealand OE Multisector - Aggressive Non-PIE AMP UT Dynamic 1.9899 6.90 New Zealand OE Multisector - Balanced AMP PUT DynamicMkts Balanced 1.6719 6.89 AMP PUT Select Balanced 1.5772 6.78 ANZ Invmt Fds Balanced 1.5549 13.53 ASB EasyFund Balanced 1.3951 14.24 Milford Balanced 1.72195 15.82 Westpac Active Balanced Trust 1.9219 13.04 New Zealand OE Multisector - Balanced Non-PIE AMP UT Balanced 2.1085 6.08 AMP UT Balanced - Other 1.8209 5.77 New Zealand OE Multisector - Conservative AMP PUT Select Income 1.5691 6.79 ANZ Invmt Fds Conservative 1.3888 9.18 ASB EasyFund Defensive 1.4451 8.00 New Zealand OE Multisector - Growth ANZ Invmt Fds Balanced Growth 1.6517 15.91 ANZ Invmt Fds Growth 1.7222 17.88 ASB EasyFund Growth 1.334 17.02 OneAnswer SAC Balanced 2.6314 15.25 Fisher Multi Sector Fund 2.7895 9.52 Westpac Active Growth Trust 1.8439 15.38 New Zealand OE Multisector - Growth Non-PIE AMP PMF - Active Growth 2.0752 5.93 AMP UT Legg Mason Balanced 1.6578 11.01 New Zealand OE Multisector - Moderate AMP Capital Conservative Fund NZ 2.21342 6.27 AMP PUT DynamicMkts Conservative 1.6332 5.26 AMP PUT Select Conservative 1.6464 5.29 ANZ Invmt Fds Conservative Balanced 1.4729 11.40 ASB EasyFund Conservative 1.422 9.30 ASB EasyFund Moderate 1.4229 10.86 Milford Income 1.4446 12.07 Westpac Active Conservative Trust 1.7077 7.59 New Zealand OE Multisector - Moderate Non-PIE AMP PMF - Balanced 2.385 4.91 AMP UT Conservative 2.0272 4.63 New Zealand OE NZ Bonds AMP Capital NZ Fixed Interest Fund 1.66064 9.41 AMP Capital NZ Short Duration 1.24963 6.38 AMP Prem PUT OnePath NZ Fixed Interest 1.649 8.65 Harbour NZ Corporate Bond 1.0562 7.44 OneAnswer SAC NZ Fixed Interest 1.5537 9.01 Name

3 Yr 5 Yr Size Morningstar Rating Return Return $M Overall 16.29 16.77 21.64  15.21 15.34 44.80  16.79 17.05 119.22  5.46 5.41

5.67 141.04  5.51 1.24 

6.44

7.70

2.79 

5.48

5.68

4.39 

3.32 5.79

-- 13.96  7.52 129.14 

14.77 10.16 51.52 -3.00 -0.65 59.48 6.88 7.17 5.11

----

2.69 2.81

---

2.57 93.85 2.67 133.75

13.64 10.40 6.87  12.72 9.53 3.55  12.81 9.59 13.92  12.39 9.12

9.09

9.48 9.48 12.59 12.00 15.69 12.39

7.80 7.83 10.39 9.38 12.56 9.67

4.92  38.05  131.68  114.12  299.02  143.79 

9.11 8.96

7.44 14.52  7.35 0.67 

3.42 7.40 6.26

4.48 3.25  6.94 34.00  5.67 118.41 

15.29 17.67 14.84 14.38 10.72 14.90

12.21 13.64 10.87 11.81 8.59 11.32



Name

Latest Transaction Exit Price 1.1447

1 Yr 3 Yr 5 Yr Size Morningstar Return Return Rating Return $M Overall % 8.96 6.23 6.77 115.79 

Nikko AM NZ Corporate Bond New Zealand OE NZ Bonds Non-PIE AMP UT NZ Fixed Interest 1.8493 5.57 2.57 3.79 0.60  New Zealand OE Equity Sector NZ - Real Estate AMP Capital NZ Property Fund 1.92368 12.56 10.22 7.23 128.88 -New Zealand OE Unlisted and Direct Property - NZ Non-PIE AMP UT NZ Property 1.562 10.02 8.71 6.02 1.79 --

Returns are calculated to 31/07/15 Returns are calculated before tax and after fees, except for the non-PIE categories, which are after tax and after fees. For more information about this table and the methodology behind the data, contact helpdesk.nz@morningstar.com or go to www.morningstar.com.au © 2015 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

112.74  49.67  26.71  50.14  10.97  59.67 

8.08 5.81 16.95 10.36 7.37 1.72

 

6.14 5.38 5.50 9.91 7.36 8.85 13.84 6.84

5.97 5.23 5.31 8.68 6.52 7.52 12.82 6.18

10.27  1.91  15.63  108.26  420.22  176.84  1134.54  137.21 

6.06 5.10

4.92 33.44  4.92 0.88 

4.71 4.71 3.62 5.35 3.67

6.22 1806.39  4.45 198.11  5.66 1.90  5.65 224.65  5.42 9.03 

033

DATA

{ HEALTH INSURANCE }

YOUNG PEOPLE SWITCHING ON TO INSURANCE Health Funds Association data shows more New Zealanders aged 25 to 35 are taking out health insurance.

he number of lives covered by health insurance rose 1800 in the June quarter, to a total of 1.334 million, or about 29% of the population. The number of people with health insurance was stagnant year-on-year. But there was an increase of more than

034

WWW.GOODRETURNS.CO.NZ

3300 people in the 25-to-35-year-old age bracket. That is being attributed to growth in cheap, “everyday” policies. There were 3600 additional lives covered in the over-65 category. Total claims paid amounted to $1.013

billion for the year ending June 30, 2015 – up 4.8% on the previous June year. Premium income was up 1.6% in the June quarter compared to March and up 6.1% year-on-year. Health insurance claims have virtually doubled over the past decade.

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Here are the top ten news stories on Good Returns in the past month. ➊ SiFA submission slams FMA ➋ FMA takes action against milford trader ➌ International equities exposure offered with no fees ➍ Two advisers get personalised DIMS nod ➎ FSC call advisers should be equal ➏ Advisers represent less than half of insurance market ➐ Bad times are gone - Dodds ➑ FSC launches commission investigation ➒ Retirees have low risk tolerance, but high expectations ➓ Opinion: Risk commission future not all gloom and doom

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