ASSET JUNE 2017

JUNE 2017

CONVERT TO INSURANCE Adviser says industry change paid off

Tide turns for QROPS Sponsored By

Education standards examined

How good are you?

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UP FRONT

Qualified to advise

04 EDITORIAL

Why not a degree?

06 PEOPLE New appointments

07 NEWS

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Susan Edmunds asks what education standard is right for advisers.

Nicki Spence likes the challenge of insurance.

REGULARS

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{Open to Question} { Investment }

{ INSURANCE }

{ ASSET ADVISER }

05 What's your view on adviser education?

24 Harness clients’ will power 26 Time to see results 30 How to prove you’re good

19 Is anyone out there?

14 QROPS tide turns 28 Harbour relaunches fund

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UP FRONT

{ FROM THE EDITOR }

STANDING APART being told they must all have degrees. I’m not sure why there is such reluctance to move towards tertiary qualifications. I understand that it is tiresome to put the time and resource into returning to study when you’ve been working in the industry for many decades. Perhaps there should be an option for existing advisers to take a test or exam.

" The level five certificate is on par with what is required of beauty therapist and is, by all accounts, not rigorous."

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ne of the big uncertainties about the review of the Financial Advisers Act has been the education standards that apply to the industry. When the Financial Advisers Act regulation was first drafted, it was initially thought that insurance advisers would be caught by the requirement to have a level five certificate. When the decision was made to apply it to AFAs only, many put on hold qualifications they had begun to work towards. So when the review was announced, many people seemed to take it as given that those who dodged the level five bullet would be caught this time around and that qualification would become the standard applied to the whole industry. While much of the new regime is now clear, we are still waiting for answers when it comes to education. The code committee working group will determine with its new code of conduct what the qualification and competence standards should be. It may be that they require level five as a base level for all advisers. Or they may have a range of appropriate standards, depending on what advice the adviser deals in. Across the Ditch, financial planners are

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But it just seems to make sense that a degree should be required of those who are dealing with investments, at least. The level five certificate is on par with what is required of beauty therapist and is, by all accounts, not rigorous. As Fred Dodds points out, even early childhood teachers are required to have degrees and there are moves to increase that standard to a post-graduate diploma. New Zealand as a whole is becoming a more degree-qualified society. In 2013, just under 14 per cent of all adults had a bachelor’s degree or equivalent, from 11.2 per cent in 2006. Almost 80 per cent had some formal qualification. When we expect New Zealanders to entrust their financial futures to advisers, it is not too much to ask that new entrants have a degree qualification. It gives consumer confidence, gives advisers something that sets them apart as skilled, qualified individuals and gives the industry something to be proud of. If the aim is to get young people interested in a career in financial advice, it should be something that has some cachet and mana – not something anyone off the street can do. Susan Edmunds Editor

Head office 1448A Hinemoa Street, Rotorua PO Box 2011, Rotorua P: 07 349 1920 F: 07 349 1926 E: editor@tarawera.co.nz Publisher Philip Macalister EDITOR Susan Edmunds Contributors Barry Read, Mike Moore, Russell Hutchinson Design Jonathan Harding Advertising sales Kelly Thorpe kelly@tarawera.co.nz phone 07-3491920 Subscriptions Dianne Gordon P: 0800 345 675 E: dianne@tarawera.co.nz ASSET is published by Tarawera Publishing Ltd (TPL). TPL also publishes online money management magazine Good Returns www.goodreturns.co.nz and TMM – The 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

Education standards

Anand Srinivasan Brisk Insurance

Tim Fairbrother Rival Wealth

Ron Flood

Ron Flood and Associates

What is the highest qualification level you hold? Apart from a degree in commerce, I hold the professional qualification of Graduate Cost and Works Accountant (Grad.CWA)

A double degree in commerce and services from Victoria and the diploma in financial planning from Massey, but the one that I hold in highest regard is the certified financial planner. It is the pinnacle of our profession and the one that I find most relevant.

My highest qualification is a Graduate Diploma in Business Studies in Personal Risk Management. I completed my studies through Massey University in 2004 and this assisted in my gaining the designation of Chartered Life Underwriter in 2007.

Do you plan to do any further study? I am part-way in completing my Graduate Diploma in Business Studies (Personal Risk Management (Massey)

While we are legislated as an industry to complete ongoing CPD, it is essential to growing as an adviser. My CPD plan is a learning tool that I place lots of emphasis on over the year.

If the new revised code requires that I undergo further study, to remain compliant in the areas of advice I give, I will meet those requirements. If not, I will continue to upskill though regular CPD offerings relevant to my identified needs.

Do you think there should be higher qualification requirements for advisers? Why/why not? If the adviser can demonstrate he/she has been working hands-on in the industry with a reputed brokerage or insurance company relevant to advice processes for over five years, the need for additional qualification should not be a prerequisite in my opinion as the person would have acquired all the knowledge and skills to do a good plan for client via the work experience. What will be required is to demonstrate a good advice process is being followed. However if someone is new to the industry, operating on their own and does not have sufficient work experience in the related field, a basic minimum qualification should be a must.

I hope the pending changes to the FAA will have all advisers; investment, mortgage, risk insurance, KiwiSaver, and general insurance, needing to pass a base module on the basics of advice, ethics and putting the client first. Each adviser should then have to prove their competency in their chosen areas of advice. I believe higher levels of qualification will instill higher levels of confidence from the public.

I have some doubts as to whether the National Certificate in Financial Services (Level 5) is an adequate qualification for an adviser who offers a full financial planning service. I feel that these advisers should aspire to gaining the designation of Certified Financial Planner and any future code requirement should include this designation or a Bachelor of Business Studies in Financial Services. I also feel that all risk advisers should be required to meet an education standard commensurate to the advice they give.

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

ANZ appoints new insurance distribution boss

Peter Dine

Andrew Boughey ANZ has appointed a new head of adviser distribution for its insurance products. Andrew Boughey has been working as a business development manager in the OnePath business for the past two years. Before that, he was a sales manager at AXA Insurance, based in Hong Kong. He also worked in private banking and wealth management for banks in New Zealand and London. Boughey has a Bachelor of Commerce (Hons) in Finance and Economics from the University of Otago, a Diploma of Financial Planning and a National Certificate in Financial Services as well as similar qualifications for the Hong Kong and UK markets. While in Hong Kong, Boughey was responsible for promoting AXA’s products and services to 100 IFA firms representing 750 advisers. "This experience in maintaining and developing relationships with advisers will be a great asset in his new role as our head of adviser distribution," an ANZ spokeswoman said. "Andrew will be responsible for the distribution of OnePath Life insurance products to independent advisers. He will maintain our existing relationships with advisers, while also leading our sales team and working closely with our broader claims and product teams."

Saturn appoints GM

Advice firm Saturn Portfolio has appointed a new general manager. Peter Dine has taken over at the helm of Saturn Portfolio Management. The independent financial advisory firm has a team of nine financial advisers in Auckland and Christchurch.

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Dine had worked as a consultant to MMC since leaving his position as head of Aegis last year, when ASB brought the platform under the remit of its head of securities. Before Aegis, he was a business development manager at BT Funds Management and worked for AMP. “Saturn Portfolio’s financial advice business had grown strongly following the acquisition of the local Van Eyk business. Peter is an ideal appointment with his 30 years of financial services experience specifically in business development and management. Peter’s appointment will strengthen the leadership of our Auckland and Christchurch offices and provide more focus on our role as a national independent financial advisory firm in the evolving regulated environment for advisers," said John McConnell, managing director. Dine said he was excited to be joining the Saturn team. “I have spent a lot of enjoyable years working for large corporates. It is now time to work in a different environment where I can work more closely with both staff and directors of the business on a daily basis."

New face at Southern Cross

She said she was excited by the challenge. “There are few stronger brands in the New Zealand financial services market so there’s a tremendous platform in place for Southern Cross.” Chief executive Nick Astwick said Boielle’s breadth of experience - including working with financial services intermediaries – made her a great fit for the role. “Kerry has an open and engaging style and I know that she will be adding value from day one as the leader of the sales function and as a member of the society’s leadership team.”

Kerr joins Chow board

Financial services veteran Roger J Kerr is joining the board of the Chow brothers' still-to-be-revealed new project. John and Michael Chow are directors of INNO Capital, a non-bank financier. They have appointed Kerr as independent director and chairman of the board of an unnamed project. “Roger brings with him vast experience in the financial services and funds management sectors to our team, and an independent level of governance," John Chow said.

Berry back on FADC

Tracey Berry has been reappointed to the Financial Advisers Disciplinary Committee for a five-year term. “Ms Berry was appointed to the disciplinary committee in December 2010. Ms Berry brings to the role more than 20 years’ experience in financial services, specialising in wealth management, regulatory affairs, compliance and distribution,” Commerce and Consumer Affairs Minister Jacqui Dean said. “I am pleased to be able to reappoint someone of Ms Berry’s calibre to this committee. The Committee conducts disciplinary proceedings, referred to it by the Financial Markets Authority, arising out of complaints regarding authorised financial advisers."

Consilium hires advice support rep Kerry Boielle Kerry Boielle has joined the society, overseeing direct and intermediated sales. She comes to Southern Cross from Kiwibank where she was general manager of lending and investments.

Financial services specialist Consilium has made two new appointments. It has hired Nicole Stewart as a client support representative, with a focus on helping independent financial advisers and their administrators on the Consilium Platform. CFA level one candidate Lydia Luo has also been appointed to an analytical role.

UP FRONT

{ NEWS from NEW ZEALAND }

Massey resumes work on financial advice degree

Massey University is recommencing work on the development of a financial advice degree. Research was conducted in 2013 as part of planning for the potential development of a course. At the time,

Massey said there were requests from the sector for the qualification, to boost professionalism. It was intended to be similar to the Bachelor of Accounting for accountants. But Deputy Pro Vice-Chancellor Claire Matthews said the degree was put on hold because there needed to be a sufficient market for it to justify its development. “We also need to be sure that the content and structure meets the market’s requirements. This is now being picked up again, and we are working with an external third party on that development.” That third party is Strategi. Its managing director David Greenslade said other countries, such as Australia, were moving quickly to degree requirements for financial advisers. He said Massey was going through a process of looking at its current diploma,

Claire Matthews

which he said had “next to no” students coming through, and said it made sense to build that up to become a major of the Bachelor of Business Studies. Those who had the level five certificate could then cross-credit it to the degree, he said. “That’s the logical move but everything has got to be integrated in. We need to start discussions with the Code Working Group to make sure it is not a useless degree. It has to be fit for purpose for the future and has to be reasonably practical.” Ara, the institution formed through a merger of CPIT and Aoraki Polytechnic, launched a graduate diploma and degree major in financial planning in 2016. It has had six students through the major this year.

UP FRONT

{ NEWS from NEW ZEALAND }

Roboadvice could come sooner than law reform The Financial Markets Authority is considering ways that roboadvice could be made possible before the new financial advice legislation kicks in. The Financial Services Legislation Amendment Bill, which repeals and replaces the Financial Advisers Act, will clear the way for roboadvice to operate in New Zealand for the first time. But lawyers said it was not happening fast enough. Geoff Ward-Marshall, of DLA Piper, said the law would not change until 2019 under the current timeline. "Fintech is fast-moving and there is a real risk that New Zealand firms looking to operate in the roboadvice area will be left behind by their overseas competitors." He said he had not seen any concerns raised about the introduction of automated advice during the Financial Advisers Act review process. "Industry is ready and waiting for it...

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and bearing in mind the glaring advice gap, consumers need it." Lloyd Kavanagh, chair and partner of Minter Ellison Rudd Watts, agreed: "I do think there is a risk of New Zealand being left behind as innovation develops pace around the world. That means the benefit, of making low cost independent advice available to the large numbers of New Zealanders who do not currently receive advice, would be delayed. "In addition, if the innovation occurs elsewhere, and is only rolled out to NZ belatedly after having been designed to suit other markets, that means New Zealand loses the opportunity to develop its technology sector." A spokeswoman for the Ministry of Business, Innovation and Employment said the concern was being addressed. "We received feedback from some stakeholders that we should consider

" I do think there is a risk of New Zealand being left behind as innovation develops pace around the world. " Lloyd Kavanagh, chair and partner of Minter Ellison Rudd options to ensure the ability to provide roboadvice is not unduly delayed. We are currently analysing these submissions. The transitional arrangements will aim to strike a balance between ensuring New Zealand providers are not at a competitive disadvantage and that there are sufficient safeguards in place for investors," she said. "MBIE has also discussed this matter with FMA. They say: 'The FMA has been considering ways to facilitate digital advice sooner than the law reform. We think this may be possible within our existing exemption powers, and we expect to publish our proposals through consultation next month, and will be looking for feedback on this'."

UP FRONT

{ NEWS from AUSTRALIA }

Expensive fines for providers

Australia’s main banks and AMP have paid AUD60 million of a combined AUD200m fine for charging customers for advice they never received.

Australian watchdog ASIC has released an update. It said AMP, ANZ, CBA, NAB and Westpac will have to pay a combined AUD204m in refunds to customers who were affected by banks’ advice failures. So far they had repaid AUD60.7m to 45,000 customers. ASIC said it would continue to supervise the banks to determine whether there were any other cases where fees had been charged for non-existent advice.

ASIC releases new sample statement of advice

Websites hinder customers Limited scope of product comparison life insurance websites combined with customers increasingly wanting a DIY approach is putting more Australians at risk of making uninformed decisions, Rice Warner says. The research firm said websites focused on price, which meant customers resorted to relying on brand names rather than considering hteir insurance needs. “The comparison websites all include education material such as explanations

of the types of insurance policies, their key features and how to obtain cover,” senior consultant Andrea McDonnell told Australian media. “However the risk of making an uniformed decision will always be greater without the guidance of a financial adviser. “It is important for industry participants to continually highlight the need to seek quality advice and to make it easy for individuals to obtain it.”

No action on increased retirement cost HSBC is warning that Australians aren’t paying attention to the rising cost of retirement. The Association of Superannuation Funds of Australia's Retirement Standard, which tracks the rise and fall of items included in average household budgets, shows that between June 2006 and March 2017 the amount required by a single person for a modest retirement rose by 33%. The amount needed for a

comfortable retirement increased 23%. The latest Future of Retirement report from HSBC shows only 21% of Australians believe they will be able to afford a comfortable lifestyle in retirement. Australians are also least likely to actively manage their retirement savings. The HSBC figures show that only 38% of Baby Boomers have sought information on retirement funding, compared to the global average of 50%.

ASIC has released a new sample Statement of Advice for life insurance advisers. The regulator released the sample SoA along with a new consultation paper which details proposed changes to Regulatory Guide 90 (RG90) which covers the creation and use of SoAs in limited advice situations. ASIC has also given the financial advice sector a one-month window to provide feedback before making further changes ahead of a final release in September 2017, Australian media reported. ASIC said the consultation paper sets out the rationale for updating RG90 which would result in the current example SoA being replaced with a new example SoA for scaled advice for life insurance for a new customer in the regulatory guide. The consultation paper stated that despite ASIC’s guidance on SoA’s “… many financial advisers were still producing SoAs that were too long and complicated” and shorter SoA’s were recommended as part of the Trowbridge Report and the Life Insurance Framework reforms.

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Qualified to advise Is financial advice a profession requiring a degree? Or does great advice require just a certain ‘je ne sais quo’?

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hen it comes to education, advisers often seem to fall into one of two camps. On one hand, you have those who say financial advice is a profession, and to be recognised as such, advisers should all have tertiary qualifications, in the same way lawyers and accountants are expected to. On the other, you have people who say it is not academic learning that makes a great adviser. Good advisers are great relationship people, who know their stuff and have often honed their knowledge over decades in the job. Expecting them to go to university and take a basic level qualification to prove it would be like sending an All Black back to do ball skills training in high school PE. Education has been a hot topic in the industry for some time. When the Financial Advisers Act was first developed, it was expected that insurance advisers would need a level five qualification. At the last minute, that changed and only authorised financial advisers were required to reach that standard.

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Then, the Act was up for review and qualification expectations were back on the table again. In the exposure draft of the Financial Services Legislation Amendment Bill, no signal is given as to what the Ministry of Business, Innovation and Employment considers an acceptable level. That is left to the Code Working Group who will develop a new Code of Conduct to cover all financial advisers in the industry, and dictate their competency and qualification requirements. Existing advisers will have a safe harbour before they are required to meet the new requirements and it has been suggested that there could be temporary grandfathering for authorised financial advisers, or that AFAs and RFAs who have been in the industry for at least 10 years could prove their competence through on-the-job assessments, tests and reviews of client files. David Ireland, the chairman of the current Code Committee, said they were short of options when the first code came into force in

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Expecting advisers to go to university and take a basic level qualification to prove it would be like sending an All Black back to do ball skills training in high school PE.

Raising the value of

FINANCIAL ADVICE 20 years of experience in financial services compliance and adviser training. Contact us for all your compliance, systems development and training, including Level 5, CPD and customised courses.

For more information call +64 9 414 information call 1300, or visit +64 9 414 our1300, website or strategi.co.nz visit our website strategi.co.nz

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2010 and dictated a level five minimum for AFAS. “In reality, the level five national certificate was the only game in town, the only thing that would tick the boxes. It was not a hard decision to make at that point.” He said the Code Working Group would need to decide whether that still made sense as the base, whether it should be the standard across the board or whether there would need to be a more granular approach. “Do you set a higher standard for some things, and lower for others? You’ve got the full spectrum of financial advice going to be covered by the new code. Whether one size fits all is going to be one of the key things that the Code Working Group needs to decide.”

AUSTRALIAN EXAMPLE

" In reality, the level five national certificate was the only game in town, the only thing that would tick the boxes. It was not a hard decision to make at that point. " David Ireland

Raising the value of

FINANCIAL ADVICE 20 years of experience in financial services compliance and adviser training. Contact us for all your compliance, systems development and training, including Level 5, CPD and customised courses.

Strategi QUARTER For more information call +64 9 414 information call 1300, or visit +64 9 414 our1300, website or strategi.co.nz visit our website strategi.co.nz

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In Australia, reforms have introduced tougher rules for financial advisers. From 2019, new financial planners must have a bachelor’s degree or higher and pass an exam which will set an industry benchmark. They will also have to complete a “professional year” for training. Existing advisers will have to pass the exam by 2021 and have until 2024 to complete a degree. Ireland said the Australian experience was something that would be part of the Code Working Group discussions. “We can’t be in a Trump-esque isolationist bubble where we ignore what’s going on in the outside world. We need to be cognisant of developments in Australia and also the UK, US, Canada... We need to take that on board. Having said that, there are differences.” He said a key concern for the Code Committee had been the availability of advice for New Zealanders. He said, with one of the proposed legislative principles of the new regime being improving access to advice, it would be hard to juggle the need to improve the availability of financial advice while requiring that everyone who delivered it had a degree. “What’s far more important is the ability to communicate effectively with human beings. Having a degree does not necessarily equate to an ability to communicate effectively.” The national certificate in financial services was replaced by the New Zealand certificate, which is widely recognised as being a better and more suitable qualification. Skills Org is conducting a review of it, which Ireland said was well-timed and would benefit those developing the new code.

WHAT FOR RFAS?

If a level five qualification is considered the industry minimum, it may be registered financial advisers who feel the pinch the most. They are not required to have any set qualification standard at present. David Greenslade, of training provider Strategi, said it seemed likely that standards would increase for them and they ought to be ready for that. “It is unlikely that we will end up with a lesser qualification standard than we’ve got with the new level five. It’s hard to anticipate we will end up with an alternative to it.” He said it should not be hard for someone who was an RFA to achieve. “We’ve got to have the qualification that is compatible with other regulatory environments. It is comparable with what other industries have. It’s time consuming and it can be quite mundane. None of this is hard. None of it is designed to victimise a financial adviser and say all financial advisers are being singled out as needing to be educated. It’s a move to licensing that is happening in every single industry.” Barry Read, of compliance firm IDS, supported the idea of staggered levels of qualification requirements, depending on the type of advice an adviser offered. He said basic product advice, such as that offered by a QFE adviser at present, could be given with internal training. Those who offered insurance planning for personal clients might need level five, he said while advisers

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offering business insurance advice or more complex issues might need level five plus a certain amount of experience. “There should be a matrix,” he said. “Someone might give level two insurance advice and level one KiwiSaver advice. That’s how I would like to see it. For some types of advice, a degree level qualification might be appropriate. Whether that is an average minimum requirement remains to be seen.”

LIFTING THE BAR

Some industry participants are taking a firm stance about the need for the standard to be raised for investment advisers. Ross Sheerin, of Trustees Executors, said for investment advisers, the level five requirement was “laughably too little”. Greenslade said there was a noticeable move internationally to degree-level qualifications and if the financial advice industry wanted to be seen as professional, having a degree was likely to be part of that. Higher education standards would go a long way to improve consumer confidence, he said. “To become a licensed building practitioner, basically a builder, they have to go through more education and practical onthe-job supervision than an AFA does.” Fred Dodds, chief executive of the Institute of Financial Advisers, can understand where some of that criticism is coming from. “Kindy teachers have to do level eight,” he said. “Does a degree equal competency? No. Morality does not equal ethics but you have got to have a line in the sand.” He said advisers would have to have “rocks in their heads” if they did not think the Australian example would be noted here. “It’s important that we don’t scare off the adviser force, with an average age of 57. But we need to understand the world is going to change.” He said it would be ideal to see students doing some financial planning papers as part of their business degrees, then going off for an OE, coming back and delving into financial advice careers. “We need to fill the funnel of degreeearners.” His counterpart at the PAA, Rod Severn, said he would support a higher level of qualification for advisers and said the disparity between the requirements of RFAs, QFEs and AFAs was problematic. AFAs must do continuing professional development, but RFAs have no such requirement. “In order to raise public trust and confidence, some form of qualification would be desirable,” he said.

" I think it is likely that we will move to a degree requirement to match Australia. I also believe that an appropriate degree should be the minimum requirement for advisers. " Claire Matthews But he said the focus should primarily be on proving advisers’ competence. He said, from that perspective, ongoing CPD and education was more important than a base-level entry qualification. “I’d like to see a minimum requirement for advisers across the board, whether that’s level five or something else. But it’s more important to test competence and have a minimum level of competency standards.” Severn said he did not think a degree was necessary. “I think that’s going over the top. We’ve got good courses here that don’t require a degree. If you’re putting a burden on everyone coming into the industry to go to university – some are doing it as a second, third or fourth career, in their 30s, 40s or 50s – are they going to go back to uni? It could hurt people coming into the industry. The opportunity should be for everyone to prove their competence, whether that’s deemed to be in association with a level five certificate

or something similar, yet to be defined by the Code Committee.” Ara, the tertiary institute formed as a merger of CPIT and Aoraki Polytechnic, launched a graduate diploma and degree major in personal financial planning. Massey University has also resumed work on its degree, in conjunction with Strategi. “The degree was put on hold because there needs to be a sufficient market for it to justify its development. We also need to be sure that the content and structure meets the market’s requirements. This is now being picked up again, and we are working with an external third party on that development,” said Claire Matthews, deputy pro vicechancellor. “I think it is likely that we will move to a degree requirement to match Australia. I also believe that an appropriate degree should be the minimum requirement for advisers. However, any change to require a degree needs to allow sufficient time for existing advisers to meet the new requirements.” Gary Young, chief executive of IBANZ, which operates the Professional IQ College, said everyone should have a qualification to give advice. But he said a degree was not the answer. “Level five seems to be the basic standard. We see that as the standard for new people to the industry.” He said it seemed at present as if most advisers were sitting on their hands and waiting to see what the new rules required they do. “If they are relatively new to the industry, they should just get on and do the certificate. It seems relatively likely that will be the base level.”

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QROPS TIDE TURNS After a run of rule changes, the pension transfer market has established a new normal.

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QROPS

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f you are feeling battered by regulatory reform, spare a thought for Qualifying Recognised Overseas Pension Scheme (QROPS) providers. Since 2014, the pension transfer industry has been hit by a series of changes, from authorities in both hemispheres. In 2014, Inland Revenue, worried noncompliance might be rife, updated its rules to introduce a sliding scale of tax payments for pension transfers. The longer you stay in the country before you bring your money over, the more tax you now need to pay. Transfers within the first four years are tax-free. Then, in 2015, changes in Britain meant all KiwiSaver schemes lost their QROPS status. UK non-funded state pensions, such as those held by people working in the health sector, also could no longer be transferred internationally. It had been estimated that previously up to a third of the market had been these pensions. People were also given the option of withdrawing their money as a lump sum at 55, instead of having to keep 70% of it as an annuity, as they had to under previous rules. On the New Zealand side, the Financial Markets Conduct Act changed things again

because it required all QROPS operators to be licensed managed investment schemes (MIS). Then, out of the UK, it was revealed this year that people looking to move a UK pension offshore will face a 25% tax charge, unless, at the point of transfer, the person and the QROPS scheme are in the same country, both are within the European Economic Area or the QROPS is provided by an employer. After such a sustained period of change, you might expect the market to have ground to a halt and migrants to decide it might be easier to leave their money where it is. But providers say, new New Zealanders are increasingly interested in transferring their money again. Alun Rees-Williams, of Britannia, said the peak period for QROPS transfers had been the time leading up to the end of the partial amnesty offered when IRD's changes were made. Until mid-2015, those who had transferred their pensions between 2000 and 2014 and not paid tax had the option of coming clean and only paying on 15% of the transferred balance. When that amnesty ended, combined with British moves that coincided, things slowed significantly, he said. "The market took quite a

big hit for those two reasons. It hasn't reached those previous heights again but no one expected it to." He said it seemed to have settled back to something more like normal. Industry estimates put the amount of money coming to New Zealand from Britain each year at about half-a-billion dollars. Rees-Williams said transferors were now much more aware of their tax obligations. Moving money between the two countries can take months. He said on the UK end, pension trustees and administrators were particularly careful about following the right procedures. "We have joint liability with the transferring scheme and they are a lot more careful," said Britannia chief executive Gavin Dixon. Ralph Stewart, who recently launched Garrison Bridge, said the industry was maturing. "It's moving from, for lack of a better term, cottagey to more industrialised. Over the last decade, the degree of information and tax required by HMRC has become clearer. The industry has been dogged by a number of fairly unexpected changes but most of them are largely on the table now. The transparency around the tax consequences of migrating a pension to New Zealand are clearer. All the

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business, looking to operate a managed fund under the FMCA,” he said. Schemes that had not moved to the new regime would not be able to accept new money or members.

WHAT ARE THE OPTIONS?

myths, legends and mysteries are avoided." NZ Funds chief executive Richard James agreed there had been consolidation. "There used to be a couple of dozen schemes and now there are eight or 10 significant ones. There appears to be $2.5 billion in New Zealand QROPS schemes." At Booster, chief investment officer David Beattie said the requirement to become an MIS had probably pushed some providers out of the market. He said that was what had driven Booster’s acquisition of Fidelity Life’s superannuation scheme. “They concluded early on that they were not, as part of their

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"It's an advice-intensive area and the consequences of poor advice are significant." Richard James

There are 10 providers of QROPS funds in New Zealand: NZ Funds Management, AMP’s Retirement Trust, Britannia’s Retirement Scheme, Craigs Superannuation Scheme, Fidelity Super, Garrison Bridge, Select, Medical Assurance Retirement Saving Plan, Portfolio Superannuation Scheme and Superlife UK Pension transfer scheme. Some, such as AMP and Britannia, have a subset of funds to allow advisers to manage their clients’ portfolios. Via AMP, QROPS money can be put into 27 different options. Select has seven model portfolios and advisers can build a portfolio based on more than 90 assets. Some funds allow investors to keep their money in British currency while others convert to New Zealand money. “Our view is that these are reasonably significant sums of money,” Jeff Ruscoe, AMP’s general manager of product and marketing, said. “Giving advisers the opportunity to create portfolios for clients is really important.” Britannia’s new scheme received QROPS approval in February. Its two existing schemes were closed to new members. Dixon said the new scheme would follow the existing model of "smart beta" funds. The older Britannia schemes had the bulk of their funds managed by IOOF, with a passive approach plus strategic tilting. The older schemes had investments in Australian and global assets. Britannia Superannuation Scheme has half of the Australian exposure invested in New Zealand equities and bonds. Britannia brought in Harbour Asset Management, which Dixon said employed a

QROPS

similar method to the approach of the existing funds. He said the New Zealand exposure should help to offset the volatility that could occur between the Australian and New Zealand dollar. Garrison Bridge launched in December after variable annuity provider Lifetime partnered with the IVCM Scheme formerly known as Brooklands to take over management duties of two QROPS super schemes. Stewart said it provided a multi-currency offer, combining international index funds and simple fees with a tax effective structure. Ruscoe said AMP had a focus on keeping fees down. “There are no contribution or withdrawal fees and low investment management fees. That’s driving prices down in the market- they have traditionally been quite high.”

WHAT DO ADVISERS NEED TO KNOW?

Only a small number of advisers in New Zealand deal with QROPS products. ReesWilliams said his business had nine that were closely aligned to the business and another 20 that it worked with. "We used to have advisers coming on board and dabbling in transfers because it was simple. Now there are maybe 30 advisers in the country specialising to some degree in transferring pensions. The market is

becoming more specialist." He said people who were not prepared to put the time into becoming pension transfer specialists should not bother. "It's so complex, the rules are ever-changing. You find with financial planning some things are flavour of the month but I don't think QROPS is any more. Because it's so specialised, if you don’t understand it, don't dabble." James agreed the stakes were high. Advisers needed to understand the tax consequences here and in the UK and if they got it wrong, clients could face significant tax bills. "It's an advice-intensive area and the consequences of poor advice are significant. If you don’t have time to invest in becoming generally expert in it, it's a potentially highly risky area for the client first and foremost and the adviser secondarily. But for an appropriately qualified adviser it might be a logical thing to do." Cordelia Scott, product manager at Select Wealth Management, said: “Financial advisers need to be really clear on the lock-in requirements and any possible tax implications that their clients may face on moving their pensions to a New Zealandbased ROPS scheme. “It’s important to ensure that investors have received advice from UK pension

You’ve brought your family to New Zealand... so don’t leave your pension behind. Call us now on 0800 254 338

garrisonbridge.co.nz

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specialists. Many financial advisers are experts at providing financial advice and don’t necessarily have the depth of knowledge to understand the intricacies of ROPS transfers. At Select Wealth, we work closely with financial advisers, many of whom are international pension specialists to assist investors in receiving the correct advice during their pension transfer process.” Beattie said it was important that advisers and providers made sure that people who transferred their money received all the benefits they would have been entitled to, had they left their money in the UK. That would require good records and systems, to pinpoint who was entitled to what, when and how much, and what was locked in. “You don’t want to fall foul of the UK tax authority because the penalty for getting it wrong is quite significant.” But Ruscoe said the key thing for advisers would be to help their clients with their investments once the money landed in New Zealand. Providers could help with the technical details of the transfer, he said.

WHEN IS IT WORTH TRANSFERRING?

People usually decide to transfer so that all their assets can be kept together in one country. Ruscoe said transferring would allow people to bring all their retirement assets into one place and avoid the risk of exchange rate fluctuations at a time when they could least afford to weather them. But James said it would generally be better for people to transfer their pensions as quickly as they could. He said the cost of the work involved would mean that it made sense for advisers to focus mainly on clients with more

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"You turn your back on the regulator and the next thing you know they’ve made changes and wiped out the KiwiSaver market." David Beattie than £100,000 to invest. "We came across one with £7m. Some have very substantial sums. They are coming to live here forever." McKenzie said people needed to be sure they were staying in New Zealand. "If you take your money out in New Zealand and go back to the UK within 10 years, that can have tax

consequences. With our client base, people say they are never going back but sometimes with parents and family they do end up going back.” There is a clear expectation of good times ahead for the pension transfer world. Stewart said the number of people migrating to New Zealand had increased significantly and that would drive it. "It's gone from 8,000 a year to 12,000 over the last few years." James also expected migration to keep the pressure on. "If you look forward, UK immigration flows are as strong as they have ever been." Scott said investors were likely to want more choice in their investment options, and the flexibility to invest in UK-based assets with a wider-based investment approach and the ability to change this dependent on market factors. But she said QROPS providers could not become complacent. “In today’s legislative climate, the one thing you can expect is that there will more change, both in UK and New Zealand law. We are not sure that any of these will be designed to make the process smoother, but we will continue to work with our business partners and financial advisers to provide investment and administration solutions for them and their clients.” Beattie agreed keeping up with changes was a challenge and required a significant investment of time. “You turn your back on the regulator and the next thing you know they’ve made changes and wiped out the KiwiSaver market.” He said because the UK had put a strong focus on funds receiving pension transfers, they could not afford to put a foot out of line.

COMMENT

Is anyone out there? Murray Weatherston says some advisers may be in for a nasty surprise.

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hrough the Financial Advisers Act review process, I have wondered whether the regulators have even been listening to many of the submissions they received. You would have to think those drafting the new law have not heard the voices of the independent advisers who tried to speak up, considering how well the exposure draft of the Financial Services Legislation Amendment Bill seems to serve the big end of town. I have questioned on a number of occasions whether it was even worth putting in a submission, because no one was going to pay attention. The people doing the review did not have much experience in the financial sector, let alone financial advice, and they seemed to have been captured by the big guys. We asked some of them early in the review whether they even had a financial adviser and I am not even sure they had any financial products. They seemed to have taken the view that you don’t need to know anything about the subject you are going to regulate – all you need to know is this magic thing, policy analysis. What they have come up with will do very little good at all. If changing the acronyms of AFA, RFA and QFE to FA, FAR and FAP makes a difference, I’ll be very surprised. It just seems to be trying to make it easier for the big institutions to sell their products. Advisers, meanwhile, are still trying to advise their customers on what they think is the best thing for them to do. The retired Chief Justice of Australia, Sir Anthony Mason, put it in words better than I could put it, talking about Australia. He said: “Our system of regulation proceeds on the footing that the adviser may be a productseller. Indeed, our system enables the productseller to adopt the disguise of a financial adviser and endows that disguise with the aura

If I go into a Toyota car plant, I’m going to be sold a Toyota. I don’t expect to be sold a Ford or a Holden, or whatever, and we know that that’s the way that it works.

MURRAY WEATHERSTON

of legitimacy by calling him a [‘financial advice representative’] That sums it up to me. I don’t have any problem with the bank selling its own products to a customer, so long as the customer knows they are getting a sale. If I go into a Toyota car showroom, I’m going to be sold a Toyota. I don’t expect to be sold a Ford or a Holden, or whatever, and we know that that’s the way that it works. But I think what they’re trying to do, and I like those words – “endowing the disguise with the aura of legitimacy” – it’s almost saying that what the banks are doing actually isn’t selling, when in fact, we know that it’s selling. But the people in the review team just didn’t seem to accept that at all. Where was the voice of the industry in this? I hate to be critical of advisers but I think a lot of them have just sat back and thought “someone else will solve this for me” or “it doesn’t really matter whether I get engaged or not because I can’t affect the outcome”. I think advisers, and especially the RFAs – the life agents, the mortgage brokers and the general insurance brokers for example, could find themselves having to face things that they don’t really like when the final shape is known. I keep going back to the fundamental question “What exactly is the problem that regulation is trying to solve?” I would guess that AFAs and their employers have already spent more than $100 million on adapting to investment advice regulation and the benefit so far has been very light. If the consumer is still confused, if they’re still saying they don’t know where they need to go to get investment advice, you would have to say this has all been a very expensive – but actually not very helpful – exercise. Murray Weatherston is a financial adviser and founding member of SIFA.

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OFFERING BEAUTIFUL ADVICE Nicki Spence is a recent convert to insurance but she couldn’t imagine doing anything else.

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ADVISER ASSET REGULATION DATA ADVISER PROFILE

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inancial adviser Nicki Spence spent ten years managing a beauty therapy business before she made the leap to insurance. Some might think that is an unusual path into the industry but she says the two professions are not as different as you might expect at first glance. “[In both cases], the better you know someone, the better quality of work you can do for them,” she says. Spence, 44, decided to try her hand at insurance advice three years ago, on the suggestion of a friend. She had been running a business in central Whangarei, Avid Beauty, with six staff. But she was looking for a new challenge, and open to moving into another industry. “I had a friend who was an adviser and he knew I would love doing it and he was absolutely right,” she says. “In the same day it’s the most frustrating and the most rewarding industry I’ve ever been in.” The biggest surprise was how much there was to learn, she says. From the outside looking in, matching people with the right insurance policies seemed fairly simple. In practice, it’s turned out to be something entirely different.

I realised that having to shoulder all the administrative burden as well as everything else was stopping me doing what I love, which is getting out there and talking to people, finding out about them and what makes them tick

She said more seemed to be willing to work together to achieve wider goals for the industry. “There are plenty of clients out there for us, why not have a great time with people you can call friends? We don’t have to fight over scraps from the banks, we can get out there and make our own way – that younger attitude is more important than an adviser’s age.” Spence says the next area she would like to focus her attention is business insurance. “My bread and butter will always be personal insurance. I would like to focus on women but in Whangarei it’s not possible to get that niche. But I’m in business making sure they’ve got someone they can call who is just up the road.” The biggest opportunity now for the insurance industry is to give clients advice that is better than anything they have had over the past 40 years, and to close the underinsurance gap, she says. But there is still a perception problem to overcome. She sometimes has stands at trade shows and says people take a mental step back when they realise they are talking to an insurance adviser. “Sometimes it’s a physical one too, if I’m talking to someone at a show and they’ve come up in a bit of a daydream and didn’t see the signs and say ‘what do you do again’ you sometimes seem people turn and walk away quickly. People think we’re out to get them but actually no. I’m looking for someone who is looking to be helped. I’m not going to jump on anyone. I want the ones who want to be helped.” She says insurance advisers can slowly overcome that reputation by continuing to do good work and by being the type of people that clients wanted to deal with. “Not being a person who’s chasing someone who has already said no.” Her biggest strength is being able to find something to relate to with virtually anyone. “I can walk in and there is almost no one that I can’t find common ground with. I’m a mum, I’ve been self-employed, I’ve dealt with ACC...” Spence plans to still be in the industry for decades to come. “There might be tears and tantrums in the meantime but I’ll still be doing it. I take what I do very seriously. I don’t take myself seriously at all, I’m happy to have a laugh, but when it comes to my work I take that seriously. I like to walk away knowing that even if I didn’t do business that person might refer me to other people.”

“It was a lot tougher than I first expected, I had no idea there were so many minute details that we have to take into account, from policy wordings and definitions, people's individual situations, regulations that we're bound by, the list seemed endless at times.” The nature of the work fits in well with her home life, too. She has two children and can be home with them in the afternoon after school when she is needed, and then gets back into work when they are in bed. She also finds time to indulge her hobbies of cake decorating and Brazilian jiu-jitsu. When she first joined the industry, it was under a brokerage. She then went out on her own for a while before realising it made sense to have the support of a wider network. “I realised that having to shoulder all the administrative burden as well as everything else was stopping me doing what I love, which is getting out there and talking to people, finding out about them and what makes them tick and then at the end of it seeing that they feel like they've got someone they can turn to, to help them sort it out if something awful happens.” She has since moved under the wing of Auckland-based Financial Design Group. She covers Whangarei and other nearby parts of Northland. Spence says the thing she likes most about her job is working to put together cover as a sort of jigsaw puzzle “to give just the right cover for the right person, rather than a one-size-fits-all approach.” Sometimes that might mean combining five different products on paper to make sure that someone had the full cover required, so that they would not be left vulnerable whether they broke a leg or had a serious heart attack, she said. “It’s making sure you have got a back-up no matter what happens. I don’t think people always understand that.” She says many of her clients appreciate that she does not fit the usual stereotype of what they expect an insurance adviser to be. But Spence says she sees a new generation of advisers coming through, with a fresh approach to insurance, and a new culture “some male in their 40s and 50s, some females in their 20s but they all have a new attitude”.

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Harness clients’ will power The goal of insurance planning is to ensure the right money gets to the right place at the right time.

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ver the last few years we have seen several cases when poor estate planning has meant that some clients’ insurance plans didn’t work as they wanted at claim time. In one case a husband had implemented life cover to pay off the family’s mortgage and leave the house freehold for the wife and kids. Unfortunately, he was made owner of the policy on the advice of the adviser, but had no will in place. The result was the proceeds of the insurance went into the estate, which was divided up based on the Administrations Act rules, resulting in the wife only being able to pay off half the mortgage, while the rest of the proceeds went into trust for the kids till their until they were 21. In a similar case we saw, the insurance was paid to the partner as the owner of

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the policy, who paid off the mortgage as planned, but the house ownership was challenged by the deceased’s kids. Because Dad didn’t have a will, the kids ended up with a freehold house and the partner was homeless, which didn’t quite match the goals of the insurance plan the adviser had organised. It’s not only insurance advice where this is important. A retirement plan recently recommended investment of assets held by a trust to help fund a couple’s retirement. The retirees set up the trust for the kids and grandkids as part of the estate planning. Yet the retirement plan was for them personally. There was no mention in the plan of the issues arising from using the trust funds without sign off of the trustees or a discussion with the kids. This could create issues for the trustees if the kids

challenged the use of trust funds in the future. These cases could potentially be challenged under the Consumer Guarantees Act or Fair Trading Act against the advice services of the adviser. Or would an adviser be in breach of the Financial Advisers Act section requiring care, diligence and skill? When it comes to financial advice and estate planning, the most common process we see is that the advisers ask a question of the client about their current estate plans. Do you have a will, EPA or trust? If a client answers yes to a will or EPA, then most commonly the adviser moves on, without confirming the details. Not often do we see advisers asking, “What does it say? Who has it? Who is the executor?” Which is worrying because the will lays out the persons’ wishes when they die, and takes

ASSET LEAD REGULATION Y R ODATA TS ADVISER STORY DAEL

deciding how much insurance they need and how it is to be owned. They don’t consider it might be affected by a challenge to their estate. While cross ownership may mean insurance is paid to the current spouse or partner, the rest of the estate’s assets could still be challenged, therefore leaving the spouse/partner/family in a worse position than intended. This is a risk for advisers who don’t identify potential issues and are then seen as offering only generic advice in insurance plans. As a financial adviser you have a couple of choices on how you can handle estate planning issues when giving advice on insurance plans. Ignore estate planning and don’t include any questions or advice in your plans. By having asked the will and EPA questions and not identifying any issues, clients may assume there are no issue with their estate plans.

Because Dad didn’t have a will, the kids ended up with a freehold house and the partner was homeless, which didn’t quite match the goals of the insurance plan the adviser had organised. - Barry Read

care of things that need funding like the kids being appointed a guardian, future asset ownership or a fair division of property between family members. Then we see in the insurance plans, or recommendations, contain standard wording along the lines of; If you don’t have a will/EPA we recommend you see your lawyer or a trust company. Then the insurance goes in place with ownership decided either by advice or client request and estate planning is never mentioned again. We believe it is worth the effort for advisers to spend some time on this important area with clients. Clients want certainty from their insurance or financial plans, and uncertain estate planning could jeopardise the outcomes for your clients. Clients may make assumptions when

Ask relevant questions to identify potential issues and advise the clients to take action, for example; Could anyone challenge your estate? Family members, former partners, children, business partners, debtors? Does your family know your plans? Have you promised anyone anything? Has your relationship status changed since writing your will? Have you discussed your insurance needs with the executor or beneficiaries? When was it last reviewed? Could your business debts flow through to the estate? If we pay the mortgage off with your life insurance, who gets the house? If they are unable to give you definitive answers about current estate plans and they want to ensure their family gets the house and the insurance moneys, then they have some options to choose from. You could add to the insurance plan action points based on the issues you identified. For example; Next steps in the process: Once you decide on your insurance plan, we will get the applications to the insurers and start the underwriting process, which can take up to six weeks, while that is happening we recommend you get the estate planning issues identified sorted to match the desired outcomes outlined in your Insurance Plan. Your options are: You can make a time to see your lawyer and get advice, or you could contact a trust company, or take a DIY approach. The key is to not let the client just float off without taking action. Providing insurance money in an event can sometimes increase the chances of a family member or business associate or creditor challenging the estate. To find out more on how to identify estate planning issues and what to look for with clients, you could complete a course on estate planning, talk to a legal firm or professional trust company or kill two birds with one stone and get your own estate plans sorted and learn from that. Barry Read runs Independent Development Solutions (IDS), specialising in helping advisers meet their compliance requirements.

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Judgement

Day

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’m fascinated listening to advisers and the topics of their conversations: ➤ An awful lot of stuff about compliance ➤ Recent scandals ➤ The complexity of research Not talk about clients and the benefits

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What will your clients say about your advice when the time comes to see the results?

that you bring to them. I do appreciate that life is more complex, and quite rightly there are a whole bunch of new rules, regulations and cultures. But at the heart of all this is the client. At the end of the day they pay the fee and more importantly - benefit from your advice.

SO LET’S TAKE TEN SECONDS AND THINK ABOUT WHAT YOU BRING TO YOUR CLIENTS Hopefully you are doing your homework on their behalf, simplifying things and explaining

PRACTICE ASSET REGULATION DATA MANAGEMENT ADVISER

complex issues in simple language. Ideally you are tracking their success, helping guide them when they fall off message and giving them the confidence that they have made good decisions.

BUT MOST IMPORTANTLY – ACTION!

You see, after a lifetime in advice, I know endless reports, seminars and newsletters achieve absolutely nothing. It’s only your client taking action on your advice that gets them anywhere. Most clients are apathetic about their financial adviser, until their circumstances change. And I’m including mortgage brokers, investment advisers, insurance advisers of all types. You are the unseen helpers until something goes wrong At that time, you leap into prominence and will be judged by the wisdom of your advice. All of which is irrelevant unless the client took action. While sales skills have now been gentrified into communication skills, either way you need them. Getting your client excited about what you do and taking action is the only outcome from your profession that provides value. The rest of it is just a supporting act. It’s a bit like surgery really, you’re not really that interested in the type of gas being used to put you under, the quality of the stainless steel and the scalpel, or even the after surgery care. What you’re interested in is being told that you made a good decision, the problem has been solved and that things should be better. Have you had that conversation with your existing customers? I’m sure that if you sent stories about how your clients, with your help, have overcome tragedy and hard times, then not only will you attract new clients but you’ll also give your existing clients cause for satisfaction. At the end of the day the only

At the end of the day the only measurement of your success as an adviser will be the improved position of those clients that took your advice. Not those who thought about it and did nothing. measurement of your success as an adviser will be the improved position of those clients that took your advice. Not those who thought about it and did nothing. So what are you going to do about it now? You should be aware of those clients that have benefited from your advice in the past and this may be a good time to pick up the phone and ask them for some feedback. Ask them if you can publish their replies (probably anonymously) because those are the sort of stories that do motivate people into action. Secondly, there are often positive outcomes for every contact. If you were to ask all of your clients to give you feedback about how they saw your service and what was the best thing you could have done for them, this will cause them to think

A CRY FOR HELP!

The demand for full or partial sales of client books far exceeds the supply. If you or anybody you know is contemplating selling down part or all of their insurance/ mortgage/investment book, please ask them to call us so we can show them how we may assist.

about other people who may be assisted by you and your advice. That sort of referral is invaluable, not just a general introduction, but a potential client with a problem to be solved.

A CRY FOR HELP

There has never been a better time to streamline or sell your advisory business. The demand for client opportunities has never been stronger in our experience of 15 years and if you’re thinking of making changes, then please let us know. I know it’s a bit unseemly to ask for assistance, but then we need to reflect on who gets the benefit. Obviously us, having full or partial client bases for sale is our specialty (as far as I know we are the only ones in New Zealand who do specialise in this). Secondly, the adviser benefits through capitalising all or part of their life’s work. Thirdly, the client benefits. Anybody who is buying a potential client base knows full well that the service offer is going to have to be of top quality. Our experience is that having purchased a client, the new adviser makes sure that they are excited and surprised by the additional attention they receive. And lastly, the financial services business as a whole. Over many years all of us acquire clients who don’t necessarily match up with our own situation anymore. They deserve a fresh slate and a fresh process and the overall advisory business and all its attached institutions needs a refresh. So if you or somebody you know is thinking of making changes, please let us show them how we can help.

Disclosure: Mike Moore is the principal of Mike Moore Marketing Limited, which specialises in giving advice and consultancy services to professional financial advisers.

Mike Moore

021 974 231

Maree Porter

021 874 231

maree@mikemoore.co.nz

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HARBOUR RE-LAUNCHES INCOME FUND Fund will include more active management after changes, by Susan Edmunds.

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arbour Asset Management is re-launching its income fund and targeting a higher return as it diversifies its investments. Harbour director and portfolio manager Mark Brown said the fund was initially set up in a simplified way, as a combination of Harbour’s Corporate Bond Fund and its Australasian Equity Income Fund. But he said over time it had become clear that those were two distinct entities with their own purposes, and there was more that could be done with the Income Fund by broadening its scope and giving it a different investment mandate, in its own right. In its new guise, the fund will also invest in securities that are not a natural fit with either the corporate bond or equity income funds. Harbour said it would expand into additional income-generating asset classes, allowing some allocation into well-researched noninvestment grade corporate bonds and loan products. Brown said that would mean broadening into bonds that were subordinate in nature, or parts of the fixed interest landscape where changing

Special report

rules and regulations had created more opportunities for non-bank lenders to take a slice of the market. “A lot of the opportunity comes from the changes the banks are faced with now by regulators... banks are required in the name of financial stabliity to put more and more capital aside for the exposure they take,” Brown said. “The cost of that gets passed on to people who borrow from them. Fund managers are not affected so we are a more cost-efficient lender for that part of the market – they are pulling back and that creates a rewarding investment opportunity for us.” The wider scope of the asset allocation range would allow more active management and for the fund to deliver returns that beat benchmarks by a more significant margin. Brown said the fund would suit people who were frustrated with the low rates available on term deposits, and who wanted a better level of income, but who were wary about having to take a lot of extra risk. He said it was likely that term deposit rates would remain low for some time, driving investors to look for other options. He said the rates on offer from banks already reflected the fact that they needed deposits to meet their funding requirements and were higher than they might otherwise be, so potential upside was limited. They would not rise significantly until the Official Cash Rate rose, he said. Investors mightachieve a much better return with a little more risk by switching to the income fund, he said. “[These investments] are more risky by definition than investing in senior-ranking bonds but they are less risky than equities.” Returns will continue to be predominantely driven by the fund’s core holding of New Zealand fixed interest securities and dividend-paying Australian equities. It will target a return of 3.5% above the cash rate, compared to 2% in its previous guise. A minimum of 5% of the fund will be held in highly-liquid securities, defined as New Zealand Government securities with less than five years maturity, cash, and other cash equivalents. The fund will have a maximum of 30% exposure to international fixed interest, including investment grade fixed interest, non-investment grade fixed interest and loans. The neutral position is to be 100% hedged to the New Zealand dollar, but Australian Dollar exposure of 10% and Trade—Weighted Index exposure of 10% is also permitted. At present, retail funds under management in the income fund are only a couple of million dollars. But Brown said

HARBOUR INCOME FUND CAPITAL STRUCTURE Cash

Senior fixed interest securities

Income Fund Sub-ordinate fixed interest securities and loans

Equity Note this is a stylised depiction of the capital structure of assets.

the fund would get a boost from wholesale funds that were expected to migrate into it. That would bring the total FUM for the fund to about $90 million. Brown said Harbour had structured the fund with the intention that it would have a volatility level of 4.5%, less than that of a typical balanced fund.“Under these numbers we think it is going to be unusual for the product to deliver a negative return in any given year.” He said other income funds in the market tended to have more equity exposure than the Harbour fund’s neutral level would be. Others had delivered strong returns over recent years, but Harbour was posiitioning itself tobe more resilient to market downturns, he said. “Historically we have tended to focus on single-sector funds and people who were after a particular type of fixed-interest fund or equity portfolio. This is a fund that we think puts us in pretty good stead for clients thinking about an investment income as an investment objective, as opposed to exposure to an asset class,” Brown said. He said the first iteration of the income fund had done it in a simplistic way, and this new evolution developed it another step. The management fee for the fund will drop from 77 basis points to 63 basis points. Harbour said that should deliver better value for investors. Quarterly distributions are paid at the fixed rate of 1.25 cents per unit.

Existing clients can choose whether they want to migrate to the new version of the fund. Financial advisers have been informed of the changes, which take effect on June 19.

Fund re-launched on 19th June 2017 Investment Objective: To exceed the Official Cash Rate (OCR) plus 3.5% pa over rolling three year periods.

Distribution: Quarterly distributions will be paid at the fixed rate of 1.25 Cents per unit.

Key points about the redesign: • Additional income-generating asset classes, for diversification and higher running yield • More active management, utilising existing in-house expertise and research • Wider allowable asset allocation ranges, enabling more proactive mitigation of downside risk • A lower retail management fee

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YOU’RE GOOD – CAN YOU PROVE IT? Just knowing you’re doing a great job is no longer enough. Now you need to be able to document it.

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PRACTICE ASSET REGULATION DATA MANAGEMENT ADVISER

T

here has been a lot of talk about conduct recently. An International Monetary Fund (IMF) report on New Zealand’s financial stability mentioned conduct in the insurance market. This buttresses the arguments of people who say that insurance advisers need to observe the authorised financial advisers’ (AFA) code of practice. They said: “A developing framework of self-regulation in general insurance and established dispute resolution services help reduce risks to customers, but do not substitute for regulatory requirements and effective oversight. The same can be said of life insurance, although less work has been done on selfregulatory structures. Many advisers I know exceed the requirements of registration, and are what I call “AFA-ready”. Also, the report notes the work that the FMA has done in issuing guidance and recent thematic reviews – think of the investigation into replacement business, for example. But it is not just advisers that are in the IMF’s sights, it is insurers too: "Nonetheless, aspects of the insurer’s relationship with customers where there may be misconduct, including the handling of claims and complaints, and advice on (nominally) simpler products provided by registered financial advisers, are effectively unregulated. Risk-based supervisory oversight, including proactive identification and management of risks, is largely limited to financial advice.” That identification of the issue of claims and complaints strikes a chord with the two largest dispute resolution bodies, Financial Services Complaints Limited (FSCL), and the Insurance and Savings Ombudsman (ISO). Both Karen Stevens, (ISO) and Susan Taylor (FSCL) have argued in favour of updating laws which govern consumer disclosure. Those laws have long been ignored, and although most market practice is excellent, the law is now out of step with our international peers, and could lead to a mismatch between consumer expectations and actual claims experience. So the Minister of Commerce, Jacqui Dean, has announced the intention to update insurance contract law in 2018, if National is in government, of course. Insurers have more practice meeting legislative requirements than most insurance advice businesses. Most, being overseasowned, already have direct experience in the UK and Australia operating under the kinds of law change being proposed. For smaller adviser businesses conduct obligations may require more adjustment, at least in governance, if not actual advice practice. The Financial Markets Authority (FMA) put the word “conduct” in the title of two recent publications. This is a direct quote from the introduction to “A guide to the FMA’s view of conduct” from July last year:

Conduct is at the core of the Financial Markets Conduct Act 2013 (FMC Act). Good conduct is vital to fair, efficient and transparent markets, and ensures the confident and informed participation of businesses, investors and consumers. Of course, right now, if you give insurance advice you are probably not required to be licenced under the Financial Markets Conduct Act. But the changes to financial advice law, which are in the Financial Services Legislation Amendment Bill, will move regulation of advisers into this law. This is why you need to start concerning yourself with what conduct means, and how to meet the requirements of the law.

"It is not the challenge of adding value that you will find hard. It is the challenge to document and create robust processes that demonstrate how you are doing that." The guide referenced above is a good place to start. Alongside that document you should also read the FMA’s “licencing overview” document - brand new, and a good overview of expectations, especially covering governance, conduct, and professional development, and financial capability for licensed organisations. Yes, even financial capability is in-scope, and retaining sufficient financial resources within your advice business to show that your organisation has some resilience will be a necessity in the future. The FMA acknowledges that this is a shift in emphasis, noting that merely meeting compliance obligations, including disclosure, is “necessary, but not sufficient”. They want to see how you go about the process of delivering value to your customers, and how you ensure that you deliver consistently good outcomes for them. Many insurance advisers I know do have

a clear understanding of how they help clients. You know the common mistakes people make in disclosure, and help clients avoid them. You know the misconceptions of different types of buyers, and help correct them. You “know what they don’t know” and make your specialised knowledge work for them, without them having to become an expert in insurance. The list could go on and on – there are many different ways you can help people with insurance advice, and a good number are common to most good insurance businesses, but there is sufficient variety for there to be room for many different kinds of business. It is not the challenge of adding value that you will find hard. It is the challenge to document and create robust processes that demonstrate how you are doing that. Key words used a lot in this process are capability, consistency, communication, and alignments. Think of it like this, you are going to be asked to demonstrate (“with examples” the guide insists) why your advice is good, how you know it is consistently good case after case, how you explain that to clients, and how your incentives to do well are aligned to the customer doing well too. At an organisational level this steps beyond benchmarks like suitability – instead, the FMA is going to ask you how you know that what you are doing is “fair value”. Being able to compare your service with that of other adviser businesses and the solutions they offer must therefore form part of what you do. I know that you probably already have an appreciation of how good you are at some level. You already have a view on how your advice is better than others. You have met clients recently who have been given recommendations – or just sold something – that you aren’t impressed with. The challenge, once again, is to demonstrate that, check it, and consistently deliver it, in a way that you can show the FMA. It might be easy to get cheesed off about this. Some will be convinced that this is a lot of work for no change, but I don’t think so. It should not be too hard. A simpler business has generally got simpler requirements. Plus, it should create some value for you: Being clear about your scope of service, how good you are, and who you are best at serving, will do more than keep you out of trouble. Such clarity makes it easier to market to clients, and get the right ones. It makes it easier to say “no” to costly distractions and marginal cases. It will be a necessity to stay in business. Russell Hutchinson is director of Chatswood Consulting and Quality Product Research, which operates Quotemonster.

031

ASSET ADVISER

For more information call 0800 888 361 Latest 1 Yr 3 Yr 5 Yr Transaction Return Return Return Exit Price % New Zealand Insurance Fund Miscellaneous Booster KiwiSaver Capital Guaranteed 1.0794 2.58 --Booster KiwiSaver Options 1.2202 0.57 --Fidelity Life Super-Sup Options -0.07 4.81 6.01 Kiwi Wealth KiwiSaver Scheme ----CashPlus Fd NZ Funds KiwiSaver Growth Strategy 1.6212 12.86 7.69 11.27 NZ Funds KiwiSaver Income Strategy 1.3061 3.64 3.86 4.01 NZ Funds KiwiSaver Inflation Strategy 1.3385 4.59 3.67 5.85 Westpac KiwiSaver-Capital Protect Plan 1 2.2963 12.34 11.83 13.64 Westpac KiwiSaver-Capital Protect Plan 2 2.0612 12.32 11.83 13.64 Westpac KiwiSaver-Capital Protect Plan 3 1.9761 12.31 11.83 13.64 Westpac KiwiSaver-Capital Protect Plan 4 2.0411 12.33 11.82 13.63 Westpac KiwiSaver-Capital Protect Plan 5 1.7746 12.33 11.83 -NZ Insurance Cash AMP KiwiSaver Cash Fund 1.4692 1.71 2.52 2.60 AMP NZRT Cash Fund 1.46228 0.65 1.50 1.58 AMP Prem PSS OnePath NZ Cash 1.56429 1.99 2.70 2.75 AMP PSS Select Cash 1.47508 1.80 2.50 2.52 ANZ Default KiwiSaver Scheme-Cash 1.3987 2.31 2.95 2.94 ANZ KiwiSaver-Cash 1.3037 2.32 3.02 2.96 Aon KiwiSaver ANZ Cash 15.0542 1.88 2.50 2.50 Aon KiwiSaver Nikko AM Cash 14.0692 2.32 2.93 3.06 ASB KiwiSaver Scheme's NZ Cash 1.4231 2.18 2.97 2.90 BNZ KiwiSaver Cash Fund 1.1283 2.59 2.84 -Booster KiwiSaver Enhanced Income 1.4816 1.89 2.76 2.91 Fidelity Life Super-Super Cash Portfolio 2.8344 0.93 1.45 1.55 Fisher TWO KiwiSaver Scheme-Presv 2818.44311 2.33 2.94 3.08 Kiwi Wealth KiwiSaver Scheme Cash Fund ----Mercer KiwiSaver Cash -2.18 2.94 2.96 NZ Defence Force KiwiSaver Cash -1.97 --OneAnswer KiwiSaver-Cash Fund 1.3535 2.18 2.88 2.83 SIL 60s + Sup Cash Fund 2.16 2.01 2.52 2.43 Westpac KiwiSaver-Cash Fund 1.3645 2.31 2.96 2.93 NZ Insurance Equity Region Australasia AMP Prem PSS OnePath NZ Shares 2.14968 6.40 7.60 13.35 Aon KiwiSaver Milford 3.0344 8.83 10.56 14.86 Booster KiwiSaver Socially Rsp Inv Gr 1.6562 12.19 9.52 9.66 Booster KiwiSaver Trans-Tasman Share 1.4165 15.07 9.28 5.63 Milford Active Growth KiwiSaver 3.05481 8.93 10.69 15.02 OneAnswer KiwiSaver-Australasian Share 1.7047 7.24 10.79 15.90 NZ Insurance Equity Region Australia AMP KiwiSaver Australasian Shares 1.0652 ---New Zealand Insurance Fund Equity Region NZ AMP Prem PSS ACI NZ Shares 2.43284 6.49 13.00 15.97 AMP Prem PSS ACI NZ Shares Index 2.15092 8.68 12.82 16.34 Fidelity Life NZ Shares Portfolio 6.1252 8.23 10.64 11.00 Fidelity Life Super-Super NZ Share -13.88 12.24 11.97 SIL 60s + Sup NZ Share Fund 5.3402 7.37 10.26 15.51 New Zealand Insurance Fund Equity Region World AMP KiwiSaver International Shares 1.1469 ---AMP KiwiSaver Passive International 1.1426 ---AMP Prem PSS ACI Global Shares Index 2.07127 15.36 13.48 13.27 AMP Prem PSS ACI Global Shares 2.16487 18.55 8.69 12.46 Index Hdg AMP Prem PSS FD Intl Share Fund 1 Value 1.2889 15.22 10.97 11.96 AMP Prem PSS FD Intl Share Fund 1.43294 17.98 14.23 13.10 3 Growth Booster KiwiSaver International Share 1.8209 16.73 11.22 12.07 FANZ Lifestages KiwiSaver High Growth 1.14314 13.49 --Fidelity Life Aggressive 3.4678 8.29 10.01 10.04 Fidelity Life International 2.4175 12.08 7.97 9.21 Fidelity Life Super-Sup Intl -16.57 9.41 10.08 Fidelity Life Super-Super Aggressive -11.65 11.10 10.69 Fisher FuturePlan - Intl Coms 2.9825 14.75 6.95 9.38 Fisher TWO KiwiSaver Scheme-Eq 4133.54026 12.68 9.28 11.52 Mercer KiwiSaver Shares -15.84 --NZ Defence Force KiwiSaver Shares -15.62 --OneAnswer KiwiSaver-Intl Share 1.7502 17.11 15.12 14.71 OneAnswer KiwiSaver-Sustainable Int Shr 1.6533 13.79 11.41 10.56 SIL 60s + Sup International Share Fund 3.328 16.87 14.65 14.16 New Zealand Insurance Fund Equity Sector Global - Real Estate AMP KiwiSaver Property 0.9577 ---OneAnswer KiwiSaver-Intl Property 1.3204 1.56 8.51 10.20 New Zealand Insurance Fund Equity Sector NZ - Real Estate MFL Property Fund 3.849 2.83 11.05 13.43 OneAnswer KiwiSaver-Australasian Prpty 1.7051 0.53 12.83 13.35 New Zealand Insurance Fund Global Bond AMP KiwiSaver International Fxd Intr 0.9945 ---AMP Prem PSS Blackrock Global Fixed Int 1.96652 2.46 5.22 5.32 AMP Prem PSS PIMCO Global Fixed 2.29942 4.63 5.90 6.16 Interest AMP Prem PSS SSgA Global Fixed 1.95186 1.09 5.30 5.16 Int Index Name

Size Morningstar Rating $M Overall 45.13 89.92 13.06 78.21 85.31 18.20 61.15 12.34 10.23 16.01 22.81 18.90

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

83.95 114.54 4.06 1.10 4.30 320.80 4.01 1.33 405.06 115.53 18.73 4.03 27.67 117.46 15.40 0.36 33.62 1.72 303.65

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

4.41 115.79 26.37 5.96 662.78 25.48

2 3 2 1 3 4

0.52

--

4.77 8.70 1.40 6.66 23.55

4 3 1 1 3

0.52 0.54 9.93 11.19 6.04 6.00 9.00 43.60 0.62 0.45 22.44 9.54 25.06 81.86 12.25 2.72 39.67 5.72 13.58

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

1.08 8.44

-4

508.87 16.72

3 4

0.27 2.22 2.40

-3 5

8.76

4

Latest 1 Yr 3 Yr Transaction Return Return Exit Price % OneAnswer KiwiSaver-Intl Fxd Int 1.6627 1.39 5.15 New Zealand Insurance Fund Multisector - Aggressive AMP KiwiSaver LS Aggressive Fund 1.4683 13.67 8.11 AMP NZRT AMP Aggressive 3.00801 12.57 7.30 AMP PSS DynamicMkts Growth 1.82607 13.04 7.63 AMP PSS Select Growth 1.7207 12.93 7.61 Aon KiwiSaver Russell Lifepoints 2045 8.3168 12.32 11.17 Booster KiwiSaver Asset Class Growth 8.1949 13.20 -Booster KiwiSaver Geared Growth 1.9644 17.47 12.35 Booster KiwiSaver High Growth 1.456 12.63 9.80 Fisher Funds Growth KiwiSaver Fund 1.8931 11.28 9.38 Fisher FuturePlan - Growth 2.84758 9.17 7.83 Generate KiwiSaver Focused Growth Fund 1.439 10.09 11.51 Kiwi Wealth KiwiSaver Growth ---Mercer KiwiSaver High Growth -13.89 11.04 NZ Defence Force KiwiSaver High Growth -13.63 -New Zealand Insurance Fund Multisector - Balanced AMP KiwiSaver AMP Global Multi-Asset 1.0582 --AMP KiwiSaver AMP Responsible 1.0532 --Invmt Bal AMP KiwiSaver ASB Balanced 1.0546 --AMP KiwiSaver Fisher Balanced 1.7249 6.95 7.80 AMP KiwiSaver LS Balanced Fund 1.6017 9.40 6.66 AMP KiwiSaver LS Moderate Balanced 1.5852 7.80 6.14 Fund AMP NZRT AMP Balanced Fund 2.8338 8.41 5.84 AMP NZRT AMP Global Multi-Asset 1.05526 --AMP NZRT AMP Moderate Balanced 2.0806 6.74 5.26 AMP NZRT ASB Balanced Fund 1.96582 8.09 8.02 AMP NZRT Fisher Balanced 2.32362 5.92 6.82 AMP NZRT Nikko AM Balanced 2.49054 5.28 8.53 AMP NZRT Responsible Investment Bal 1.05739 --AMP PSS DynamicMkts Balanced 1.83998 8.75 6.10 AMP PSS Lifesteps Consolidation 1.7615 7.03 5.66 AMP PSS Lifesteps Progression 1.85369 8.61 6.00 AMP PSS Select Balanced 1.78252 8.72 6.10 ANZ Default KiwiSaver Scheme-Balanced 1.6555 7.01 8.37 ANZ KiwiSaver-Balanced 1.7284 7.10 8.40 Aon KiwiSaver ANZ Balanced 23.8482 7.52 8.24 Aon KiwiSaver Russell Lifepoints 2025 8.6686 8.06 8.73 Aon KiwiSaver Russell Lifepoints Bal 8.8107 10.48 10.12 ASB KiwiSaver Scheme's Balanced 1.7198 10.02 9.47 BNZ KiwiSaver Balanced Fund 1.3849 10.34 8.57 Booster KiwiSaver Balanced 1.6649 8.60 7.90 Booster KiwiSaver Socially Rsp Inv Bal 1.2689 8.23 -Fidelity Life Balanced 4.3155 5.42 6.34 Fidelity Life Super-Super Balanced -7.86 -Fisher FuturePlan - Balanced 3.911 7.08 6.93 Fisher TWO KiwiSaver Scheme-Bal 4681.65956 7.98 7.69 Kiwi Wealth KiwiSaver Balanced ---Mercer KiwiSaver Balanced -9.10 8.54 Milford KiwiSaver Balanced 2.00865 10.51 11.13 NZ Defence Force KiwiSaver Balanced -8.89 -OneAnswer KiwiSaver-Balanced 1.7516 7.13 8.49 Westpac KiwiSaver-Balanced Fund 1.673 7.78 8.52 Westpac Retirement Plan - Balanced Port 3.4927 6.71 7.38 New Zealand Insurance Fund Multisector - Conservative AMP KiwiSaver ANZ Conservative 1.015 --AMP KiwiSaver Default (Default) 1.5845 5.39 5.54 AMP PSS Select Income 1.74193 1.11 3.82 ANZ Default KiwiSaver Scheme Cnsrv(Dflt) 1.6519 4.04 6.30 ANZ KiwiSaver-Conservative 1.6175 3.62 6.00 Aon KiwiSaver Russell Lifepoints Cnsrv 9.288 5.69 7.24 ASB KiwiSaver Scheme's Cnsrv (Default) 1.6733 5.10 6.17 BNZ KiwiSaver Conservative (Default) 1.2479 5.95 6.13 BNZ KiwiSaver First Home Buyer Fund 1.0755 4.94 -Booster KiwiSaver Default Saver 1.1744 4.42 -FANZ Lifestages KiwiSaver Income 1.05812 3.26 -Fisher Funds Conservative KiwiSaver Fund 1.5196 4.81 5.97 Fisher FuturePlan - Capital Prot 1.20944 1.50 1.50 Fisher TWO KiwiSaver Cash 1.65524 4.70 6.04 Enhanced(Dflt) Kiwi Wealth KiwiSaver Conservative ---Kiwi Wealth KiwiSaver Scheme Default Fd ---Mercer KiwiSaver Conservative (Default) -5.27 6.36 Milford KiwiSaver Conservative Fund 1.58419 7.49 9.26 NZ Defence Force KiwiSaver Conservative -4.62 -OneAnswer KiwiSaver-Conservative 1.634 3.70 6.02 Westpac KiwiSaver Default 1.1609 4.04 -New Zealand Insurance Fund Multisector - Growth AMP KiwiSaver ANZ Balanced Plus 1.9267 8.18 9.21 AMP KiwiSaver ANZ Growth 1.0713 --AMP KiwiSaver ASB Growth 1.0814 --AMP KiwiSaver LS Growth Fund 1.5107 12.21 7.55 Name

5 Yr Size Morningstar Rating Return $M Overall 4.62 2.70 2 10.36 9.29 9.57 9.63 13.19 -11.86 10.40 11.05 9.67 --12.41 --

254.87 256.06 4.20 34.42 14.23 42.16 7.49 167.85 1294.46 72.14 183.54 1008.76 120.62 7.42

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

---8.81 8.11 7.27 7.08 -6.22 8.52 7.83 8.97 -7.31 6.59 7.32 7.39 9.12 9.55 9.65 10.07 11.45 9.83 -7.59 -6.88 -8.03 8.81 -9.53 12.91 -9.66 9.47 8.28

2.55 2.98 2.09 34.60 794.54 541.08 791.04 0.59 278.78 72.83 157.31 155.26 1.91 3.16 7.40 2.83 48.11 90.21 1664.31 27.44 17.62 101.92 990.83 206.77 359.28 26.72 5.54 238.13 122.29 590.45 1227.14 294.34 147.07 26.89 461.37 1132.26 101.24

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

-5.64 3.13 6.31 6.18 7.86 5.94 ----6.59 1.55 6.08 --6.79 --6.23 --

2.42 1321.91 1.95 1029.90 640.54 75.48 3468.37 392.45 44.21 34.93 52.10 525.40 21.82 702.11 510.20 107.29 1054.74 35.30 1.36 402.29 103.59

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

10.66 --9.47

209.85 2.31 1.94 607.37

3 --2

Latest 1 Yr 3 Yr Transaction Return Return Exit Price % AMP KiwiSaver Nikko AM Balanced 1.7027 6.29 9.56 AMP KiwiSaver Nikko AM Growth 1.0547 --AMP NZRT AMP Growth 2.12721 11.10 6.76 AMP NZRT ANZ Balanced Plus 2.42692 7.11 8.29 AMP NZRT ANZ Growth 1.06927 --AMP NZRT ASB Growth 1.07108 --AMP NZRT Nikko AM Growth 1.04266 --AMP PSS Lifesteps Growth 1.81359 11.57 7.10 ANZ Default KiwiSaver Scheme1.6615 8.96 9.58 Balanced Gr ANZ Default KiwiSaver Scheme-Growth 1.6569 10.66 10.61 ANZ KiwiSaver-Balanced Growth 1.764 9.01 9.62 ANZ KiwiSaver-Growth 1.7791 10.76 10.66 Aon KiwiSaver Nikko AM Balanced 17.2715 6.91 9.62 Aon KiwiSaver Russell Lifepoints 2035 8.5655 10.46 10.13 Aon KiwiSaver Russell Lifepoints Growth 8.7433 12.32 11.12 ASB KiwiSaver Scheme's Growth 1.6982 12.81 11.02 BNZ KiwiSaver Growth Fund 1.4621 13.18 9.67 Booster KiwiSaver Balanced Growth 1.6275 10.61 8.98 Fidelity Life Growth 4.1578 8.03 7.71 Fidelity Life Super-Super Growth -9.71 8.18 Fisher TWO KiwiSaver Scheme-Gr 1.65273 10.12 8.59 Generate KiwiSaver Growth Fund 1.3956 7.29 10.58 Mercer KiwiSaver Growth -12.06 -NZ Defence Force KiwiSaver Growth -11.77 -OneAnswer KiwiSaver-Balanced Growth 1.7885 9.03 9.65 OneAnswer KiwiSaver-Growth Fund 1.8014 10.79 10.73 SIL 60s + Sup Balanced Fund 4.0636 8.84 9.09 Westpac KiwiSaver-Growth Fund 1.7116 9.17 9.86 Westpac Retirement Plan - Dynamic Port 3.9344 8.13 8.78 New Zealand Insurance Fund Multisector - Moderate AMP KiwiSaver AMP Income Generator 1.031 --AMP KiwiSaver ASB Moderate 1.032 --AMP KiwiSaver LS Conservative Fund 1.6826 4.63 4.83 AMP KiwiSaver LS Moderate Fund 1.6195 6.48 5.53 AMP KiwiSaver Nikko AM Conservative 1.0171 --AMP NZRT AMP Capital Assured Fund 2.42125 4.10 4.27 AMP NZRT AMP Conservative 2.68341 3.57 3.89 AMP NZRT AMP Income Generator 1.02938 --AMP NZRT AMP Moderate 2.06403 5.41 4.61 AMP NZRT ASB Moderate 1.03833 --AMP NZRT Nikko AM Conservative 1.01318 --AMP PSS DynamicMkts Conservative 1.76797 3.79 4.11 AMP PSS Lifesteps Maturity 1.68412 3.55 4.05 AMP PSS Lifesteps Stability 1.77475 5.57 4.81 AMP PSS Select Conservative 1.75824 3.80 4.11 ANZ Default KiwiSaver Scheme-Cnsrv Bal 1.6515 5.20 7.15 ANZ KiwiSaver-Conservative Balanced 1.6803 5.28 7.20 Aon KiwiSaver Russell Lifepoints 2015 8.8745 5.69 7.32 Aon KiwiSaver Russell Lifepoints Mod 9.1727 7.98 8.66 ASB KiwiSaver Scheme's Moderate 1.7145 7.07 7.75 BNZ KiwiSaver Moderate Fund 1.3194 8.42 7.58 Booster KiwiSaver Asset Class Cnsrv 3.518 6.11 -Booster KiwiSaver Moderate 1.6277 5.26 6.15 Fisher TWO KiwiSaver Scheme-Cnsrv 1.7185 5.06 6.15 Generate KiwiSaver Conservative Fund 1.2341 2.13 6.93 Mercer KiwiSaver Moderate -6.49 -NZ Defence Force KiwiSaver Moderate -6.26 -OneAnswer KiwiSaver-Conservative Bal 1.6958 5.28 7.17 Westpac KiwiSaver - Moderate 1.1947 5.53 -Westpac KiwiSaver-Conservative Fund 1.6019 4.19 5.93 New Zealand Insurance Fund NZ Bonds AMP KiwiSaver NZ Fixed Interest 0.9976 --AMP Prem PSS ACI NZ Fixed Interest 2.03075 1.76 5.44 AMP Prem PSS OnePath NZ Fixed Interest 1.84954 1.05 4.94 Fidelity Life NZ Fixed Interest 3.9603 1.66 3.55 Fidelity Life Super-Super Fixed Int -1.57 3.51 OneAnswer KiwiSaver-NZ Fixed Interest 1.6363 1.52 5.41 SIL 60s + Sup NZ Fixed Interest 2.8794 1.08 4.80 Westpac Retirement Plan - Accum Port 3.2438 1.10 2.69 New Zealand OE Cash AMP AIT NZ Cash - UT35 1.10174 1.93 2.79 AMP ARS-Cash 1.94096 2.18 2.95 AMP Capital Cash Advantage Fund 1.41617 1.55 2.57 AMP Capital NZ Cash Fund 1.63238 2.30 3.07 AMP Capital Term Advantage ---AMP Prem PUT OnePath NZ Cash 1.38409 1.84 2.60 AMP PUT Select Cash 1.32559 1.64 2.39 ASB Cash Fund ---BT Enhanced Cash Fund 2.0738 2.33 2.98 Fisher Cashplus Fund 1.2983 2.17 2.64 Name

5 Yr Size Morningstar Rating Return $M Overall 9.99 40.93 3 -- 1.53 -8.41 196.92 2 9.65 271.18 3 -- 3.45 --- 1.15 --- 3.28 -8.79 0.40 2 10.66 98.61 3 12.12 82.19 4 11.21 1390.94 4 12.77 2188.49 5 10.08 7.52 3 11.78 16.09 4 12.83 31.86 5 11.72 1095.43 4 -- 177.02 3 9.03 198.63 2 8.43 3.12 2 8.72 97.05 2 10.56 245.03 3 -- 154.16 4 -- 43.46 --- 7.63 -11.30 405.18 4 12.85 306.33 5 10.46 97.05 4 11.13 823.87 3 10.01 107.03 3 --5.31 6.38 -3.25 4.28 -5.32 --4.45 4.44 5.53 4.49 7.60 7.90 8.24 9.65 7.77 --5.56 6.48 ---7.92 -6.29

1.26 0.41 309.46 381.96 0.99 101.21 299.12 0.27 116.22 0.94 1.46 0.94 3.34 5.66 9.80 31.00 781.09 4.92 18.65 1243.36 272.89 13.70 128.82 123.78 86.01 55.30 1.74 152.31 195.84 2126.39

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

-- 0.28 4.33 11.79 3.77 2.26 3.25 0.21 3.28 1.26 4.16 7.10 3.58 7.57 2.54 18.30

-4 3 1 2 3 2 1

1.95 3.02 2.91 3.12 -2.67 2.44 -2.99 2.54

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10.72 12.16 107.43 4508.61 -3.01 3.15 289.02 131.36 35.04

ASSET ADVISER

Latest 1 Yr Transaction Return Exit Price % Nikko AM NZ Cash 1.0233 2.85 NZ Funds Core Cash 1.32755 1.93 New Zealand OE Equity Region Australasia AMP AIT Australasian Shrs-Multi 2.8272 11.28 Mgr-UT07 AMP ARS-NZ & Australian (multi3.34643 12.11 manager) AMP ARS-NZ & Australian (Value) 3.67551 3.50 AMP NZRT Australasian Shares 1.28777 12.90 AMP Prem PUT OnePath NZ Shares 2.17937 6.24 BT PS Australasian Diversified Share 2.0419 7.03 Castle Point Ranger Fund 1.335 18.11 Devon Alpha Fund 1.5828 -Devon Dividend Yield 1.8973 -Devon Trans-Tasman Fund 3.6614 -Forte Equity Trust 1.32897 25.72 Harbour Australasian Equity 2.2523 12.77 Harbour Australasian Equity Focus Fund 1.4103 13.59 Harbour Australasian Equity Income 1.7123 7.09 Milford Active Growth 3.02799 8.56 Milford Trans-Tasman 2.25874 15.35 Mint Australia NZ Active Equity 2.4427 8.20 Nikko AM Concentrated Equity 1.9344 10.72 OneAnswer SAC Equity Selection 2.1894 6.52 Pie Australasian Dividend 2.2114 10.45 Pie Australasian Emerging Companies 2.8285 4.96 Pie Australasian Growth Fund 4.252 -5.83 Pie Growth 2 Fund 1.2733 7.42 New Zealand OE Equity Region Australia AMP Capital Australian Share Fund 2.44476 12.20 Devon Australian 1.3786 -Fisher Funds Australian Growth Fund 3.2832 5.68 Fisher Funds Premium Australian Fund 1.4423 6.06 Milford Dynamic 1.49957 9.03 OneAnswer SAC Australian Share 3.8235 7.95 New Zealand OE Equity Region Emerging Markets AMP AIT Emerging Markets - UT65 1.36447 17.57 New Zealand OE Equity Region NZ AMP Capital NZ Shares Fund 2.65786 6.99 AMP Capital RIL NZ Shares 1.81147 7.99 AMP Prem PUT ACI NZ Shares 2.4937 6.42 AMP Prem PUT ACI NZ Shares Index 1.88993 7.97 BT Dividend Share Fund 2.167 4.93 Fisher Funds NZ Growth Fund 7.2137 10.42 Fisher Funds Premium New Zealand Fund 1.6929 10.55 Fisher Trans Tasman Equity Trust 4.7318 7.64 Forsyth Barr New Zealand Equities 2.4341 10.36 Harbour NZ Equity Advanced Beta Fund 1.3325 7.52 Nikko AM Core Equity 1.9034 10.54 NZ Funds Dividend and Growth 1.7588 13.48 OneAnswer SAC NZ Share 4.1743 7.54 Russell Investments NZ Shares 1.545 9.11 Smartshares NZ Core Equity Trust 1.2847 11.02 New Zealand OE Equity Region World AMP AIT Global Equities-Multi Mgr-UT28 1.15398 17.19 AMP AIT Global Infrastructure - UT04 2.53399 11.92 AMP ARS-International Shares (Growth) 1.41545 18.47 AMP ARS-International Shares (Passive) 1.57958 17.47 AMP ARS-International Shares (Value) 1.33457 22.65 AMP Capital Core Global Shares Fund 1.40074 16.48 AMP Capital Core Hedged Global 1.4443 19.69 Shares Fd AMP Capital Emerging Markets Share 1.05926 19.26 AMP Capital Global Listed Infrastructure 1.75845 13.61 AMP Capital Global Shares Fund 2.66277 18.05 AMP Capital Resp Invest Leaders Gl Sh 1.54057 15.60 AMP NZRT International Shares 1.37925 18.14 AMP NZRT Passive International Shares 1.37484 17.35 AMP Prem PUT FD Intl Share Fund 1 Value 1.34535 14.98 AMP Prem PUT FD Intl Share Fund 1.47276 17.88 3 Growth AMP Prem PUT SSgA Global Shares Index 1.80733 15.09 AMP Prem PUT SSgA Global Shares 2.25731 17.38 IndexHdg ASB World Shares 1.5203 18.37 BT PS International Diversified Share 1.6966 17.37 Elevation Capital Value Fund 1.6497 14.34 Fisher Funds International Growth Fund 1.7651 16.34 Fisher Funds Premium International Fund 1.8325 16.05 Fisher Global Fund 5.0413 14.67 Milford Global Fund 1.37464 12.50 Nikko AM Global Equity Hedged 1.6629 14.08 Nikko AM Global Equity Unhedged 1.7503 13.75 NZ Funds Equity Inflation 0.8502 -1.48 Name

3 Yr 5 Yr Size Morningstar Rating Return Return $M Overall --- 118.91 -2.77 2.68 60.88 -8.38 10.50 20.01

2

9.03 11.00 9.39 7.51 12.40 9.03 ----12.24 11.92 11.48 10.41 10.96 13.73 15.83 7.41 11.69 18.71 9.76 --

11.12 15.34 -13.37 16.55 -----16.62 -14.49 14.81 14.75 17.59 16.71 12.85 18.10 -14.85 --

7.59 5.44 8.93 1.96 187.84 18.33 99.61 76.98 126.47 14.43 163.24 10.35 49.26 733.98 278.21 56.31 32.81 16.54 83.19 84.10 71.51 124.21

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

5.32 -8.87 9.02 10.13 3.29

6.24 -7.96 8.30 -5.91

173.78 31.92 59.84 63.60 168.28 29.65

2 5 3 4 5 1

5.53

1.45

3.29

--

13.32 14.04 12.82 12.05 15.28 11.92 12.10 10.42 15.02 -14.55 14.04 10.59 12.99 --

16.31 -15.84 15.85 17.52 16.29 16.41 13.76 17.23 -17.33 13.01 15.79 ---

468.67 12.27 1.82 4.16 19.12 141.91 79.22 47.24 15.36 100.08 7.51 81.83 116.48 207.62 36.80

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

9.43 9.40 15.78 9.32 12.69 14.66 9.93 8.45 8.25 11.52 8.40 10.92 11.12 10.85 14.09 12.67 9.96 12.71 11.68 10.30 8.64 9.09 7.12 8.72 10.06 13.70 3.90

10.90 13.08 17.04 12.87 15.13 14.56 14.26 5.34 -13.56 11.33 --11.96 13.04 13.09 14.29 13.13 12.54 10.66 8.73 9.05 10.53 ---5.41

22.64 17.76 7.19 3.62 5.49 868.24 521.20 74.04 308.38 140.27 59.23 8.10 4.34 2.53 2.24 4.61 7.25 148.74 293.57 25.98 33.14 72.91 91.69 298.53 95.11 129.35 81.32

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

Latest 1 Yr Transaction Return Exit Price % OneAnswer SAC International Share 1.9965 16.93 Pathfinder Global Water 1.8156 11.42 Pathfinder World Equity Fund 1.6474 14.19 Pie Global Small Companies Fund 1.3749 15.55 Russell Investments Global Shares 1.7806 17.20 Russell Investments Hedged Global 1.9262 19.25 Shares T.Rowe Price Global Equity Growth 1.3256 17.53 New Zealand OE Equity Sector Global - Real Estate AMP AIT Global Property - UT54 3.04778 -0.43 AMP ARS-Listed International Property 3.73851 0.69 AMP Capital Global Propty Securities Fd 1.49999 -1.13 NZ Funds Property Inflation 1.5395 3.04 OneAnswer SAC International Property 1.336 1.28 New Zealand OE Equity Sector NZ - Real Estate AMP ARS-Listed NZ & Australian Property 3.2007 -0.27 AMP Capital Listed Property Secs Fd 2.24044 -0.29 AMP Capital NZ Property Fund 2.18497 2.10 BT Property Fund 3.9216 1.66 Mint Australia NZ Real Estate Investment 1.7087 0.04 OneAnswer SAC Property Securities 2.9972 0.49 New Zealand OE Global Bond AMP AIT Fixed Interest Income - UT36 1.19635 2.08 AMP AIT Global Bonds-Multi Mgr-UT13 1.96686 0.62 AMP ARS-International Fixed Interest 2.44618 1.35 AMP Capital Global Short Duration 1.08242 2.43 AMP Capital Hdgd Gbl Fixed Intrst Fund 2.3176 2.30 AMP NZRT International Fixed Interest 1.14667 1.69 AMP Prem PUT Blackrock Global Fixed Int 1.82294 2.28 AMP Prem PUT PIMCO Global Fixed 2.2974 4.42 Interest AMP Prem PUT SSgA Global Fixed 1.80784 1.19 Int Index ASB World Fixed Interest 1.1087 1.41 BT PS International Diversified Bond 2.1748 2.81 Fisher BondPlus Fund 2.1483 3.29 Fisher Funds High Income 1.0261 4.02 Nikko AM Global Bond 1.1461 2.68 NZ Funds Global Income 1.4222 3.33 OneAnswer SAC International Fixed Intrst 1.1921 1.32 Russell Investments Global Fixed Int 1.1707 3.82 New Zealand OE Miscellaneous AMP ARS-UK Cash 0.72596 -10.83 BT PS Alternative Investments 1.0873 4.18 Fisher Funds Property and Infrastructure 2.1887 13.32 KTAM NZ Australian Long Short Equity 1.3161 -Nikko AM Income 1.2276 2.19 Nikko AM Multi-Strategy 1.1086 4.64 NZ Funds Core Inflation 1.3231 5.65 NZAM Alpha Fund 1.1316 -NZAM Global Growth 1.4192 -Pathfinder Commodity Plus Fund 0.8379 -8.87 Salt Long Short Fund 1.4734 7.07 New Zealand OE Multisector - Aggressive AMP AIT Aggressive Portfolio - UT31 1.87825 12.36 AMP AIT eInvest - Aggressive - MDF7 1.31061 13.48 AMP AIT Growth Portfolio - UT03 1.80308 11.19 AMP Capital Growth Fund 2.50925 11.67 AMP PUT DynamicMkts Growth 1.85402 12.62 AMP PUT Select Growth 1.64294 12.62 New Zealand OE Multisector - Balanced AMP AIT eInvest - Balanced - MDF5 1.2374 9.21 AMP AIT Moderate Portfolio - UT01 1.81459 5.61 AMP ARS-Balanced 1.99777 9.83 AMP Capital Global Multi Asset Fund 1.2113 8.13 AMP Capital Responsible Inv Leaders Bal 1.80951 7.63 AMP PUT DynamicMkts Balanced 1.814 8.37 AMP PUT Select Balanced 1.71272 8.42 ANZ Invmt Fds Balanced 1.688 6.71 ASB Balanced 1.5494 9.42 Milford Balanced 1.97346 10.34 NZ Funds Core Growth 1.3753 6.25 OneAnswer MAC Balanced 1.688 6.71 Westpac Active Balanced Trust 2.0981 7.09 New Zealand OE Multisector - Conservative AMP PUT Select Income 1.62346 1.00 ANZ Invmt Fds Conservative 1.4715 3.43 ASB Conservative 1.551 4.49 Milford Conservative 1.07898 7.58 OneAnswer MAC Conservative 1.4715 3.43 Westpac Active Conservative Trust 1.8113 3.54 New Zealand OE Multisector - Growth Name

3 Yr 5 Yr Size Morningstar Rating Return Return $M Overall 16.00 16.10 177.89 5 10.19 12.57 12.00 3 11.70 -- 32.83 4 8.97 -- 72.07 2 13.89 -- 59.31 4 10.63 -- 57.48 3 --- 16.50 -9.12 10.16 2.72 7.71 10.04 5.57 6.92 10.31 190.49 6.76 7.34 85.07 8.13 -- 5.18

5 3 2 2 3

11.64 13.17 10.35 14.28 12.16 12.73

11.38 12.90 9.46 13.16 12.09 13.16

4.56 20.98 119.68 75.06 48.00 123.77

1 3 -4 2 3

3.38 3.91 4.65 3.48 4.95 4.33 4.95 5.72

3.24 3.80 4.50 -4.92 -5.12 6.15

101.41 11.97 1.80 196.59 82.80 1.98 1.42 2.39

1 2 2 1 3 2 3 5

5.19 3.52 3.96 5.33 5.01 5.22 3.47 5.00 6.11

5.10 3.21 4.68 5.54 5.11 -3.53 -6.40

4.80 304.21 355.90 154.96 66.47 21.66 116.52 3.35 528.93

3 1 2 4 3 4 1 3 5

-2.07 1.09 12.46 -6.18 3.51 3.02 ---3.13 --

-1.47 1.77 13.25 -6.26 -4.78 ---3.54 --

10.73 9.38 71.57 22.33 10.60 119.14 123.62 47.07 57.47 63.49 236.71

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

6.54 7.72 6.44 7.17 7.48 7.45

7.77 -7.57 9.38 9.47 9.49

112.58 66.97 36.98 5.76 4.02 14.19

1 3 1 4 3 3

6.42 4.69 7.07 6.21 6.36 5.93 5.95 8.03 8.88 10.70 3.73 8.03 7.80

-5.20 8.02 -8.53 7.22 7.24 9.25 9.23 12.51 8.30 9.25 8.98

93.24 103.02 156.06 166.56 45.39 5.15 39.23 208.01 152.32 390.81 93.43 35.78 222.83

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

3.78 5.74 5.55 -5.74 5.02

3.10 5.94 5.32 -5.94 5.47

2.83 50.91 135.70 122.94 9.52 217.79

1 3 2 -3 2

Latest Transaction Exit Price AMP AIT Balanced Portfolio - UT 02 1.88404 AMP AIT eInvest - Growth - MDF6 1.29021 AMP ARS-High Growth 1.79085 ANZ Invmt Fds Balanced Growth 1.8183 ANZ Invmt Fds Growth 1.9182 ASB Growth 1.5083 Fisher Multi Sector Fund 3.0645 NZ Funds Global Equity Growth 1.508 OneAnswer MAC Balanced Growth 1.8183 OneAnswer MAC Growth 1.9182 OneAnswer SAC Balanced 2.8909 Westpac Active Growth Trust 2.0364 New Zealand OE Multisector - Moderate AMP AIT eInvest - Conservative - MDF2 1.16795 AMP AIT eInvest - Moderate - MDf3 1.20571 AMP ARS-Conservative 2.18522 AMP Capital Conservative Fund NZ 2.33332 AMP Capital Income Generator Fund 1.10486 AMP PUT DynamicMkts Conservative 1.71299 AMP PUT Select Conservative 1.72396 ANZ Invmt Fds Conservative Balanced 1.5775 ASB Conservative Plus 1.5344 ASB Moderate 1.5549 Harbour Income 0.9946 Milford Diversified Income 1.63475 Mint Diversified Income Fund (Retail) 1.0403 NZ Funds Global Multi-Asset Growth 0.5892 OneAnswer MAC Conservative Balanced 1.5775 Westpac Active Moderate Trust 1.4219 New Zealand OE NZ Bonds AMP AIT NZ Bond - UT36 1.18441 AMP AIT NZ Fixed Interest - UT60 1.7196 AMP ARS-NZ Fixed Interest 2.45645 AMP Capital NZ Fixed Interest Fund 1.65633 AMP Capital NZ Short Duration 1.25676 AMP NZRT NZ Fixed Interest 1.20359 AMP Prem PUT ACI NZ Fixed Interest 2.01694 AMP Prem PUT OnePath NZ Fixed Interest 1.72382 BT Corporate Bond Fund 1.6256 BT PS NZ Diversified Bond 1.3138 Fisher New Zealand Fixed Inc Trust 1.25 Forsyth Barr NZ Fixed Interest 1.6434 Forsyth Barr Premium Yield 1.6775 Harbour NZ Core Fixed Interest 1.0957 Harbour NZ Corporate Bond 1.0585 Nikko AM NZ Bond 1.0178 Nikko AM NZ Corporate Bond 1.1486 NZ Funds Core Income 1.53039 OneAnswer SAC NZ Fixed Interest 1.6393 Russell Investments NZ Fixed Interest 1.1639 Westpac Active Income Strategies Trust 1.1785 Name

1 Yr Return % 8.55 11.93 12.52 8.59 10.35 12.17 6.67 16.83 8.59 10.35 8.22 8.40

3 Yr 5 Yr Size Morningstar Rating Return Return $M Overall 5.72 6.53 111.36 1 7.22 -- 32.82 2 7.83 9.33 54.58 2 9.27 10.96 151.47 3 10.28 12.40 72.42 5 10.38 11.05 30.38 3 6.68 8.24 11.74 3 9.80 11.66 61.79 2 9.27 10.96 33.22 3 10.28 12.40 18.63 5 8.99 10.43 51.38 4 9.08 10.55 70.33 3

4.48 6.30 5.04 3.56 6.41 3.59 3.57 4.92 -6.50 3.96 10.53 --1.23 4.92 5.02

4.52 5.25 5.22 4.49 -3.97 3.91 6.86 -7.17 -12.24 --10.85 6.86 6.38

--5.55 4.91 -4.34 4.36 7.53 -7.19 -13.40 --6.48 7.53 7.08

26.75 95.45 54.29 8.00 110.19 2.17 15.89 167.89 651.74 272.08 2.66 1612.16 39.54 30.60 10.85 400.35

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

2.17 1.38 1.98 2.01 2.90 2.05 1.74 0.87 2.74 1.84 0.89 2.24 2.55 2.34 2.79 1.92 2.97 3.09 1.42 1.97 2.36

5.10 5.01 5.59 5.65 4.55 5.73 5.35 4.80 4.72 5.15 4.72 5.32 5.56 5.28 5.05 5.40 5.82 4.18 5.27 5.33 3.08

2.95 3.93 4.47 4.52 4.20 -4.29 3.67 4.57 4.44 3.68 4.10 4.75 4.56 4.73 4.82 5.42 4.73 3.85 -3.04

29.33 7.04 6.88 1884.62 370.64 8.02 8.65 1.86 71.07 226.37 60.06 13.97 57.03 148.98 309.60 62.42 340.44 126.27 12.73 166.22 14.45

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

Returns are calculated to 30/04/17 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 © 2016 Morningstar, Inc. All rights reserved. Neither Morningstar, nor its affiliates nor their content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. To the extent that any of this information constitutes advice, it is general advice and has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 and/or Morningstar Research Limited (subsidiaries of Morningstar, Inc.) without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant Product Disclosure Statement (in respect of Australian products) or Investment Statement (in respect of New Zealand products) before making any decision to invest. Neither Morningstar, nor Morningstar’s subsidiaries, nor Morningstar’s employees can provide you with personalised financial advice. To obtain advice tailored to your particular circumstances, please contact a professional financial adviser. Please refer to our Financial Services Guide (FSG) for more information www.morningstar.com.au/fsg.asp

DATA

LIFE EXPECTANCY EXAMINED Many advisers wrestle with how best to estimate how long clients might live. New Statistics NZ data can be used to inform your discussions. EXACT AGE (YEARS)

LIVES ANOTHER YEAR

DIES WITHIN THE YEAR

EXPECTED NUMBER OF YEARS OF LIFE REMAINING

MALE 0

0.99530

0.00470

79.91

1

0.99905

0.00095

79.29

5

0.99935

0.00065

75.36

10

0.99933

0.00067

70.41

15

0.99728

0.00272

65.46

20

0.99650

0.00350

60.63

25

0.99623

0.00377

55.83

30

0.99580

0.00420

51.04

35

0.99473

0.00527

46.24

40

0.99250

0.00750

41.47

45

0.98862

0.01138

36.77

50

0.98227

0.01773

32.16

55

0.97334

0.02666

27.70

60

0.96023

0.03977

23.39

65

0.93789

0.06211

19.25

70

0.89907

0.10093

15.36

75

0.83343

0.16657

11.81

80

0.71633

0.28367

8.67

85

0.53335

0.46665

6.11

90

0.00000

1.00000

4.27

0.99582

0.00418

83.40

1

0.99932

0.00068

82.75

5

0.99958

0.00042

78.81

10

0.99956

0.00044

73.84

15

0.99860

0.00140

68.87

20

0.99839

0.00161

63.96

25

0.99820

0.00180

59.06

FEMALE 0

30

0.99774

0.00226

54.16

35

0.99698

0.00302

49.28

40

0.99500

0.00500

44.42

45

0.99205

0.00795

39.64

50

0.98742

0.01258

34.93

55

0.98154

0.01846

30.35

60

0.97330

0.02670

25.87

65

0.95858

0.04142

21.51

70

0.93181

0.06819

17.33

75

0.87942

0.12058

13.42

80

0.77793

0.22207

9.92

85

0.62074

0.37926

7.03

90

0.00000

1.00000

4.80

034

www.goodreturns.co.nz

.

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