RI: the name of the game - Lowdown from FSC and RIAA conferences
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
OCTOBER 2019
RI: the name
of the game
Lowdown from What PRI in
FSC and RIAA Spotlight on ESG Person is
conferences really like
Great news
Our updated pricing makes us more competitive
Updated Updated Plus more great
Lump Sum Trauma Cover reasons to
Insured Discounts and Trauma Multi recommend us
Cover Rates to customers
For all the details please visit:
advisers.fidelitylife.co.nz/campaigns/2019-pricing-updates
Updates apply to a number of covers in the Platinum Plus, Platinum Plus Level, Mortgage Protector,
Platinum, Fidelity Life and Lumley ranges. Updates are in addition to any other changes applying NZ Insurance Industry Awards
to a policy resulting from an increase in age, an increase following a CPI adjustment to the sum
insured, any other adjustments (e.g. an option or cover ending) and any other change instigated by 2017 & 2018 WINNER
the customer which changes the premiums. There are no changes to policy wordings. Life Insurance Company of the Year
CONTENTS
RESPONSIBLE INVESTMENT
ASSOCIATION AUSTRALIA
CONFERENCE
14
Miriam Bell reports on the growing trend
towards ESG and responsible investment.
20 FINANCIAL SERVICES
COUNCIL CONFERENCE
Leading-edge speakers covering topical
content with a ‘Towards Wellbeing’ theme.
UP FRONT FEATURES
04 EDITORIAL 12 PROFILE
Transitional licensing is about to begin. Darren Howlin compares TVs and
investment research.
06 NEWS
Updates from the New Zealand market. 18 RUSSELL INVESTMENTS
SPONSORED CONTENT
Shining the spotlight on ESG trends.
24 HARBOUR INVESTMENTS
Lower interest rates and the ‘New
Normal’ for investors.
08 PEOPLE
ASSET rounds up the
main people stories
from the past month.
26
ADVISER
REGULARS PROFILE
Former journalist
Neville Glaser has
28 P
RACTICE MANAGEMENT his report-writing
The ‘would you rather?’ of life insurance down pat.
with Russell Hutchinson.
30 PRACTICE MANAGEMENT
David van Schaardenburg on OCR
cuts and their impacts for investment
RETURNS.
34 KIWISAVER
Asset allocation and the benefits of the
life-stages approach.
03
UPFRONT
From the editor
New regime
upon us
you’ll need to meet new record-keeping
requirements, too.
There have been some dire predictions
that advisers would drop out of the
industry in droves, so it was good to see
that in a recent survey of Financial Advice HEAD OFFICE
NZ members, most intended to stick it out 1448A Hinemoa Street, Rotorua
PO Box 2011, Rotorua
and almost half said their own business P: 07 349 1920
would take on at least a transitional F: 07 349 1926
licence to become a FAP. E: philip@tarawera.co.nz
Only 7% said they still hadn’t thought
PUBLISHER
about it or understood it – a fortunately Philip Macalister
small percentage but still high considering
the limitations on time. EDITOR
Susan Edmunds
If you’re not sure what to do, there are an
increasing number of resources available, SUBEDITOR
such as the FMA’s website, the Financial Dawn Adams
Advice NZ helpdesk or services offered by
CONTRIBUTORS
providers such as Advisery at Asteron Life. Miriam Bell, Russell Hutchinson, Michael
It’s in advisers’ interests to ensure they Lang, David van Schaardenburg
get the process under way as soon as
DESIGN
possible. Financial Advice NZ points out
Amy Bennie
that, if you’re planning to have your own
licence, you should check your details are ADVERTISING SALES
correct on the FSPR as a first step. Amanda Ellery
P: 027 420 2083
But it’s in everyone’s interest to ensure E: amanda@tarawera.co.nz
that as many advisers as possible
By the time you read this, the SUBSCRIPTIONS
transition to the new regime. New Zealand
start of transitional licensing for needs more advice, not less. With more Jill Lewis
P: 07 349 1920
the new financial advice regime public trust and confidence, the industry E: jill.lewis@tarawera.co.nz
should flourish – but it can only do that if
will be only weeks away. the advisers stick it out to take advantage ASSET is published by Tarawera
Publishing Ltd (TPL). TPL also publishes
of the opportunities ahead.
Advisers will have until June to make online money management magazine
an application for a transitional licence. Good Returns
GoodReturns.co.nz
From that point, if they want to keep and TMM – The Mortgage Mag
offering advice they will need to apply for
a full licence or fit under someone else’s All contents of ASSET Magazine are
financial advice provider (FAP) umbrella. copyright Tarawera Publishing Ltd.
Any reproduction without prior written
For many advisers, particularly RFAs, permission is strictly prohibited.
this regime will mean significant changes.
You’ll have a code of conduct, you’ll ISSN 1175-9585
need to show you meet competence Susan Edmunds
requirements equal to level five, and Editor
MOVED OFFICES?
Make sure you
don't miss an issue
by changing your address.
Go to
tarawera.co.nz/coa
04 WWW.GOODRETURNS.CO.NZ
BRAND INSIGHT
Introducing AIA Vitality
ambassador: Ian Jones
In a career that spanned In March 2017, a few short weeks before It’s Ian’s holistic approach to his own
his 50th birthday, Ian completed the lifestyle and his family’s that makes him
some 11 years, Ian Jones Taupo Ironman, one of the most gruelling such a wonderful ambassador for AIA
played over 100 games for the multisport events in the world. “Little by Vitality, understanding the importance of
little, step by step, if you do the small things eating well, exercising, thinking well and
mighty All Blacks – 79 of those … you can achieve great results.” A Sky planning for a healthy life.
test matches. Sports commentator and busy husband
and father, it’s impressive he still finds the
What’s more, Ian scored 14 tries and time for events like this. “I’ve played at the
made 38 appearances in the early years very top of elite sport. But for me, my sport AIA Vitality: rewarding
of Super Rugby where he captained the has never defined me. My family is what healthy choices
Chiefs. At the time of his retirement, Ian defines me. Being a father and a husband AIA Vitality is a scientifically-backed
was the second most capped All Black to helps to put things in perspective.” health and wellbeing program that
have ever played. A true sporting legend, Ian also finds time to give back to supports your clients to make
Ian is also someone that understands what the community through philanthropy. healthier lifestyle choices.
it’s like to balance the struggle of health Alongside his wife, he set up "Eddie’s AIA Vitality's approach will take your
and wellbeing. Meals", a community food kitchen they clients on a journey to better health,
After Ian retired from professional rugby, host every Friday night with free food, where they get to know their health,
he found that his physical and mental where everyone is welcome. Initially they improve it and enjoy the rewards for
health declined: “I thought I’d take some imagined providing for the homeless or doing so.
time out but that didn’t work so well for those short of food, which of course they
me. My body started to ache, my mental do, but soon realised those in need come in AIA Vitality is available with an
state wasn’t so good, and I wasn’t that many different guises. "A lot of the people eligible AIA insurance policy. For
in this room can afford a meal at home, but more information please visit
fun to be around.” Ian decided that he
many are simply lonely and need company aia.co.nz/vitality or talk to your AIA
needed to continue his health journey,
and interaction with other people – Business Development Manager.
so he got involved in adventure and
multisport racing. basically a reason to come out," says Ian.
05
NEWS
Kloogh
investigations
ASB sells Aegis
ASB has sold its investment has been a key consideration
continue administration and custody
with MMC committed to investing for
long-term success, and committing
businesses, Aegis Limited to offer employment to all Aegis
Liquidators for financial employees,” he said.
and Investment Custodial Aegis’ employees
adviser Barry Kloogh’s
Services Limited. and customers
companies are considering have been
They have been bought by MMC. informed of
whether the rights to his It comes after a recent strategic review the sale.
trail commissions could be of Aegis. ASB will
ASB’s executive general manager, continue
sold to help recover money private banking, wealth and insurance to use the
for creditors. Adam Boyd said that provided an Aegis platform.
opportunity to gauge the best options for
The businesses were placed into Aegis’ continued success.
liquidation by the High Court at the end “Aegis is a good business which
of August. requires continued investment and
It came after an investigation by the strategic management focus to
Serious Fraud Office, as a result of ensure its customers continue
information supplied by the Financial to receive excellent levels of
Markets Authority. service in the future. As part
The companies owe more than of this review, we came to
$12.5 million. understand that Aegis would be
The Official Assignee, in its first best placed to grow and serve
liquidators’ report, said it was not the interests of its customers
practicable to estimate how long the under a new owner with a
process could take and it was in the specialised focus.
early stages of administration of the “Essential to the success of
liquidations of Financial Planning Ltd, Aegis is its people, and that
Adam Boyd
which traded as Breathe Financial, and
Impact Enterprises Ltd.
Breathe Financial was a registered
FMA: Where’s
financial provider whose clients were
advised on an investment plan by Kloogh,
the liquidators noted.
“The liquidator will need to review and
value for money?
verify the purchase of each investment
currently showing as a custody asset.
Initial sample investigations have shown
that the actual funds provided by one
investor may have been used for other
purposes (eg to repay earlier investors),
or co-mingled with other funds.
KiwiSaver providers can Year-on-year the average fee charged to
members increased 13%, to $132.26.
“For each investor, an investment expect pressure to show what The FMA said, despite its expectation
that appears in the records in their
name, may actually be purchased with
value they're giving members, that there would be competitive pressure
on fees, they had moved very little over the
another investor’s funds or a mixture after an analysis prepared for year to the end of March.
of investors’ funds. The scale of co-
mingling and funds misapplied is not
the Financial Markets Authority "We will be asking KiwiSaver providers
to demonstrate how they are providing
known at this stage and will be the showed they charge higher fees value for money for their members, which
subject of investigation. This will involve
the liquidator having to assess hundreds,
than comparable British funds. includes explaining their investment
style and how higher fees are justified for
potentially thousands of transactions The report, produced by actuaries services such as active fund management
to verify claims by investors to assets MJW, was included with this year's or responsible investment funds."
currently held with the custodian KiwiSaver report. The report has already prompted
on trust.” It showed that New Zealand fees were change – Westpac announced it would
The liquidators have already been higher than those of the UK across all cut its monthly administration fee from
given records for a “substantial number” fund types except the most conservative $2.25 to $1 and reduce the management
of investors and banking records for active funds. fee on its cash, default, conservative,
companies going back to 2012. KiwiSaver members were paying FUM- moderate, balanced and growth funds by
The custodian and wrap platform have weighted average fees for active funds of 0.1 percentage points.
been placed on notice that they should 1.14% compared to 0.4% in Britain. Passive Kiwi Wealth cut its fees the day after the
not pay out any of the custody assets funds sat at 0.67% and 0.29%, respectively. period the FMA included in its report.
pending an investigation by the liquidator.
06 WWW.GOODRETURNS.CO.NZ
Generate
Milford
launches new
advice model
Milford Asset Management
is offering a new way to pay
advisers for KiwiSaver advice.
opens fund
Under its new model, advisers can be Generate is no longer just a growth funds and 38% in cash, default,
paid either a $150 upfront consultation conservative and fixed interest funds.
KiwiSaver manager – it has More than three-quarters (78%) of
fee for giving advice or the client can
pay the adviser out of their funds under now opened a new fund. Generate’s members got some or all
management. of this years’ $521 annual Government
Generate has launched its first non- KiwiSaver contribution versus 64% for the
If the latter option is chosen, a 20
KiwiSaver managed fund the Focused whole of KiwiSaver.
basis point fee on the sum invested
Growth Trust, which is based on its $1.6 "These two important factors alone
is paid from the KiwiSaver member's
billion KiwiSaver Focused Growth Fund. should materially improve the outcomes
account to the adviser.
The KiwiSaver fund has been at retirement for those KiwiSaver
Michael Robson, Milford head of
successful on a performance basis, but members, and shows the value of advice,"
intermediary distribution, says "advisers
the manager had done well supporting Tongue says.
need to be paid for the advice given".
its members. Tongue said the new fund has been
”There is a cost to giving advice and this
Generate chief executive Henry Tongue launched as: “We have
is a way of remunerating advisers."
says the firm has given KiwiSaver had a lot of members
To make this cost neutral Milford will
advice to nearly all of its 74,000 and advisers asking
also rebate its management fee by the
members. He says 84% of members’ us for a non-KiwiSaver
same amount. Robson says this is fair
savings being in growth funds version of this fund.
as the fund manager no longer has to
and only 16% in conservative They want a fund that
service the member.
funds. This compares invests that same way
Robson says the advice fee will be
well to the whole of but they don’t want
clearly disclosed on each KiwiSaver
KiwiSaver which the money locked in
members statement each month. This
has only 33% in until they turn 65.”
makes the fee transparent and ensures
members are aware it is being paid to
the adviser.
Advisers not dropping out: Financial Advice NZ
Financial Advice NZ says a survey of provider (FAP), 21% said they intended to
members shows advisers are planning to join a large licensed FAP – either a current
stick it out into the new regime. aggregator or a dealer group – and 12% said
Michael About 80% of respondents had already their employer was becoming licensed.
Robson determined how they would give financial Just 12% said they had yet to make up
advice under the new licensing regime. their mind about what route to take, while
Of those, 48% said their own firm was 7% said they hadn’t thought about it or didn’t
becoming a licensed financial advice understand enough yet.
Let’s work together.
If you’re an Authorised Financial Adviser, as well as industry awards. Which makes
Milford has a new facility that lets you work it an ideal choice for your clients.
with us. It means you can access the Milford If you’d like to know more, please
KiwiSaver Plan on behalf of your clients. get in touch on 0800 662 975 or
As you may know, our KiwiSaver Plan comes wholesale@milfordasset.com
with an impressive track record of returns, A wealth of expertise.
Past performance is not a guarantee of future returns. Please read the Milford Product Disclosure Statement at milfordasset.com.
07
PEOPLE
For the latest
people news go to
www.goodreturns.co.nz
If you have a new appointment email details and a picture to editor@goodreturns.co.nz
TRUSTEES EXECUTORS ADDS TOP NAMES
Trustees Executors has made of $4.5 billion. developing a strong culture of best practice
Robert Sloan has been appointed to the conduct in the MIS sector.”
a number of key appointments newly created role of chief risk officer. It has also appointed Victoria Grace and
over recent weeks. He is currently head of capital markets Graeme Kirkpatrick as directors.
disclosure at the Financial Markets Ryan Bessemer is also joining the board
It has appointed Geoffory Rimmer to Authority. Prior to joining the FMA Sloan as a director. The three new directors will
the new role of chief operating officer, spent 14 years working for major New join current board member Matt Sale.
with responsibility for overseeing the Zealand, UK and United States law firms Former directors Sarah Roberts and
company’s daily operations and business advising clients on M&A and equity Mark Darrow have stepped down from
strategy. Establishing goals for sustained transactions in the energy, transport and their roles.
performance and growth across Trustees defence sectors. Kirkpatrick has an international
Executors business units will be one of his “We are delighted to have appointed background in banking and financial
key priorities. two high-calibre senior executives to help services. He has held senior positions at
Rimmer has more than 25 years’ drive our growth agenda and oversee our PwC, Deloitte, AIB and JPMorgan.
experience in the Australian trustee management of risk and compliance," Grace has been working closely with
and financial services sector, and has chief executive Ryan Bessemer said. Trustees Executors over the last 12
deep leadership experience in strategic “Geoff is an accomplished and very months, driving a number of key corporate
planning, finance, operations, sales and strategic executive who will assist me to initiatives involving digital technology
marketing, business development and develop and execute our growth strategy, assessment and investment.
M&A. which is underpinned by distributed
He was previously executive ledger technology.
general manager of trustee “With his deep
and wealth services at Equity understanding of
Trustees, an ASX-listed the regulatory and
trustee company. Prior to compliance framework
this he was the founding in New Zealand, Robert
chief executive of Financial will bring a strategic
Services Partners, a top-20 and technical focus
dealer group which had to our supervision
funds under administration business, whilst
Robert Sloan Victoria Grace
08 WWW.GOODRETURNS.CO.NZ
FMA ADDS TO LEADERSHIP TEAM GASCOIGNE
The Financial Markets and insurance.
She leaves a senior role at the UK LEAVES PM
Authority (FMA) has made two
CAPITAL ROLE
markets and conduct regulator, the
senior appointments, including Financial Conduct Authority (FCA).
Bolingford has worked for the FCA Aaron Gascoigne, the executive
filling the newly-created for almost 20 years, most recently as director of Kiwi Investment Partners,
which represents Australian manager
role of director of banking head of cross-cutting policy and head
of supervision for retail banking groups. PM Capital in New Zealand, has taken
and insurance. She also recently spent two years at the on a new role with a sharebroking firm.
UK Treasury, leading capital markets and With a career in financial services
Sarah Vrede joins as director of capital
prudential policy. spanning two decades, Gascoigne
markets and has more than 20 years’
Bolingford will relocate to New Zealand to brings Australasian and European
public and private sector experience in
assume her new role in January 2020. She experience in funds management and
financial and capital markets.
will be based in Auckland. investment advice to Forsyth Barr.
Most recently she was the head of
Chief executive Rob Everett said: “I Forsyth Barr managing director Neil
the NZ Debt Management Office within
am excited to be hiring leaders of such Paviour-Smith said the company was
Treasury. Vrede was appointed a Fellow
calibre into my team. These are important excited to have someone of Gascoigne’s
of the Institute of Finance Professionals
additions into the leadership group as we calibre and experience joining the
(INFINZ) earlier this year in recognition
look towards a greatly expanded regulatory Auckland team.
of her significant contribution to New
remit. It is great to see such enthusiasm “Aaron has a wealth of experience
Zealand’s capital markets.
for the work of the FMA as we serve New in advising clients and investment
She will join the FMA in early November
Zealanders by applying conduct regulation management. He has a track record of
and be based in Wellington.
across sectors and markets within financial building strong client relationships and
Clare Bolingford will join the FMA
services." businesses,” he said.
in a new role of director of banking
If you're looking to recruit go to www.goodreturns.co.nz/jobs
FIND YOUR IDEAL CANDIDATE
ARE YOU READY FOR LICENSING?
FULL LICENSING PACKAGES
FOR ALL ADVISERS
COMPLIANT SOFTWARE
DETAILED SYSTEM AND
PROCESSES
CONTINUING TRAINING
AND DEVELOPMENT
AND SO MUCH MORE
Find out more. Call 0508 4 ASTUTE (0508 427 888)
09
ADVERTORIAL
By Footprint
Advisers:
Key to Bridging
the Wills Gap
A new Kiwi company is expanding the service profile for
advisers while tackling a longstanding problem in New
Zealanders’ approach to personal finance and future planning.
Footprint offers an innovative costs of their Wills.
digital Wills service and WHAT FOOTPRINT “As a responsible adviser it is up to me to
make the introduction to Footprint. I pay for
is collaborating with advisers to OFFERS ADVISERS it as a ‘thank you’ to my clients for arranging
• Help to protect their clients by their insurance with me. For a lot of families,
start the conversation providing Wills $100 for a Will is something they have to
with clients. • A dedicated point of contact budget for, and by meeting the cost I can
• Regular service check-ins ensure my clients don't have a qualm about
The urgency of the need is proven by a • Step-by-step guides for advisers and getting a Will and don’t procrastinate. I’ve
May 2019 survey of 1,100 New Zealanders their clients never had any pushback and it helps clients
which found that only 37 percent of full-time • Reporting on client referrals and take- overcome the misconception that they need
workers have a Will, despite the cost and up so advisers know which of their
to take time out of their day and go to a
effort involved having plummeted through clients created or updated their Wills.
lawyer’s office. In most cases a Will can be
digital innovation. This also has the benefit of providing
made online quickly and easily because it’s
Footprint CEO Angela Vale says after evidence that estate planning support
not a complicated document.”
taking a while to find its feet with advisers, was offered to clients
the company has adapted to the necessary • Comprehensive Footprint collateral EASE, ACCESS
levels of service and support. “We have • The option to collaborate on trials to AND AFFORDABILITY
refined our service by bringing in the right help improve conversion ratios and To lead the adviser support programme
people to make sure we deliver on the client service Footprint has appointed Emma Richards as
value proposition. sales and service manager. Ms Richards says
“Our focus is on working with advisers many advisers are already doing great work
to provide a value-add. They refer clients Registered financial adviser Paul de Klerk, in the estate planning arena, and Footprint’s
for Wills services as part of their full principal of Paul de Klerk Financial job is to make the work of Wills easy for
consultative service across all aspects of Advisors Ltd, refers clients to Footprint. To advisers and attractive and affordable for
financial planning.” deliver extra value to clients he covers the their clients.
010 WWW.GOODRETURNS.CO.NZPaul de Klerk and
Angela Vale.
“Our aim is to have advisers pre-position whose chief executive Sudesh Jhunjhnuwala
our services with clients. Some advisers are brought in Footprint to upskill employees.
among the 81 percent of Kiwis who don’t The majority of staff admitted to not having Making a Will is
necessarily understand estate planning fully, written a Will, mostly because they hadn’t
which is understandable as it is a specialist had time to get around to it. not difficult or time-
area in its own right, and we are working on
that knowledge gap.
FOOTPRINT LEARNING LABS
Footprint provides its corporate clients with
consuming but it is a
To understand more closely what advisers
need, Footprint is currently running a trial
employee Learning Labs either on-site or at a
convenient location nearby. Our consultants
today conversation,
with a number of advisers. Ms Vale says
more grounding in the challenges facing
teach staff all the ‘need-to-knows', such as: not a retirement
advisery businesses will only improve the
• What is an asset
• What is an Estate conversation.
Footprint service. • Why you need a Will and what can happen
if you don’t have one Mr de Klerk says he has a “very open”
• What is an Executor and what do they do
I think every • What is involved in Estate Administration,
relationship with Footprint but doesn’t
receive referrals in return for passing on
financial adviser who tasks and costs
• How to avoid leaving loved ones without
clients. He says Footprint is “not a burden of
a process – it’s simple, easy to use and to
deals with insurance access to funds while your estate is
being administered
understand. Ninety-nine percent of my clients
are in similar situations to one another, so I
has a responsibility to A COMPETITIVE ADVANTAGE can say to them ‘here's how the Will works
bring up the issue of Ms Vale says Footprint is conscious that
the advisery market is intensely competitive,
and why it's a good idea’. My advice is around
highlighting the consequences of not having
Wills. and advisers need a point of difference.
“Incorporating Wills as part of the advice
a Will in place. Footprint is a really good thing
for financial advisers because it’s so easy for
programme feeds into the industry’s Code clients to go online and take care of it.”
“We are very experienced with corporates of Conduct. Advisers are also able to secure
As Ms Vale says, “The Will only performs
so we know how to make the messaging good rates for clients because we pass
one part of the life finance equation. How
relevant to people’s lives. We can help discounts on, and we are seeing a trend
bank accounts and insurance policies are
advisers cover off FAQs with clients, and towards advisers paying for clients’ Wills
set up and how your property is owned can
our guides and monthly reporting are also because there is a low cost of acquisition and
it is a good way to differentiate their service all affect the funds that are available to your
comprehensive, so advisers can be confident
and take due care of clients. loved ones while your estate is being settled.
about quality of advice and meeting
obligations to regulators. “We don’t want to step into advisery Too many people have been left penniless
“We already do on-site Learning Labs for businesses but see a much stronger value in that interim period. That’s why these are
our corporate clients on employee benefits, proposition in being a good commercial conversations for today and why our work
and there could be similar labs in future partner. The more successful advisers are, with advisers and employers like Sudima
for advisers that are accredited and count the more people are protected. Thinking Hotels is so important.”
towards their required annual training quota.” ahead, there is no reason why an adviser who To find out more about how Footprint can
One of the companies investing in Learning wants to specialise in estate planning could work with your business, contact
Labs is national hotel group Sudima Hotels, not, and Footprint could be white-labelled.” www.myfootprint.co.nz
011PROFILE
By Susan Edmunds
Spotlight on
New Zealand
market
Research IP founder Darren Howlin says good
research is about breaking investment outputs down
to understand their parts.
Investment researcher Darren … investment is the same. You know what
the output is, the PDS, talking to portfolio
Howlin says investment products managers, the marketing teams. The PDS is the
aren’t too dissimilar from TVs “The research piece is deconstruction.
The PDS is the TV screen, we want to know TV screen, we want
– the output to the consumer how you got there. What processes were
involved in whatever investments are inside
to know how you got
depends a lot on the make-up of
the components within.
that portfolio, the different asset classes
determine how you get the picture on
there.
the screen.”
It might not be the comparison that its own fund manger of the year awards.
Before setting up Research IP, Howlin
springs to mind most readily for those in Howlin had been interested in buying
was a research manager at Lonsec,
the industry but the analogy is indicative of FundSource but said he and the NZX could
national research manager for Professional
Howlin’s background. not come to an agreement on price. “They
Investment Services, and worked for Suncorp
An electrical engineer by training, he as a product research adviser. did what they had to do.” Zenith reportedly
started his career with the Australian Defence Research IP has been making noise on this bought FundSource for about $340,000. The
Force, doing “interesting things” that he’s not side of the Tasman this month, launching its NZX had valued its assets at the end of 2017
really at liberty to discuss in the media. expanded operation in New Zealand. at $435,000.
Basically, he says, it amounted to Until the sale of FundSource it had been He said the Research IP launch could have
breaking everything down to its processes providing qualitative reports to the NZX happened sooner. “But sometimes it’s better
and systems and understanding the operation and powering its FundSource to let a little bit of water go under the bridge.”
building blocks. awards, which highlighted the country’s best He is also in the process of locking in
“Take a TV. TVs have changed a lot over performing fund managers. an expanded team and said some of the
the last 20 years, from CRT to plasma, to At launch, Research IP offered 58 managed people who will join the business are still
LCD to LED. The quality for the picture keeps fund qualitative research reports and more on gardening leave in positions where
getting better and better at time goes by than 700 one page snapshots. It will also run they cannot be seen to be making any
012 WWW.GOODRETURNS.CO.NZprofessional moves yet. to look at finance companies as an example,
Howlin said the move was a continuation of
what Research IP had already been doing in
Research IP I think they had half of New Zealand’s wealth
sitting in them at one point.”
the New Zealand market.
“One of the key things that has been part
will have a core But he said while products would change
and people would move in and out of the
of our rollout into New Zealand has been offering that is freely industry and between companies, in essence
making sure that our technology is set up investment products were always about
specifically for the New Zealand market. available to financial the key asset classes. “Equities, bonds,
That’s part of the reason for the timing being
what it is.” advisers and direct property still make up the world. Nothing
has really changed there despite everything
Some of the technology has been used
in the Taiwanese market, where Research
investors. that’s happened.”
Advisers would continue to be important,
IP provides services to the Taiwanese “Aaron [Drew] and Chris have the best he said, and should focus on what they did
Government. It has been operating there understanding of the New Zealand best.
since 2013, led by Kevin Kan, who heads marketplace of all of us but their service is Research IP also provides consulting
sister company Square One Research. “We different to the type of service that Research services to Australian financial advice groups
had to do some tailoring for the New Zealand IP puts into the market place.” and financial advisers, with over $2 billion
market. In Taiwan, we have information on Howlin said the investment world had under advice and growing. Over $600 million
over 3,000 managed funds … the universe changed over the time he had been part of of this is invested via managed accounts,
isn’t that big in New Zealand even if you do it. “You definitely have asset classes that with the balance residing in advice group
include all the Australian fund managers who were the darlings of their time and don’t exist approved products.
have New Zealand-compliant funds.” anymore. You Howlin said: “With the regulatory landscape
Square One Research and Research IP are only have constantly changing, financial advice groups
key partners in the Taiwan Government’s are now bolstering investment
voluntary top up retirement saving system committees with independent
called the Fund Rich Service (FRS). Since experts like us. We don’t just sit
launching in January 2017, the FRS has on an investment committee,
grown to US$2 billion ($3.15 billion) and we assist advisers to solve
there are more than 140,000 active investors and implement systems and
using the service. More than 35% of users services which allows financial
have fortnightly or monthly regular savings advisers to do what they do
plans linked to their accounts. The Taiwan best; help their clients, rather
Government’s FRS leverages Research IP’s than filling their day with
Search-Research-Transact capability. administration.”
He said qualitative research was an He said many advisers
important part of the New Zealand called on Research IP services
proposition and was less scalable. “That’s a because they were dealing
bit more important In the New Zealand and with increasing amounts of
Australian market.” paperwork and administration
Howlin said it was important to him that that had become a distraction
the product was open to financial advisers taking them away from working
and to retail investors. with their clients.
“Research IP will have a core offering that He said roboadvice would be
is freely available to financial advisers and part of the future – Research
direct investors. This will enable people to IP is developing its own AI
have access to key information and ratings, solution. But he said it would help
helping them to make important investment advisers with some of their heavy
decisions. The only requirement to access lifting, rather than replace them.
the service is an email address.” “People go to people to talk to
Howlin said the New Zealand research people.”
market was changing again. “Zenith has
acquired FundSource – there’s a brand there
but a limited amount of knowledge
of the New Zealand market.
Obviously, Morningstar
had a long relationship
with the market but
the key person who
understood the
market best has
moved on.”
Chris Douglas
moved from
Morningstar to
MyFiduciary.
013
Darren Howlin Melanie PurdeyRIAA NZ CONFERENCE
By Miriam Bell
Think
responsibility
There’s a strong appetite for investments that deliver social and
environmental impact and that trend is set to grow exponentially,
reports Miriam Bell from the frontlines of this year’s Responsible
Investment Association Australasia conference.
014 WWW.GOODRETURNS.CO.NZROADMAP
PART OF THE SOLUTION FOR SECTOR
It seems a contradiction in terms: Z Energy
is a fossil fuel company and yet its CEO, Mike It is about truly
Bennetts, says sustainability is at the heart of
all they do. committing to ESG
That’s because since a company reset back
in 2010, which identified and articulated their and all the benefits
core values, Z has actively worked to play
their part in helping New Zealand transition to
that flow from it
a low-carbon future.
Kicking off the speakers at the RIAA
rather than just
conference, Bennetts talked about their paying lip service to
efforts – as a company and part of the
wider community – to perform well in the the idea in order to be
environmental, social and governance (ESG)
space. compliant.
“We have always recognised that we are
part of the problem but we want to move to
being a part of the solution.”
Z Energy’s
So Z plans to reduce their operational Mike Bennetts
emissions by 2020 and voluntarily offsets
what they haven’t been able to reduce there are things that we can do and we are Matt Whineray
through investment in permanent forestry, engaging with New Zealanders around that.
Increasing pressure on corporates from
he said. We have to collaborate and get some actions
investors, regulators and consumers means
This means that, as a business, Z is carbon going around this stuff.”
that there has been a lifting of sustainability
neutral. While this might be challenging, it is To play its part, Z has invested almost
expectations – and standards – in the finance
not the biggest problem. $30 million in building New Zealand’s first
sector.
“It’s how we deal with the emissions from commercial-scale biodiesel plant, which
This led to the establishment of the NZ
the petrol, diesel and aviation fuels that we turns tallow, a by-product of the agricultural
Sustainable Finance Forum earlier this
sell to our customers which equates to about industry, into high quality biodiesel.
year and it is now hard at work producing
9% of New Zealand’s total carbon emissions. It has also invested in a majority stake in
a roadmap for the finance sector to help it
“Dealing with that is a different story. But retail electricity provider Flick Electric and
become more sustainable.
in Mevo, an electric ride-sharing company
NZ Super Fund CEO Matt Whineray is the
indicative of the changing nature of how
co-chair of the forum. Speaking at the RIAA
people get from point A to B.
conference, he said the forum’s work is not
Bennetts said that ESG is not just a fad,
about how to direct capital to sustainable
rather it’s a solid business-call to make: get it
investment.
right and you will manage risk as well as have
“It is about the whole financial system, from
better access to debt and equity funding.
insurance to banking investment and what
Additionally, ESG is something that
can be done to ensure that standards are
investors are increasingly keen on.
raised and the sector lives up to them.
“Four years ago no-one knew what ESG
“It is no longer enough to just have a policy.
was. Now it is very much a feature of the
There’s a very active context and there’s lots
conversation with our investors. And it’s no
of conversations about how it is all being
longer just about what the compliance people
managed and how to incorporate the risks.”
have told them to ask.”
But such dialogue is necessary, as is the
At Z, which is a part of the NZ Climate
work of the forum, because climate change
Leaders Coalition, they believe that it’s
critical to be responsive to community risk is now actionable and urgent and we have
concerns, he said. to do something about it, Whineray said.
“It is about truly committing to ESG and The forum, which is made up of
all the benefits that flow from it rather than representatives from a range of “actor groups”
just paying lip service to the idea in order and observers from the regulators, is standing
to be compliant.” on the shoulders of initiatives that have
While there are challenges for gone before.
businesses, Bennetts believes “We are breaking the goals down further,
it is important for companies questioning why things can’t be done now,
to get started on ESG before it and linking then to outcomes. But our priority
becomes compulsory. areas are leadership and accountability,
“You need to work with your data importing, and redirecting and
suppliers and reach out to the prioritising capital.”
community as well. Remember Whineray said they were looking at matters
listening is good: most things get solved from across the spectrum, including how
by dialogue, not shouting.” to think about sustainability in the context
of advice and fiduciary obligations, and
considering how they connected.
015
Mike BennettsRIAA NZ CONFERENCE
By Miriam Bell
“Our interim report, which will have ideas which explored active ownership at the
and pathways, is due out at the end of RIAA conference.
October. Then we’ll need engagement and
feedback to turn those goals into procedures.
Devon Funds Management portfolio
manager Nick Dravitzki said that, on behalf of
Let’s not make
“From this we can work out what you need their investors, they carry out both informal
and formal engagement over ESG issues with
excuses [around ESG]:
to do to improve and change the behaviour of
actors in the financial sector. But I think we all companies they work with, like Fletchers and we will end up in an
need to engage proactively, not just react.” Air New Zealand.
“It is a constant process for us as an active incremental spiral if
investor. Collaborative engagement is often
we do.
Locally, there has a part of this as it can be more effective than
indirect engagement.”
been a shift “One example of this is Climate Action
100+ which is an investor initiative that tries Australasian Centre for
away from excuses to influence companies to make positive Corporate Responsibility's
changes to their climate impact. It is striking
for not doing ESG to a how much impact it has and how much time Brynn O’Brien
focus on how we are companies spend trying to respond.”
BMO Global Asset Management’s Alan O’Brien said to deal with this they make
use of a double-barrelled resolution method
integrating ESG Fitzpatrick agreed that there is a role for
collaborative engagement and that there where an amendment to the original
and making a has been a big uptick in the number of such
initiatives being used.
resolution takes place and then other ESG
resolutions are proposed as part of that.
difference. But he noted that most of this engagement “We use shareholder resolutions to protect
company interests from ESG risks and for
is behind doors. “Increasing ownership in
companies and using voter rights is also a broader political purposes to break through
Habour Asset way to engage with them to a great degree. for political change in areas where there has
Management’s Jorge “It’s an efficient model to engage with
companies – especially as with some
been a political vacuum.”
The balance of how these issues are
Waayman companies it is very difficult to engage with considered needs to be changed, O’Brien said.
people who can enact effective change, not “There is a lot of excuse making from the
financial sector about why they can’t do
ACTIVE OWNERSHIP
just a gatekeeper.”
Shareholder resolutions are another avenue anything. We need to flip the bias in favour
Shareholders have also started to take that can be used to advance ESG causes in of the urgency of ESG issues. Let’s not make
a much more active role in ensuring the companies and to enact change. excuses: we will end up in an incremental
companies they invest in are operating Australasian Centre for Corporate spiral if we do.”
responsibly and more sustainably. Responsibility executive director Brynn Other forms of active ownership employed
This is known as active ownership and, O’Brien said there are differences between by companies representing investors include
much like impact investing itself, it is a rapidly New Zealand and Australia in this regard. offering advice, pushing for more explicit
growing trend. In New Zealand an individual can do a disclosure of ESG policies, and working with
One of the key aspects of active ownership shareholder resolution but, in Australia, 100 government on policies and the environment
is engagement, according to a panel session shareholders need to do it together. they sit in.
016 WWW.GOODRETURNS.CO.NZESG TREND WATCHING New Zealand and
There’s been a widespread shift in looking at putting ESG funds together – but Australia are fairly
advanced, with people
thinking about ESG: no longer is it merely there’s zero regulation or compliance and
something nice for businesses to have, it’s little interest.”
now something clients want and look for.
At the RIAA conference panel on ESG
Another common issue pointed out by the
panel is the way companies disclose on ESG really starting to take
trends and insights, this change in thinking
about ESG generally was one of the key
and the related potential for “greenwashing”,
which can make a company appear more
ESG into account.
themes to emerge. environmentally friendly than it actually is.
Habour Asset Management investment MFS Investment Management senior Refinitiv's Jamie Coombs
analyst Jorge Waayman said that managing director Marian Poirier said
responsible investing policies are big news there is a lack of consistency in disclosure The inconsistent disclosure trend
around the world. which makes it difficult to compare ESG appears to be pronounced in New Zealand,
"Locally, there has been a shift away from credentials. Further, sometimes people according to a big analysis of disclosure
excuses for not doing ESG to a focus on are doing it, even if they don’t have the and offset practices in New Zealand’s
how we are integrating ESG and making a right terminology. investment market carried out by Harbour.
difference. To deal with this, it’s necessary to have Waayman said they found that less than
“There are big issues – both multiple data sources and to analyse it half of companies in their sample disclosed
environmental and social – that we need to yourself, she said. “As corporate reporting their emissions.
lean into and unpick. So we need to think improves it lifts the sector and gives you the “Because a lot of the data is self-reported
about how we manage ESG programmes opportunity to select what is best for you. we looked at how many of the companies
and where do we need to progress to But don’t just take one example, get more, had externally verified their data. Only seven
with them.” and challenge people.” out of the 25 companies had done so. So
But while growing numbers of companies New Zealand is lagging behind the global
try to incorporate ESG into all that they scene and needs to pick up the pace there.”
do, pick up of the concept varies widely That’s because the new reality is that ESG
between countries. has become mainstream and needs to be
Across the Asia Pacific region there are integrated into all aspects of investing.
very different levels of investor engagement Poirier said while the risks do need to be
and knowledge in different countries, managed, it is a big opportunity. “Passive
Refinitiv’s performance director Asia, Jamie management is not the best way to
Coombs, said. integrate ESG – but active management
“New Zealand and Australia are fairly means it is necessary to do the research
advanced, with people really starting to take and to really engage.”
ESG into account. But South East Asia is a
very different story. Some of our clients are
Jorge Waayman
017ADVERTORIAL
Spotlight
on ESG
trends
Responsible Investing (RI) is How should a money management industry. Where once RI
consisted of naïve investment screens and
a term we are hearing more in manager decide on the shared only analysed equities, new datasets and
the media. It's used to loosely values of all the underlying approaches are now used to implement
describe a range of investing investors? sophisticated ESG strategies for a range of
financial securities. Issues of transparency
RI initially began in a religious context, and information disclosure are becoming
strategies that include, but are not based on the principles of “love thy more prevalent; investors want to know
limited to, environmental, social neighbour”. Ideas promoted included how their money is invested. The increased
divestment from alcohol, tobacco, weapons availability of quantitative data now allows
and governance (ESG) integration and gambling – the original “sin” stocks. investors to both strategise and measure
and socially responsible investing Over time, RI developed with the addition their portfolio characteristics.
of civil rights, international politics and In 2015, we developed a product for a client
(SRI). environmental sustainability into the mix. that would track a benchmark whilst reducing
Both terms share the same goal: to move Integrating ESG factors into investment the overall carbon exposure of the portfolio
money away from the “bad” guys and research is comparatively new and can and simultaneously minimising active risk
towards business that is “good” for society. include issues such as climate change, and trading costs. The strategy ultimately
employee rights, modern slavery and evolved into our Low Carbon Fund, a low cost
Move money from the bad diversity. The purpose is to consider the ESG global equity offering that can be used by
investors to reduce their carbon footprint.
guys and towards business footprint of a company and how these non-
financial issues can contribute to the bottom
that is good for society. line of a company.
The desire to invest responsibly by
organisations and individuals depends Investors want to know how
on various values or ethical motivating investment professionals
factors. It is these differences that make the are considering ESG in their
definition and approach to RI so difficult. The
challenge is that values and ethics are hard
portfolios.
to define and thus very subjective, something Some commentators believe that the
the investment community finds hard trend in investor demand for ESG solutions
to conceptualise. is disrupting the status quo of the asset
018 WWW.GOODRETURNS.CO.NZInterestingly, our decarbonisation research a research-based approach are required in
RUSSELL INVESTMENTS order to proactively meet market demands
shows that many companies with large
DECARBONISATION STRATEGY and generate solutions that ultimately
carbon footprints also have large investments
in renewable energy. The original carbon benefit investors.
strategy would exclude these securities
by ignoring climate-proactiveness metrics Successful ESG strategies
of the underlying firms. In 2016, Russell require creativity,
Investments added clean energy and ESG transparency and a
tilts to the strategy; both of which are directly research-based approach.
related to the overall low carbon tilt and allow
for a more sophisticated investment strategy.
Research into responsible investment
at Russell Investments has been a case of
Russell Investments became a
ongoing enhancement. Recent research
signatory of the United Nations
includes a study on the relevance of material
governed Principles of Responsible
ESG scores that are weighted based on the
Investment (PRI) in 2009, and
exposure of the company to the specific subsequently joined the ESG
type of ESG risk. Furthermore, Russell requires innovation. Markets are rapidly discussion with world leading
Investments has also begun to engage in evolving, along with investor needs. proponents of RI. In our 2019
water research, identifying opportunities Gone are the days where simple (and naïve) UNPRI assessment we scored A or
around integrating water-sustainability exclusions of securities sufficed, or where A+ ratings in the 10 categories in
metrics into portfolios. strategies were not backed by robust market which we are assessed.
We believe that implementing RI and ESG- analysis. At Russell Investments, we are
specific solutions for our investors’ portfolios confident that creativity, transparency and
Russell Investments Low Carbon
Global Shares Fund
The Russell Investments Low Carbon Global Shares
Fund provides investors with a sustainable investment
solution that supports the management of climate
change risk and the transition to a low carbon
economy.
For more information about our responsible
investing solutions please contact:
Matthew Arnold
t: 09 359 3576
e: marnold@russellinvestments.com
w: russellinvestments.co.nz
For more information on the funds and solutions available to you and your clients, please visit russellinvestments.co.nz. This publication provides general
information only and should not be relied upon in making an investment decision. In particular, you should seek independent financial advice and read the relevant
Product Disclosure Statements available by contacting Russell Investment Group Limited on 09 357 6633 or 0800 357 6633 or at russellinvestments.co.nz.
019FSC CONFERENCE
By Miriam Bell
Back to
the future
Delegates at this year’s Financial services could enhance New Zealand’s
Services Council conference were told wellbeing and nurture diversity and
that success for the sector, in a rapidly leadership. Miriam Bell was among
changing environment, will require getting them as they discussed a roadmap for
a lot of the basics right for customers. growth for advice, advisers and the
They also considered ways that financial wider population.
020 WWW.GOODRETURNS.CO.NZTHE AGE of wellbeing
Business needs to face up income earners.
“But 60% of those involved didn’t think they
to the fact that the world has would have saved enough for retirement It’s not about
transformed: these days ensuring and one of the big anxieties was around not
having enough for emergencies. It was clear working harder, it’s
the wellbeing of employees
and customers is the best way
that lifting financial productivity and savings
was a key ingredient of wellbeing.” about working
to embrace change and boost
A critical aspect of doing so is financial
literacy. On average, New Zealanders’
smarter. That will
productivity. financial literacy is not good, particularly in
comparison to similar countries like Australia.
help to boost
That was one of the key messages to
emerge from a wide-ranging panel session on
Mulholland said to improve this a productivity.
consistency of approach is required. “There
wellbeing on the first morning of the Financial needs to be a focus on KiwiSaver to help
Services Council’s annual conference. build financial literacy. The work of the MinterEllisonRuddWatts'
Prompted by the current focus on
wellbeing, which is exemplified by the
Commission for Financial Capability needs to Christine Brotherton
be supported.”
Government’s Wellbeing Budget, the theme While the work towards building financial intergenerational thing. Those in the know
of the conference is “Towards Wellbeing”. literacy is starting, New Zealand has a long need to help those who are not.”
In line with this, the panel session way to go, he said. “We need to start with For Mantis, the financial literacy of lower
explored multiple issues relevant to children and think about how we educate income groups is a concern. She said BNZ
wellbeing, including mental health, them on money and finances? It’s an works with community financial programmes
digital technology and social media, the aimed at such groups to provide help around
changing world of work, productivity and budgeting plans, managing debt and making
environmental considerations. use of KiwiSaver.
But perhaps, not surprisingly, the central “There does need to be more education for
wellbeing issue of the panel session was children and in schools too. To improve the
financial wellbeing. financial wellbeing of New Zealanders, we
ANZ’s managing director of wealth need to start thinking about it and helping
Craig Mulholland said their research more people to get educated on it.”
around wellbeing revealed that people feel When it comes to the financial sector itself,
good when they have an active savings the panel session highlighted that there are
programme and don’t have to borrow for important conversations to be had about
everyday needs. better business practices which will benefit
This was not dependent on income per se, employees and customers and support
he said. “You could have a high-income their wellbeing.
earner with lots of debt and no Resilience expert Kathryn Jackson
savings and they weren’t as happy as said it’s critical for companies to equip
a lower income earner with no debt employees to deal with stress and
and some savings. pressure and to build resilience.
“It’s about having control of your And MinterEllisonRuddWatts
destiny, knowing what you want to HR director Christine Brotherton,
achieve and how you want to achieve whose company has embraced
it. Financial wellbeing comes down a four-day working week, said
to being able to save and pay your it is about trying new things
bills without getting into debt.” because the old ones are not
BNZ CEO Angela Mentis agreed working.
that savings, along with wealth, “People are under pressure
does contribute to wellbeing. and productivity is not good. For
She said their wellbeing index better customer outcomes think
provided some interesting about changing focus from
insights into this. what employees are doing to
“There was a wide spread achieving the outcome you
of financial hardship and want. It’s not about working
distress in New Zealand and it harder, it’s about working
was particularly pronounced in 18- smarter. That will help to
29-year olds, in women and in single boost productivity.”
021You can also read
