For those who keep a close eye on their KiwiSavings, it was grim start to the year with most KiwiSaver funds dipping troublingly into the red. Things have bounced back in recent months however and with a few new, innovative players entering the market, big players talking themselves up and new rules around providers having to disclose the actual amount paid on fees rather than just a percentage, the KiwiSaver market is suddenly looking a lot healthier and far more competitive. Juno and Pie Funds are the latest to try and shake things up with a new flat-fee option.
The result of a joint venture between Takapuna-based investment management company Pie Funds (currently with $800m under management) and quarterly investment magazine Juno, the Juno KiwiSaver scheme promises low fees, and no-fees for under eighteens and a ‘Netflix style subscription model’.
So why now?
“We’ve launched now because we see a gap in the market,” says co-founder, Juno magazine founder and advisor to the board, Jacqueline Taylor.
“We know that many KiwiSaver members wouldn’t be able to tell you what fund they are in, let alone who their provider is and what they’re paying in fees. Juno KiwiSaver is all about closing that gap and offering a unique fee model, and compelling educational information, in language that we all understand.”
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It’s more than just a feel-good veneer on the old formula, however. Taylor says that Juno KiwiSaver is the first to operate on the subscription model, offers “absolute transparency” around fees and investment practices and occupies the lower end of the fee spectrum for KiwiSaver providers.
“The drive for us is social good, and to really see a positive change in the KiwiSaver market,” says Taylor.
Much of the offer’s DNA comes directly from research conducted by the magazine into Kiwi attitudes and perceptions around KiwiSaver schemes. According to that research, more than half of would-be investors say that ethical investing is important, about half care whether their money is managed locally, but a full 43 percent don’t actually know where their money is invested.
“And only 6.6 percent responded saying they didn’t care what fees they paid, which proves the point that fees really do matter,” says Taylor. “They can have a huge impact on your balance over time – if you’re paying an extra few hundred dollars in fees, rather than having those few hundred dollars invested in your fund, it makes a massive difference to your balance over the lifetime of the investment.”
In response, Juno KiwiSaver is offering what it calls a ‘Netflix-style’ monthly subscription model, calculated on the customer’s level of investment.
“Most providers charge their clients an admin fee plus performance fees, and these are represented in percentages,” says Taylor. “And those performance fees change each year with little explanation as to how the figure has been arrived at. With Juno KiwiSaver there are no hidden fees. What we say you’ll pay is what you do pay.”
“There’s no catch,” adds co-founder, founder of Pie Funds and Jacqueline’s husband, Mike Taylor. “It’s just maths. With us, you can see exactly what you will pay at all stages of your KiwiSaver journey. Most importantly, what you pay isn’t much – and parents can open a Juno KiwiSaver Scheme account for their children fee-free.”
Low price points are all well and good, but in an industry ruled by perception, just how does the group plan to wrestle business away from the big banks in an area so cursed by customer indifference and dominated by default schemes?
The plan, says Taylor, is to dazzle them with a better customer experience.
“Our strategy? Just don’t be like them,” says Taylor. “We’re warm, friendly, we speak in plain and simple language, and we’re a no-jargon zone.”
“We’re not sending any money to be managed overseas – our team is based here in Auckland and in Havelock North. Our investments will all be handled by Pie Funds, which is an innovative, very well respected fund manager. And our education piece is important: we’ll continuously strive to improve people’s knowledge and understanding of their finances, their investment journey, and how to make their money work for them.”
The Juno KiwiSaver scheme goes live on August 1.
This new option comes as new marketing activity in the multi-billion KiwiSaver industry is ramping up. The rules around providers having to disclose the actual amount Kiwisavers paid on fees rather than just a percentage have changed and a disruptive force in the form of Simplicity, a very vocal, and not-for-profit KiwiSaver option, has been doing its bit to shake up the market.
To combat this, ANZ, the country’s biggest KiwiSaver provider, has launched a campaign that likens choosing a scheme to dating in its latest campaign, while Forsyth Barr is encouraging Kiwis not to follow the pack.
It also watches the dad take a jab at his sons’ lazy behaviour when explaining what an actively managed KiwiSaver scheme means.
The father and son duo live beyond the TVCs as well as they mark ANZ’s KiwiSaver information online.
ANZ is New Zealand’s biggest Kiwisaver provider, with over $10 billion under investment in 2017.
“That means for every four dollars invested in KiwiSaver, ANZ handles $1 … Morningstar’s figures show the six largest KiwiSaver providers have 85 per cent of the market. ANZ is the largest followed by the ASB, Westpac, AMP, Fisher Funds and Kiwi Wealth.”
Forsyth Barr has also taken on the challenge of getting Kiwis interested in KiwiSaver, however, it took a more surreal approach to its new ‘Sheeple’campaign.
Launched by FCB New Zealand, the campaign calls for Kiwis to think seriously about choosing a KiwiSaver scheme and not just follow the pack.
The human-sized sheep (with human personalities), developed by Flux Animation Studios, talk to the camera about never thinking about which KiwiSaver to choose. The ‘Sheeple’ campaign will be rolled out across TV, digital, billboards and in print.
Trish Oakley, head of the Summer scheme at Forsyth Barr, says they want to help people get the most out of KiwiSaver and the first part of that is to get people to take it seriously. The solution: make a joke about it.
“When we talked to different people we got an insight into how low priority choosing a KiwiSaver scheme is for most New Zealanders. We totally understand that so we wanted a campaign that was engaging and would prompt people to take a second look and not underestimate the importance of a saving scheme.”
AMP has also joined the fray with a no-fees for a year bribe to get people switching.
This story originally appeared on Idealog.