Research houses philosophical about disclosure

New KiwiSaver periodic disclosure requirements are stepping on the toes of research houses – but they say more transparency is good for the industry.

Tuesday, November 19th 2013, 6:39AM 1 Comment

by Susan Edmunds

As of last month, KiwiSaver providers have been required to display their periodic disclosure statements on their websites, detailing who manages money, where it is invested and what fees are charged.

The statements have to be issued every quarter.

Sam Stanley, of FundSource, said it would not make a big difference to the operation’s day-to-day business. “What it means is that traditionally some of the stuff that we would have provided is now provided by the FMA. That’s good for the industry, not so good for us as a business.”

He said clarity on fees would help investors. Presenting information in a way that was straightforward would benefit consumers and the KiwiSaver sector, he said. “It might encroach a bit on what we do and we’ll have to adapt and add value in different areas.”

Morningstar’s Chris Douglas said there would be no change to his firm’s KiwiSaver performance survey at this stage. “From our perspective, there’s very little impact.”

Morningstar would absorb information from providers that were not already in its survey.

He said it would benefit consumers who would no longer need the contacts and scale of a firm such as Morningstar to find out thing such as who manages the money. “Every other market we operate in already has that publicly available information.”

He said Morningstar’s information was collected more quickly than it was presented in the quarterly disclosure statements. “Our ability to analyse and research – that’s where we have an advantage. And we’ve got historical data. KiwiSaver’s been running for seven years.”

Overseas, similar disclosure requirements had resulted in changes to the way portfolio managers were paid, he said. When the spotlight was put on remuneration, incentives for things such as assets under management growth disappeared and the focus went on bonuses for strong performance.

Other countries had to reveal full portfolio holdings every quarter, he said. At the moment KiwiSaver providers are only required to disclose that annually.

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Comments from our readers

On 20 November 2013 at 11:05 pm Collin said:

Greater disclosure is good for investors and the industry and the impact (or not) for research houses should be of little concern. Research houses in New Zealand conduct very little research but make money packaging information that should be readily available in any case. Making a business out of the industry's previous poor disclosure meant research houses were part of the problem.

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