Smaller players need to stand out

Smaller providers will have to differentiate themselves to stand out in a KiwiSaver market dominated by banks, an investment analyst says.

Thursday, March 12th 2015, 6:00AM

Mark Weaver, of actuarial firm Meville Jessup Weaver Investments, said banks controlled 58.5% of the KiwiSaver market, not including ANZ’s OneAnswer scheme.

There are 28 KiwiSaver providers, six of which are banks.

He said ANZ, ASB and Westpac had experienced growth of more than 40% in funds under management in their KiwiSaver schemes over the past 18 months. ANZ had 53% growth, ASB 44.4% and Westpac 41.9%.

BNZ experienced 304% growth because the scheme only launched in 2013.

Growth was helped by strong market performance which lifted balanced funds 15% to 16% on average.

The top three banks in terms of scheme member numbers were the same as the top three for funds under management. ANZ is in front, followed by ASB and Westpac. ANZ had higher member growth than Westpac and ASB over the 18-month period, at 18.4% compared to 11.8% and 14.6% respectively.

Only Kiwi Wealth members recorded a drop in the average balance size, which MJW said could be due to the scheme attracting new members.

OneAnswer had the highest average member balance, which Weaver said was likely explained by the membership profile of the scheme, mainly financial adviser clients who would make higher regular contributions and one-off amounts.

He said ANZ and OneAnswer had a much higher allocation to growth investment options than the other banks. “Perhaps ANZ have been more active in moving members of their default fund into a more appropriate investment strategy.”

With banks having such strong distribution models for their KiwiSaver offerings, Weaver said other fund manager providers would have to show what they did differently or better than the banks. “Distribution is everything and banks have got that.”

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