[The Wrap] Has the Code been cracked? Celebrating success; Market warning

Oh what a week: A second crack at a Code of Conduct for advisers, a stark warning from the NZ Super Fund and a real Kiwi success story.

Friday, October 12th 2018, 6:06PM

First up let’s acknowledge the amazing success of the FNZ Platform which underpins groups like Consillum and some of the banks.

This Wellington-born tech company has become a significant global player and has been sold for $3.25 billion.

FNZ flies below the radar, and deliberately keeps it that way. Trust me on this. Getting them to say anything has been a challenge for years.

But let’s celebrate this great Kiwi success story.

What FNZ has done is a nice segway into another topical story. NZX is trying to build its own, FNZ-esque platform. However, minority shareholder Elevation Capital argues NZX should divest its Wealth Technology platform and funds businesses to focus on actually running an exchange.

NZX has shown a bit of mongrel this week and challenged Elevation to call a special meeting.

It’s going to be an interesting space to watch.

WHERE'S THE ADVICE?

During the week the FMA put out its latest KiwiSaver report. It’s pretty bland, but has two highlights. First up is fees. It’s becoming blindingly clear the regulator is fixated on fees and remuneration - and not just when it comes to KiwiSaver.

A dog with a bone keeps popping into my head on its approach in this area.

The report was high level throughout, with a few exceptions. The main one was around default providers getting their members into appropriate funds.

When the latest round of default appointments was made in 2014 investor education was part of the contract.

It could well be argued the managers at the bottom of the table have failed here. Maybe they could lose their default status when the government does a review next year?

In the bottom two is AMP and Westpac. AMP is a surprise considering how it is morphing from a life business into one which has much more focus on KiwiSaver. Added to that it has a large adviser network, actually the biggest in the land.

Second worst is Westpac.

At the other end of the scale, Booster is doing the best and it is highly proactive in contacting default customers when they join up. Booster principal David Beattie says they do this "by using an extraordinary piece of technology called the telephone!

Here's what the FMA says: "Providers continue to tell us that poor data hinders their efforts to communicate with default members. We accept that it is not easy to reach and engage with people in defaults, and we know that almost half of default members are not contributing to their KiwiSaver, which may further reduce their incentive to engage. However, some providers have improved this year, which shows us that these challenges are not insurmountable."

But rest assured…it is asking questions and talking to default providers.

SUPER WARNING

Adding to a fascinating week is the NZ Super Fund’s annual report. In it the Guardians have been brutally honest on market conditions, the risks of volatility and going so far as suggest another GFC would wipe out 20% of its value.

I’m not sure too many private sector fund managers would be saying that to their clients.

Today’s Wrap is going to leave Version Two of The Code for its own piece.

MIA LAST WEEK

Sorry to have missed getting out The Wrap last week. I headed over to Napier to do the Cole Murray Cape Kidnappers Trail run. Great to see financial advisers supporting events like this and Booster also chimed in as a event sponsor.

The event raised more than $8,000 for the local rescue helicopter; Here's Cole Murray director, Jeremy Cole presenting the cheque.