Simplicity NZ Limited is the issuer of the Simplicity KiwiSaver Scheme. For a Product Disclosure Statement, see www.simplicity.kiwi - Angel ...
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Simplicity NZ Limited is the issuer of the Simplicity KiwiSaver Scheme.
1!
For a Product Disclosure Statement, see www.simplicity.kiwi
disclosure
turned
Simplicity - why, how, what?
what?
money
how?
choices!
why?
dignity!
active vs passive?
past returns are just that
is the future different?
three big challenges…
4! Source: NZ Treasury Estimatesmega challenge #1
tyranny of size
KiwiSaver funds under management
250
KiwiSaver is a $42b
200 savings pool , $200b by
2030
$billion
150
100
Non KiwiSaver funds
$100b by 2030
50
Size and efficiency are
0
2016 2018 2020 2022 2024 2026 2028 2030
correlated
5! Source: NZ Treasury Estimatesmega challenge #2
dis-inflation / disruption
6!mega challenge #2
dis-inflation / disruption
7!the grim reaper
for active managers
8!mega challenge #3
transparency
$370m KiwiSaver fees in 2017, @90% marginal profit
Fees are 20% of member returns - a tax, not a fee
Encourages poor transparency. Education is not the active managers friend
More educated customers will be much more demanding
9!active management
uberisation
Old way New way
High Fees or Lowest Fees
High Shareholder
Profits or All Profits to Members
Costly Advertising or PR / Education
Shiny Head Offices or Virtual Business
Expensive Branches
or Commissions
or Direct to our Members
10!already
60% cheaper
1.8
Profit Yours
1.4
% fee
1.1
charged Advertising
every Commissions
year 0.7 Branches
Communications
0.4 What it costs What it costs
0.0
Traditional active Passive
11! Source : Total Fees from Melville Jessop Weaver and based on average KiwiSaver Fund balances of $10,500 as at 31st March 2016. Breakdowns are Simplicity NZ Ltd estimates.a $65,000
difference Our Not for Profit and
online business model
means much lower fees.
Lifetime Amount on
Fund
fees paid ($) retirement ($)
Over their lifetime our
Average Fees 54,700 319,200
example saver in a
Passive Fees 19,000 385,000 growth fund can get
$65,800 more on
Savings 35,700 65,800
retirement ie. a 20% pay
rise. See footnotes for
Lower fees assumptions. This is an
means…
In our illustration, an
example for illustration
average $65,800 more purposes only.
more in your KiwiSaver account
earning $$$ for you.
This compounds up to…
Identical assumptions are made for both ‘Average’ and ‘Simplicity’ Fees ie. 45 years savings, 6% total contribution rate and $47,000 average salary, rising at 1% p.a., investing in
a Growth Fund until 65. PIR of 17.5%. Before tax returns of 6.67% p.a. assumed in both cases. Using identical assumptions the equivalent saving by investing in a balanced fund
is $37,713 (5.33% p.a. gross returns) and Conservative Fund $19,370 (4.18% p,a. gross returns). Simplicity fees assume $30 p.a. administration fees and 0.30% total fund
management fees, inclusive of in fund expenses. All Simplicity funds charge the same fees.
12! This example is for illustration purposes only, to show the compounding effect of reduced fees. Actual performance will differ, and no particular return can be promised or
guaranteed. Investment in a growth fund may not be appropriate and investors should get financial advice. All figures supplied by Melville Jessop Weaver$65,000 20,000 ice creams for your
can buy grandchildren.
25 round the world airfares.
Your dream car?
Free power for the rest of
your life.
Health insurance for the
rest of your life.
Retire a year earlier.
13!where does it end?
$50 fixed fee
after fees performance the only
differentiator
14!active manager responses
or
15!old world
VC / PE / Direct Profit Active Passive
Yours
Advertising
Commissions
Branches Communications
What it costs What it costs
16!new world
VC / PE / Direct Profit Active Passive
Yours
Advertising
Commissions
Branches Communications
What it costs What it costs
17!what does all this mean?
trends
longer duration mentality, reflects
reality of supply and demand
18!what does this mean?
trends
changing attitudes to liquidity
19!what does this mean?
trends
easier transitions from direct to
listed
fewer snouts in the trough
20!what does this mean?
trends
much bigger follow on cheques
21!what does this mean?
trends
moving the needle gets harder
22!what does this mean?
trends
much lower fees, everywhere.
pay for performance
23!what does this mean?
trends
active managers more like NZ Super
Fund / ACC
24!what does this mean?
trends
govt. linked JV’s the norm when the
investors are KiwiSavers
long term and strategic
25!what does this mean?
trends
diversity and sustainability become
mainstream requirements for
investment, of necessity
26!the new world
better for (almost) everyone
VC / PE / Direct / Govt. Passive
27!28!
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