by Niko Kloeten
Stubbs made the comment at yesterday's Tower quarterly media briefing in Auckland, in response to a question about the recently reported survey on performance fees by Harbour Asset Management.
The survey raised concerns about the way some New Zealand equity managers calculated these fees, with investors possibly paying performance fees for below-market performance.
Stubbs said Tower charges performance fees on the same basis as Harbour for the small number of products where it has them.
He said "as a general rule" he agreed with the findings.
"If you have a performance fee so the headline rate looks low you're doing it for the wrong reason," he said.
"We should be prepared to accept low income in bad years if we accept good income in better years."
Stubbs said the "devil is in the detail" with performance fees, and said he looks forward to changes to KiwiSaver reporting requirements that will allow investors to compare "apples with apples" in that regard.
"If there's any lies or mis-truths about performance fees they're all going to come out in the wash. I think there will be some very interesting revelations that come out of it."
Stubbs also spoke out about "mischievous" reporting by media on the fees issue, saying KiwiSaver fees are actually very low.
He referenced a Morningstar survey that found fees for KiwiSaver balanced funds are much lower (0.93%) than their Australian counterparts (1.76%) and almost as low as for wholesale investors (0.85%).
"I'm looking forward to some more rational analysis on this in future."
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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Lets see....400,000 default people of which Tower has 1/6. That is roughly 66,000. Say it might take 30 minutes on average to deal with them (as some will tell you to go away, but then to really give some proper help to others an adviser would have to cover a bit of ground, especially if as Sam say these conversations lead to 80% of them moving) it could take 33,000 hours to talk to them all. Based on there being around 2,200 working hours in a year, this looks like about 15 solid years work for 1 person.
I guess the answer to how long it will take Tower to discharge their fiduciary responsibility will be a function of how many advisers they have to do the job. These would have to be in-house I am picking, as an independent wouldn't be into doing this.
Anyone got an idea how many qualified advisers Tower has?
Another fun bit of math would be to ask what 15 years of an approved advisers hard work would cost..........
Righto back to the phone to ring more Default clients.