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Default status attractive: Fisher

TOWER’s status as a default KiwiSaver scheme provider made it an attractive proposition, says Carmel Fisher, managing director of Fisher Funds.

Tuesday, February 26th 2013, 1:46PM 2 Comments

by Susan Edmunds

TOWER has sold its investment business, including its KiwiSaver schemes, to Fisher Funds for $79 million.

But Fisher said uncertainties about the default system meant a  value had not been put on the TOWER’s scheme’s default status.

The Government is reviewing the default schemeand may make changes. “All the schemes could be default schemes next year," Fisher said.

Fisher Funds was helped in the deal by TSB, which is taking a 26% shareholding in Fisher Funds in return. TSB would not disclose what it had paid.

Each default provider has an agreement with the Government.

Under Tower’s agreement, it says the Finance Minister can remove the default status if the change of provider compromises its ability to provide the default scheme in accordance with the relevant requirements.

Fisher said there would be no change to the way the scheme was set up so there was no reason for the Minister to be concerned.

Fisher Funds’ KiwiSaver schemes have been paying comparatively high fees but Fisher said economies of scale could be expected to bring those down.

The acquisition of TOWER’s KiwiSaver clients brings its funds under management to $5 billion and makes it the biggest New Zealand-owned KiwiSaver provider, with 10% of KiwiSaver funds under management.

Fisher said TOWER’s KiwiSaver funds were the main attraction but its entire funds management business had appeal.

Fisher Funds is able to operate under TOWER’s brand for 12 months and Fisher said the schemes would operate quite independently for some for some of that time, to give TOWER clients time to adjust to the change.

In the short term TOWER staff will continue in their jobs as normal, although Fisher hinted that there could be redundancies as the back-office functions of both fund managers were combined.

TSB chief executive Kevin Murphy said customers would soon be able to sign up for Fisher Funds investments through TSB branches.

TSB has in the past directed customers seeking KiwiSaver to superannuation specialists SuperLife. Chief executive Michael Chamberlain said there was no reason to expect that relationship not to continue.

TOWER’s investment chief executive, Sam Stubbs, said he was having a meeting with Fisher Funds on Thursday to discuss the future of his role.

It is expected that the transaction will be settled in April.

« TOWER investments sold to Fisher FundsFund managers call for level playing field »

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Comments from our readers

On 27 February 2013 at 6:27 am Collin said:
If I was a TOWER shareholder I would be furious. The TOWER asset management business has literally been given away at a bargain basement price (which is only slightly more than 8 times TOWER KiwiSaver scheme revenues in 2012). KiwiSaver assets, in turn, comprise around 23% of TOWER AM's total assets under management. TOWER management has a lot of explaining to do and lose all credibility in my opinion.
On 28 February 2013 at 9:53 am Collin said:
TSB's decision can be seen as a vote of no confidence in Superlife. The overly elaborate Superlife KiwiSaver scheme must be a nightmare to distribute and TSB clients are definitely trading up.
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AMP Home Loans 6.99 5.99 6.29 6.60
AMP Home Loans $200k+ 6.89 5.89 6.19 6.50
AMP Home Loans LVR <80% - - 5.85 6.29
ANZ ▲6.74 6.05 6.49 6.65
ANZ LVR > 90 ▲6.74 6.55 6.99 7.15
ANZ Special - - 6.09 -
ASB Bank ▲6.75 6.09 6.40 6.65
ASB Bank Special - 5.95 - -
BankDirect ▲6.75 6.09 6.99 6.65
BankDirect Special - 5.95 - -
BNZ - Classic - - - 6.25
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus ▲6.74 5.99 6.39 6.59
BNZ - Mortgage One ▲7.15 - - -
BNZ - Rapid Repay ▲6.74 - - -
BNZ - Std, FlyBuys ▲6.74 5.99 6.39 6.59
BNZ - TotalMoney ▲6.74 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide ▲6.45 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Finance Direct 6.10 6.45 6.69 7.10
Lender Flt 1yr 2yr 3yr
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.15 5.85 6.20 6.25
HBS Special - - - 5.95
Heartland 6.45 6.75 7.00 7.60
Heretaunga Building Society 6.25 5.85 6.50 -
Housing NZ Corp 6.50 6.00 6.30 6.60
HSBC Premier 6.59 5.95 5.99 6.25
HSBC Premier LVR > 80% - - - -
HSBC Special - 5.85 5.85 5.85
Kiwibank 6.40 5.99 6.29 6.29
Lender Flt 1yr 2yr 3yr
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 6.30 - - -
Kiwibank LVR > 80% - - 5.85 6.29
Liberty 5.64 - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society ▲6.95 ▲6.15 6.60 -
NZ Home Loans 6.35 6.09 6.40 6.65
Perpetual Trust 7.70 - - -
RESIMAC - lo doc 7.34 7.06 7.38 7.82
RESIMAC LVR < 80% 6.34 6.06 6.38 6.82
RESIMAC LVR < 85% 7.34 7.06 7.38 7.82
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RESIMAC LVR < 90% 8.34 8.06 8.38 8.82
SBS Bank 6.15 5.85 6.20 6.25
SBS Bank Special - - - 5.95
Silver Fern 5.95 6.10 6.55 7.05
Sovereign ▲6.85 6.09 6.40 6.65
Sovereign Special - 5.95 - -
The Co-operative Bank 6.45 6.00 6.00 6.25
TSB Bank ▲6.74 6.00 6.19 6.60
TSB Special - - 5.80 -
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac ▲6.59 6.09 6.39 6.65
Lender Flt 1yr 2yr 3yr
Westpac - Capped rates - 6.49 6.99 -
Westpac - Offset ▲6.59 - - -
Westpac Special - 5.95 6.09 -
Median 6.54 6.00 6.39 6.60

Last updated: 29 July 2014 6:33am

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