Grosvenor chief investment officer David Beattie says its default scheme will have no membership fee and the lowest percentage fund management fee in the market.
Under the new default regulations the funds need to be up and running by July 1 and providers will have to have a focus on providing education to its members.
A key reason behind the educational requirements is to help make sure that members are in an appropriate fund for their risk profile.
Beattie says that Grosvenor doesn’t have a direct sales model and all its business is handled through advisers.
“Advisers are our business and offering advice is integral to our process,” he told delegates at the SiFA conference.
Grosvenor wants to see advisers talking to KiwiSaver members and getting them into appropriate funds, where it will also earn more money.
He says the pricing model incentivises the company to give advice. “We are not going to get rich very quickly (if they stay in the default fund).”
He says as a default provider the company expects to acquire 500 new members a month and around 75% of them shouldn’t be in default funds.
One of the worrying trends at the moment is that banks are dominating the KiwiSaver market and trying to commoditise the product and don’t have the resources to give advice to members.
On current numbers Grosvenor has one adviser for every 220 members, however the banks have, on average one qualified adviser for every 4000 members and in the worst case a bank has one qualified adviser for every 7,000 KiwiSaver clients.
Beattie told advisers the industry needs “to work to gether to fight the commoditisation.”
“We are going to put some real heat on others,” he said. “We want to shake the industry up a little bit.”
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