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InvestNow mix-up disappointing: Stubbs

Simplicity founder Sam Stubbs says he is disappointed about a mix-up with direct investment platform investNow which resulted in his firm pulling its funds.

Thursday, May 25th 2017, 6:00AM 8 Comments

by Susan Edmunds

InvestNow is run by Anthony Edmonds, of Implemented Investment Solutions. It is an online platform that allows clients to buy, sell and manage their own investments. Clients can start with $250.

Earlier this month, it was revealed that Simplicity’s “sidecar” funds – which operate in the same way as its low-cost KiwiSaver offerings, but allow investors to withdraw money at any time – had been made available on InvestNow.

Via that platform, clients seemed to be able to get access to the Simplicity funds with just $250 to invest instead of the usual $10,000 minimum – and without the usual $30 annual fee.

But Stubbs said that had not been his intention.

His firm had opened an account with Adminis, the wrap platform for InvestNow.

“In opening an account with Adminis, our first with a wrap provider, we thought we were facilitating advisers accessing our funds and advising clients. That turned out not to be the case with InvestNow’s offering. Given their business model, we would know neither whom our clients were, or how to communicate with them.“

He said the decision had been made to close the account.

“While it was disappointing that InvestNow listed our funds without contacting us, and embarrassing to hear about it about it via third parties, the reason to close the account is a deep desire to communicate directly with clients, or via advisers. Advice and communication are key priorities for us.”

The 14 clients who had applied to invest in Simplicity’s funds via InvestNow had been taken on directly, he said.

“While they are all below the $10,000 minimum investment threshold, it’s the right thing to do to look after them directly, and InvestNow and Adminis have been very helpful in making this happen,” he said.
“We hope over time to lower the $10,000 minimum, but this needs to be in agreement with our administrator, MMC. We need to make client on boarding process very efficient, so the costs involved are fair to everybody and our fees stay the lowest in the market.”

Edmonds said in a social media post: "We apologise wholeheartedly, as we know Simplicity’s decision is disappointing."

Tags: Simplicity

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Comments from our readers

On 25 May 2017 at 11:37 am Bobby said:
Interesting to see a fund manager highlighting a short coming in their AML and KYC process in a spot like the media.
On 25 May 2017 at 2:24 pm smitty said:
Reading this, and knowing the pedigree of those involved, surely that question would have been asked right at the beginning... Something like " so how will you distribute your wrap product?" You don't suddenly find out from a media article that advisers are not involved. Homework people!
On 26 May 2017 at 3:45 pm Murray Weatherston said:
@bobby
I think you have got the wrong end of the stick. The issue isn't AML as you think and suggest.
Rather more likely the issue is that when the ultimate investor invests via a platform, the manager has no idea who the investor is. All they know is Platform X holds Y units, which is the aggregate number of units their Z clients hold.
Simplicity obviously value their ability to correspond direct to their investors.
So nothing sinister like your comment could be interpreted to be saying.
On 26 May 2017 at 7:39 pm ramanan3012 said:
I heard Simplicity's recent wealth innovation tour and excited about it. What are the timeline to reduce the minimum investment threshold $10,000? Ramanan Arampamoorthy
On 28 May 2017 at 9:16 am Bobby said:
No Murray. Simplicity need to know where the money is coming from.

The rules don't say they can just make an assumption. Imagine if the end group in this example were terrorists laundering money. That clearly would not be cool, would it?

What you are saying sort of makes sense once a wrap all set up and running with lots of advisers behind it.
On 29 May 2017 at 11:55 am Barry Read said:
Bobby is right. Simplicity is a reporting entity for AML/CFT. They can rely on a third party for CDD/EDD etc, but they need to ensure they can rely upon it. Investnow is also a reporting entity and if their CDD processes were up to scratch then they should be okay. I don't think the funds via the platform being direct or via an adviser should be an issue, as long as Simplicity know if this is the case or not. Investnow though would have obligations of passing on investor communications from Simplicity to direct clients or advisers using the platform.
On 30 May 2017 at 8:46 am samstubbsnz said:
Hi. It’s Sam here from Simplicity. Murray is correct. Our decision to withdraw has nothing to do with anyone’s AML obligations or requirements. Invest Now listed our products without our knowledge. Our concern is that we couldn't rely on our communications reaching clients directly or via an advisor.
As communication and education are key values at Simplicity, we’d be uncomfortable with any distribution platform where we couldn't communicate either directly with clients or via well informed, well-intentioned advisors. It's unfortunate this occurred but we hope to be able to offer a lower minimum investment amount in due course. Cheers Sam
On 30 May 2017 at 4:52 pm Pragmatic said:
"Invest Now listed our products without our knowledge"...

What / who else have InvestNow done without prior consent or knowledge?

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