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Stubbs vows to reduce fees after Simplicity hits the $4 billion mark

Simplicity's Sam Stubbs says the not-for-profit fund manager's fees are still "way too high" and has vowed to reduce them after the company reached $4 billion of funds under management.

Friday, November 12th 2021, 6:06AM 1 Comment

by Matthew Martin

The Simplicity co-founder and managing director says reaching the $4 billion mark is a "pretty good result considering we started this around a kitchen table five years ago" and says members can look forward to a fee reduction in the near future.

The fund manager, which is owned by the Simplicity Charitable Trust, has also made more than $3 million worth of charitable donations to various causes around the country.

Stubbs is often vocal on the subject of KiwiSaver fees and recently hit out at the major players saying they "...are just greedy and still not passing on their enormous benefits of scale".

"Fees in New Zealand are very high by global standards, and managers no longer have the excuse of small scale," he said.

Stubbs says details around KiwiSaver and managed funds fee reductions will be released next month.

"It took us a while to get to the first billion but now we have around 2.5% of the overall KiwiSaver market and just over 12% of [KiwiSaver] switches so that's great as well."

Simplicity already offers some of the lowest KiwiSaver fees in the country and Stubbs says now that larger economies of scale are kicking in the organisation has paid back all of its establishment costs, is now fully cashflow positive and will be looking to pass those benefits on to members.

"We still think our fees are way too high and look forward to dropping those soon."

Stubbs says when Simplicity onboards more default KiwiSaver accounts at the end of this month it will introduce another level of scale and provide a significant increase to its funds under management, "...and we'll have some pleasant Christmas surprises to announce".

Kiwi charities can also look forward to increased funding and each year the organisation asks its members where that money should go.

Stubbs says 15% of Simplicity's fees go to charity with more than $3 million already donated to homelessness projects, children in need, environmental charities and financial literacy projects.

And late last week, Simplicity, along with New Zealand home builders NZ Living, launched their build to rent housing programme called Simplicity Living with the long-term intention of building high-quality, affordable homes for rent across New Zealand.

Shane and Anna Brealey, the owners of NZ Living, will manage Simplicity Living on a pro-bono basis and aim to build and rent one home a day within the next 18 months.

Tags: fees funds management KiwiSaver Sam Stubbs Simplicity

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Comments from our readers

On 12 November 2021 at 2:51 pm John Milner said:
Great to see Simplicity thriving and doing some good along the way. I support Sam in the battle to reduce fees but don't find it equitable, comparing a KiwiSaver business reporting to shareholders, staff and the IRD and one that is a charity, with a throng of free helpers (as quoted by Sam). The real test would be to provide both low fees and outperformance which appears lacking. Keep up the good work though Sam.

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