BNZ is to be applauded. Can’t say the same for some of the others e,g ANZ , and the timid comments from some , are typical of those still trying to camouflage, the Golden money mile that has existed in New Zealand for years with management fee’s.
BNZ move to trim KiwiSaver fees ‘may have other providers watching closely’
Susan Edmunds 11:51, May 06 2019
BNZ’s move to lower KiwiSaver fees has been described as a step in the right direction.
From May 1, BNZ will remove the $1.95 monthly KiwiSaver member fee and reduce management fees from up to 1.1 per cent a year to a maximum of 0.58 per cent.
“These changes remove important barriers to choosing the best fund for a customer’s needs, with the moderate, balanced, and growth funds now all on the same low fee. By this action, we’re removing fees as a consideration when deciding what fund to go into,” chief customer officer Paul Carter said.
Under the new structure, a person with $20,000 invested in the BNZ Growth fund would have their fees more than halved, from $243 to $116.
AUT senior lecturer in finance Ayesha Scott said it was a good move.
“Any move to lower fees, enabling easier decision making and increasing accessibility of information is positive. While I cannot comment on whether the level of KiwiSaver fees is appropriate, BNZ’s move toward lower fees and easier-to-read disclosure is positive. ”
BNZ is also shifting from active management to a more passive approach for international investments, which Scott said was also positive.”I imagine other providers and the banks will be watching BNZ closely. “Her colleague, Aaron Gilbert, agreed.
“This is brilliant, exactly what has been needed for a long-time. So far we haven’t seen a lot of evidence on competition between KiwiSaver providers on fees but this suggests that it is starting to occur. ”
He said it was possibly driven by the introduction of low-cost options like Simplicity and the fixed fee model of Juno.
“It will be up to members to force providers to look at reducing fees by switching to lower cost providers. Academic evidence doesn’t show evidence that high-cost providers earn additional returns, nor that active managers out-perform passive managers. There is no reason not to look at the lower cost providers. And if enough people move, then other providers will have to match BNZ.”
The country’s biggest KiwiSaver provider, ANZ, said it had made changes to its fees, too.
“From April 1, ANZ has removed the membership fee for KiwiSaver members aged under 18 years of age, and has reduced the membership fee for all other members from $2 to $1.50 per month,” a spokesman said.
“We regularly review fees as we achieve greater economies of scale. As an active manager, ANZ believes it is important to focus on returns-after-fees, rather than just on fees. Active managers generally utilise a higher level of decision-making and analytics, and therefore the fees charged will typically be higher than those of a passive manager.”
Westpac said it also regularly reviewed its fees.
“Fees matter but they should be considered in the context of the service and return a scheme provides.
“The Westpac KiwiSaver Scheme has received the Platinum rating from independent research house SuperRatings for five consecutive years, and was described as a ‘best value for money’ KiwiSaver scheme. It also placed first-equal in a KiwiSaver customer satisfaction survey released by Consumer in April.
“When it comes to fees and returns, we believe the after-fee return is the most important thing for customers to consider. ”
Posted Alec Waugh