BNZ delivering value and simplicity with managed fund fees

There’s been a very welcome focus on the fees charged by the providers of managed funds (including KiwiSaver) in recent weeks. This came on the back of the work the Financial Markets Authority (FMA) has been doing to look at Managed Fund Fees and Value for Money. Peter Forster, General Manager for BNZ’s Wealth business, takes a look at how BNZ’s approach to fees fits into this picture.

We know that fees are one of the critical elements in delivering good outcomes for our customers. They are one element that can be controlled when you are choosing who you invest your money with. Because of this importance, we support the FMA in its ongoing focus to deliver value for money for KiwiSaver members.

And we were very pleased to see that the report’s findings align closely with the way we approach KiwiSaver and our other managed fund options – with a strong focus on low cost, high quality, and delivering value for customers.

As the size of our schemes has increased, we’ve used that scale to deliver a quality service at a lower cost, which is passed on to our customers in the form of lower fees. For example, we made changes to the BNZ KiwiSaver Scheme in 2019 when we removed member fees, the first of the big providers to do this, and reduced management fees. We also moved to a unique mix of active and passive management of our funds which we believe will deliver better long-term outcomes for our members at a lower cost. The FMA report specifically highlights these areas as things fund managers should be doing to make sure they are delivering better value for money.

Another aspect of the report that resonated with me was the emphasis on the need for providers to be more transparent with their fees, and that the fee levels should be reviewed regularly.

Unlike some other providers, our approach avoids so-called ‘tax leakage’ where members end up paying more tax, but this is not always clear to them as it is hidden in reduced returns. This approach, along with our single fee rather than a mix of fixed and percentage fees, makes the costs to our members clearer and easier to understand. We are also regularly reviewing our approach to ensure we are consistently doing the right thing by our customers.

We have a laser-like focus on making sure we are continuously delivering value for money for our customers, and we are unashamed about our belief that this is the right way to run a KiwiSaver scheme. It’s crucial we get this right, as our work to improve returns and reduce fees can mean the world of difference to the quality and dignity of retirement our customers might enjoy.

Any views expressed in this article are the personal views of Peter Forster and do not necessarily represent the views of BNZ, or its related entities.

References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.

This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. While BNZ has made every effort to ensure that the information provided is accurate, neither BNZ nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this article.

BNZ Investment Services Limited, a wholly owned subsidiary of BNZ, is the Issuer and Manager of the BNZ KiwiSaver Scheme. Download a copy of the BNZ KiwiSaver Scheme Product Disclosure Statement PDF 675KB, or pick up a copy from a BNZ branch.

Investments in the BNZ KiwiSaver Scheme are not bank deposits or other liabilities of Bank of New Zealand (BNZ) or any other member of the National Australia Bank Limited group. They are subject to investment risk, possible delays in repayment, possible loss of income and possible loss of principal invested. No person (including the New Zealand Government) guarantees (either fully or in part) the performance or returns of the BNZ KiwiSaver Scheme or the repayment of capital.