Robo advice changes open door to new KiwiSaver player

The newest player in the KiwiSaver market is due to launch its offering in two weeks’ time.

Nikko Asset Management will enter the market with an offering using eight of its funds.

While it may seem late in the piece to be joining KiwiSaver, managing director George Carter says a window of opportunity has been opened now that roboadvice can be used. The FMA is currently accepting exemptions from providers who want to make use of its exemption to allow roboadvice, before the introduction of the Financial Services Legislation Amendment Bill makes it legal.

“We want to be in the first wave,” he says.

Nikko plans to have its robo tools available for KiwiSaver members in July.

Members will be able to use digital advice tools to select funds and portfolios and to work out how much they need to save to reach their savings targets.

Carter says this rounds out Nikko’s offering and is complimentary to its financial advice distribution strategy. He says it won’t “cannabalise or compete with advisers”.

Nikko can’t give advice if a member asks. “It will help advisers to sell what their edge is.”

The third leg of Nikko’s distribution is with institutional investors.

As part of its launch Nikko is planning to waive management fees on its funds until March 2019.

However there will be a $30 annual membership fee.

Nikko is offering four balanced funds, plus four sector funds: NZ Core Equities, Enhanced Cash, Global Shares and its Options fund.

Fellow provider, Booster, which is a default provider, has been offering the Options fund to its members, but earlier this month withdrew it from its platform.

It is likely to be a competitive strategy to prevent the loss of members to Nikko.

Carter admits Nikko is not a well-known brand in the market. However, he believes its digital strategy, fee offer and strong fund performance will make a compelling proposition for potential KiwiSaver members.

He expects members will come from other providers as well as people who are not yet KiwiSaver members.

Carter says Nikko has strong support from its parent company to back its entry to the KiwiSaver market.