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Non-profit KiwiSaver provider launching

NZN 31/07/2016

The former chief executive of KiwiSaver provider Tower, Sam Stubbs, is turning from gamekeeper to poacher with the launch of a new KiwiSaver fund that he says will charge fees at half the rate of most existing schemes.

Dubbed Simplicity, the online-only fund will operate on a non-profit basis, commit 15 per cent of its annual management fee to charities its fund members will help choose, and use only passive investment techniques.

Mr Stubbs hopes to reach $500 million of funds under management "fairly quickly".

All but its local market investment decisions will be farmed out to Vanguard, one of the largest global fund managers, which operates on a low fees, mutual model akin to not-for-profit and provides service to numerous competing KiwiSaver funds already.

"If we get this right, we will literally be putting millions of back into the hands of Kiwis into charity," Mr Stubbs told BusinessDesk.

Backing the new venture with $1m of his own money on an interest-free loan and taking no salary himself, Mr Stubbs said he was "working for love", along with just six salaried staff and a cohort of senior New Zealand businesspeople.

The venture will seek to challenge the 85 per cent of the KiwiSaver market held by just six players, four of them Australian-owned and booking profits of $150m annually.

Simplicity will start by offering conservative, balanced and growth funds at a single fee rate of 0.65 per cent, compared with an industry average of 1.34 per cent.

The only reason no one else has launched such a venture in New Zealand is that there had no one with an appetite to try a not-for-profit model, Mr Stubbs said.

"The very large banks and insurers, they're staffed by wonderful people, they're all our friends.

"But they're trapped in business models which are very demanding in terms of profits, so I'll be interested to see how they respond."

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