David Chaplin 's Opinion

A personal finance columnist for the NZ Herald

Inside Money: Outsider wins BNZ KiwiSaver business

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BNZ is about to appoint Russell Investments to manage its own KiwiSaver scheme. File photo / Bay of Plenty Times
BNZ is about to appoint Russell Investments to manage its own KiwiSaver scheme. File photo / Bay of Plenty Times

The now-merged Australasian financial conglomerate AMP/Axa looks set to lose a solid chunk of its KiwiSaver distribution network following the appointment of Russell Investments to manage the money for BNZ's imminent scheme.

While neither Russell nor the BNZ was able to confirm the deal, official PR-sanctioned news should not be far away.

As I reported last month, BNZ, the last major bank to get on the KiwiSaver train, officially put out feelers for scheme service providers - which includes investment management plus other back-office duties - earlier this year.

Up until now, BNZ has merely sold the KiwiSaver schemes of AMP and Axa, which can't have sat well with the bank's Australian parent, National Australia Bank, after its bitter corporate battle with AMP for control of Axa over 2010/11.

The appointment of an investment manager, a capability BNZ ditched some years ago, signals the bank is well on the way to getting its new scheme to market.

It's difficult to measure how much AMP/Axa stands to miss out once BNZ begins marketing its own scheme but, as a rough guide, the much-smaller KiwiBank garnered 8,000 members in its KiwiSaver product less than a year after ditching former scheme manager Mercer.

For Russell, something of an outsider in the retail market, this is a major coup and could significantly boost its funds under management given the unerring success of bank-based KiwiSaver schemes.

Better-known as an institutional investment consultant and multi-manager, Russell does already have a KiwiSaver presence on the Aonsaver schemes and has had a pretty good performance run. A deal with BNZ, however, will bring Russell to the masses... again (those with long memories may recall Russell used to manage investment funds for ANZ).

Alister Van der Maas, head of Russell NZ, declined to comment on the BNZ news. However, he said it's been a good couple of years for the group both in its consulting business and investment management.

According to Van der Maas, the Russell investment business - in both institutional and retail markets - has been boosted by its new arrangement with Implemented Investment Solutions - a business set up by former AMP Capital man, Anthony Edmonds.

Guardian Trust is also understood to be the BNZ KiwiSaver back-office front-runner.

David Chaplin

A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. David has edited magazines and websites for the financial advice, investment and superannuation industries. Today, he contributes to various publications in Australia as well as his bi-weekly blog for the NZ Herald under the 'Inside Money' banner.

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