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Home / Business

Peter Lynn: Talking money, minus the jargon

NZ Herald
13 Nov, 2015 04:00 PM5 mins to read

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Peter Lynn believes NZ still has a chance to become a financial services hub. Photo / Dean Purcell

Peter Lynn believes NZ still has a chance to become a financial services hub. Photo / Dean Purcell

Peter Lynn was in limbo this week.

On Monday the outgoing head of Nikko Asset Management NZ handed the reins to his successor - George Carter, previously AMP Capital's head of distribution.

"He's taken over my office now," Lynn tells the Business Herald during an interview at the firm's base in Auckland's Vero Centre. "I've been sitting on the equity desk, just finishing things up."

After 15 years with the firm, the last five as managing director, Lynn flies out to Singapore on Tuesday to take up a new, global role with Tokyo-based Nikko - head of product promotions.

He'll be responsible for explaining and promoting the Japanese fund manager's offerings, including Asian emerging market and multi-asset funds, to clients around the world.

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A trained actuary, Lynn joined the New Zealand fund manager - then called Tyndall Investment Management - in 2000, after working for Mercer Investment Consultants. Tyndall was acquired by Nikko in 2011 and last year adopted its Japanese parent's name.

Thanks to the 2007 arrival of KiwiSaver and favourable tax changes, the local funds management industry has been going through a golden age.

Total funds under management sat at $123.6 billion on June 30, up from $57 billion at the end of 2003, according to Reserve Bank figures.

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Nikko's New Zealand division has grown assets under management by more than $1 billion over the past year, to $4.8 billion, Lynn says.

But despite its meteoric expansion, he reckons the industry could do a better job of explaining itself to investors, especially as people begin taking more interest in KiwiSaver as their balances grow ever larger.

"I don't think that, as an industry, we do a terrific job of making things simple for people to understand," he says. "We still communicate with an awful amount of jargon and talk in a way that makes people switch off completely." He says the industry needs to make a concerted effort to make information more palatable.

"There are some practitioners that do that quite well now, but the vast majority of us don't," Lynn says. "It's not something that comes easily to most people in this industry."

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Another big development in funds management has been a licensing regime introduced under the Financial Markets Conduct Act, the overhaul of securities legislation that came into force last year.

The process has been hugely time-consuming, but Lynn says it was crucial for the industry.

"One of the things that I learned very early on after Nikko purchased us was how poorly New Zealand was perceived as a financial market destination."

Not long after Nikko acquired Tyndall, Lynn made a pitch to the firm's head for Asia. He suggested the company could run its funds management operations out of New Zealand, saving on labour costs and providing some time-zone benefits from being a few hours ahead of Japan.

"He just laughed at me and said, 'We'd never ever consider that - New Zealand's not seen as a regulated market at all'."

Lynn still reckons there is scope for this country to become a financial services hub. There have, however, been some setbacks on that front, with Deutsche Bank and Goldman Sachs recently announcing plans to shift Auckland-based market operations to Australia.

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"We need to reverse that trend," Lynn says. "For the sake of New Zealand as an economy and as an information-based centre we need to set up our own industries here rather than just being an incubator of talent that then goes offshore."

He says spending time in Nikko's Singapore office made him realise how irrelevant New Zealand can be to much of the financial world.

"They just don't even consider us," Lynn says. "And that's not really an indictment - it's just a function of our size and distance."

Thinking back over his time at Nikko New Zealand's helm, he says a decision three years ago to focus on the retail market has paid dividends and helped drive growth in funds under management.

The company now has 10 retail funds. "We set ourselves at the start of this year a target of getting to $4.5 billion [under management] and we busted through that in June." But there have been difficult times, including the firm's ill-fated investment in the Pike River coal mine, where 29 miners were killed in 2010.

Though the human cost dwarfs the impact on investors, Tyndall's clients took a big hit from the disaster as it was the company's biggest holding.

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"No one could have foreseen that," Lynn says. "We had an analyst down in the mine a week before it blew up."

Looking ahead to his new role in Singapore, he sees opportunities despite the uncertainty surrounding Asian emerging markets.

"If the guys can pick the right markets and sections of the markets they can do very well," Lynn says. "If you think of somewhere like Thailand, which obviously has lots of political problems and of course the impact on trade from China is a negative. But at the same time there are booming markets like healthcare tourism."

He doesn't mind the idea of living in sweltering Singapore, although the acrid haze that has been enveloping the city - the result fires in neighbouring Indonesia - could be unpleasant. "I like warmth, I'm not a big fan of the cold," Lynn says. "For someone who grew up in the darkest depths of Canterbury, I don't know how I did it."

Profile

• Job: Head of product promotions for Japan's Nikko Asset Management, which has more than US$160 billion in assets under management. Formerly managing director of Nikko's New Zealand arm

• Age: 44

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• Grew up in: Ashburton

• Education: First class honours in maths from Canterbury University

• Hobbies: Travel, movies, music and sports - especially cricket

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