News

KiwiSaver measurement standards put out to tender

Monday 29th of March 2010

Chief executive Vance Arkinstall told Good Returns the ISI had been working on an industry standard, as recommended by the Securities Commission in its KiwiSaver guidelines out this week, since before Christmas, but had decided to put it up for tender to dampen potential criticism that it may be biased in favour of the industry association's members.

"After the Huljich thing came up, even if we did a good job, there was a risk of being seen as bowing to our own members and the industry setting its own standards and not necessarily for consumers," Arkinstall said. "We've gone to the four major chartered accounting firms and asked them to tender for the undertaking of the project for us."

He says this will have the advantage of bringing a "good degree of independence" and make any industry standard more attractive to funds that are not members of the ISI and consumers alike.

Market regulator the Securities Commission released guidelines for KiwiSaver funds after Huljich Wealth Management managing director and chief financial officer Peter Huljich resigned after it became known he had topped up the performance of his fund.

Arkinstall said he expects whichever accounting firm that wins the tender will make a recommendation on which standard to adopt faster than the ISI could due to the commitments by the industry group's members.

He will discuss the proposed industry standard with the Ministry of Economic Development, Government Actuary and Securities Commission.

 

Comments (4)
Murray Weatherston
Re penultimate paragraph, why will the successful tenderer be an accounting firm? What expertise do accountants have in performance measurement of managed funds? They don't even audit the unit price of a fund as part of the annual audit! Is this just another case of the consultant, when asked to tell you the time, borrows your watch from you, tells you the time, charges you plenty and then keeps your watch?
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14 years ago

Murray Weatherston
Aren't there already Global Investment Performance Standards (GIPS) established by the CFA Institute and adopted in many advanced economies? If so, why would little ol' NZ need to spend investors money on reinventing the wheel?
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14 years ago

Robert Oddy
Why is the ISI driving this instead of the regulator (choose which one). A measurement of performance needs far more information to be disclosed than that which is currently provided by the funds management industry. Investors should be able to easily assess not only the result of their investment over any period but also the risks being taken to achieve that performance. Anecdotal data suggests the public, and retail investors in particular, have diminished trust in the sector because of a continual stream of stunning revelations and poor results. And why are these standards being considered only for Kiwisaver? It is time to adopt performance reporting standards for all investments. Let's also address fund managers ability to report only six month or one year investment results in marketing material - reminiscent of psychology-driven finance company advertising. Equally important is legislative demand for full disclosure of all fees including those of feeder structures between the investor and the end use of their funds; auditing of unit pricing; full disclosure of all related party transactions and reserving policies plus the number and frequency of transactions. This is not a comprehensive list. Trust needs to be rebuilt and sunlight into the deepest recesses of the industry is the best form of disinfectant likely to achieve that. Lets not miss this opportunity to do so.
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14 years ago

Charles Widdicombe
The Big 4 Accounting firm do a lot of GIPS verification work globally (using CFA charterholders) and so would be able to tap into that knowledge base of what would be appropriate. NB there is the issue that under GIPS, you can't be selective about which funds are in compliance - the entire "firm" has to be in compliance, which is not always an easy task for NZ fund Managers due to the nature of some of their mandates.
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14 years ago

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