Navigating the tides of change: New Zealand's financial industry

The shift is expected to be driven by a combination of factors, including changes in fees, an increased focus on private assets, and the inability of some managers to adapt to changing conditions. The impact of these changes on the New Zealand financial industry is a topic of considerable interest and concern.

Clayton Coplestone, director of Heathcote Investment Partners, provides some insight into this issue. He suggests that to understand the implications of these changes, it is necessary to differentiate between various aspects of the value chain and to remain mindful of the relative uniqueness of the New Zealand industry.

"There is currently in excess of 129,000 various managed funds available for consumers to invest, with the vast majority of these either sub-scale and/or failing to add value," says Coplestone. "This is not an active/passive debate, more so that the majority of investment solutions have a limited point of differentiation whereby price and/or brand becomes the primary differentiator. For those Asset Managers who continue to operate in this ‘no man's land’ the future of consolidation is imminent."

The situation is different for wealth advisors. Coplestone says, “Large aggregators have long since realised that it is difficult to 'McDonalise' what is essentially a relationship-centric industry. Consumers are willing to pay a relationship premium in exchange for a bespoke financial solution. Some New Zealand groups are attempting to develop vertically-aligned businesses by purchasing advisory businesses, but these moves are more about shoring up their distribution structures than adding any meaningful value.”