Mad for KiwiSaver

Photo / Bay of Plenty Times.

The John Banks/Don Brash backed Huljich KiwiSaver scheme has taken some stick of late for an aggressive marketing campaign that has targeted - among others - mental patients. But whatever your view on the ethics of such tactics, it has worked a treat.

My survey  of almost all (some were yet to report) the KiwiSaver providers, shows the Huljich scheme membership numbers grew by a staggering 16,377 per cent over the 12 months to March 31, 2009. This is not a statistical blip - Huljich member numbers jumped from 112 in March 2008 to 26,389 a year later and are currently edging the 50,000 level. By any measure this is an impressive growth record (the second fastest growing KiwiSaver scheme in the survey was the NZ Maritime Officers fund which increased over 500 per cent over the same period but having added just seven members in the year this is a statistical blip).

Last year Peter Huljich, the scheme's main man, told me that he recognised distribution was essential to surviving in the KiwiSaver game. Principally, he has solved his distribution problem by hooking up with associated mortgage broking chains NZF and Mike Pero (Huljich is a director and shareholder). The solution has come at a cost with Huljich tossing the brokers up to $50 for each member signed up. It's possible the Huljich scheme could have spent over $2 million acquiring its 50-odd thousand members, who are free to transfer to another scheme at any time.

Huljich is probably counting on member inertia in retaining most of his sign-ups and he might be right to do so.

He would be in a hurry too to sign up more because new regulations coming in next year will mean only qualified and accountable advisers will be able to sell KiwiSaver products. Door-to-door selling of KiwiSaver was already illegal but tighter rules will constrain the sales process further.

But is it growth at any price? Other providers have criticised the Huljich scheme for what they refer to as the 'quality of the book' - that is, suggesting it is full of kids and other 'low value' members. My analysis of the March 09 figures shows the average Huljich KiwiSaver member balance stood at just $670, the lowest by far - obviously some of the $1,000 government kick-start money had not yet flowed through to the Huljich accounts.

One day the kids will grow up I suppose and start contributing. If Huljich can hang around long enough the scheme could turn a profit. You can't blame him for wanting to build his membership base quickly - while some providers might be happy to be 'niche', scale is everything for the majority and unless you're a bank or other major financial institution that is difficult to achieve. Gareth Morgan has done it by bagging everybody else; Carmel Fisher has built on her already loyal retail client base, and; two or three other non-institutions, of the 40 providers in the survey, have reached a reasonable size.

At the other end of the scale, the industry-based KiwiSaver funds such as the SRF scheme have been a flop. In a mastery of understatement the SRF chairman, David Scott, described the fact that only 11 members had signed up to its scheme as "very disappointing".

The KiwiSaver members keep rolling into schemes, though, with total membership now over one million. Only three million to go and with the annual $1,043 tax credit from the government on offer they'd be crazy not to.

 

David Chaplin

 

 

Photo / Bay of Plenty Times