An AMP director is ringing the alarm bells over the diminishing number of financial advisers in New Zealand, as our population ages and the prospect of making sure we’ll have enough money to see us through our increasingly long retirements becomes more daunting.
With less than 1000 Authorised Financial Advisers (AFAs) currently practicing in New Zealand (according to an AMP estimate), its director of advice and sales, Blair Vernon, warns this dwindling number is one of the things we should be most alert to as we look to the future.
There are a further 800 AFAs who aren't practising, as well as 8000 Registered Financial Advisers (RFAs) who are less qualified and have to meet lower reporting standards than AFAs, according to the New Zealand Institute of Economic Research.
Vernon says there simply aren’t enough people to deliver the advice required.
He points out around 15% of AMP’s distributors are carrying Gold Cards, with this portion expected to jump to 30% by 2020.
“They are unlikely to be available to help New Zealanders… We have got to figure out the issue of supply but I see a very narrow pipeline of that for some time. It could be a 10 to 30 year issue given what we see in the industry and how many are about to leave."
A long term problem
Vernon says the products or solutions to managing your money through your retirement are there - reverse mortgages, annuities or KiwiSaver for example - yet they all include a level of complexity.
“The most frequent sort of comment you hear from people who work in the adviser market [about their clients] is, ‘Will I run out of money before I run out of life?’ That’s where you need the advice component to come in.
“And I guess the challenge is, you can kind of build a product quite fast, but you can’t actually manufacture advisers. There’s a skillset and a technical knowledge, but there’s also just a straight level of experience that comes with time... This is a long-term problem.”
Vernon says that if you look at the industry for the better part of 15 years, there’s been little in the way of sustained recruitment.
This has been exacerbated by the fact a number of advisers, when the Financial Advisers Act 2008 (FAA) regime came into play, were retrenched from giving investment advice yet could move into the insurance space.
“You’ve got lots of people staying as RFAs and lots of people at the level of AFA who are thinking, ‘Why do I want the extra burden and challenge of staying in this market?’.”
The elephant in the room = commissions
Vernon recognises the way advisers generate revenue is a core part of the puzzle.
He notes the industry is going through a transition from being largely commission-based to being more reliant on fees from clients.
“The odd thing for the financial advice sector is it’s sort of survived on that [commission structure] for a large part and there’s a big transition now if you’d like to get to a model which is more about fee for service and ongoing fees for looking after a client’s financial wellbeing. And that’s a big change for advisers and clients.”
While AMP’s moving away from commissions, only spending 9% of its life insurance premiums revenue on commissions for example while most other insurers spend around 23%, the Government appears to have backed away from banning or capping commissions paid to advisers as it reviews the FAA.
“If commissions are in play, then really open transparent disclosure is a critical part of the puzzle. Commissions themselves aren’t necessarily damaging. When you don’t know the extent or value of them, that’s a problem,” he says.
“If you’ve got a profession that’s fundamentally commission-related, you’ll tend to find people who are far more transactional/sales orientated than long-cycle advice orientated.”
While Vernon believes commissions work well for the likes of real estate agents and car salespeople, he maintains taking a longer-term holistic view on a client’s finances should be paramount for advisers.
“Some advisers are quite successful in a straight fee to service approach… So the whole issue around commissions disappears. There are people experimenting with that already. There’s plenty of potential in that space.
“The question remains though, if we’re struggling to attract people to the industry, there are issues in terms of their perception of the remuneration for the effort required, versus other industries.”
Show me the money
“To put more people in the industry, there will have to be a greater pool of remuneration available.”
Vernon says the available revenue to support advisers has reduced over the last 20 years, as banks have started participating in the investments and insurance space.
“Secondly you’ve got the emergence of KiwiSaver, which is a much more economically efficient product for the client, but obviously has got much less revenue available for advisers.”
Vernon says the issues facing the New Zealand market aren’t unique, as regulatory change in the UK following the Global Financial Crisis has seen a reduction in advisers there. Australians don’t have particularly tight relationships with financial advisers either.
“There’s no single leaver. You have to see all of those dimensions - customers being prepared to pay, providers able to sustain recruitment and a pool of candidates ready to engage in that. It’s not a one or two year fix.”
The market only supplies what consumers demand
“It’s not simply a case of saying, ‘How come businesses aren’t recruiting more?’ The commercial response will play to where there’s revenue. And ultimately, most of the surveys you see say clients aren’t too keen to pay for advice. So therein lies the challenge.
“We have a wonderful DYI mentality… and it’s a bit the same with our financial affairs.
Furthermore, Vernon says people are prepared to pay for the here and now, but not their futures.
“How is it people are prepared to pay an enormous amount to go to a gym, but they aren’t prepared to pay almost anything to get some significant advice on their financial future.”
He too often encounters people nearing retirement, who haven’t put much effort into planning for their retirement in the past, so are looking for quick fixes.
They’re not looking for products or solutions, but for someone to sprinkle pixie dust over them he says.
“That’s a problem because that’s when we get people being susceptible to scams or other investment products that simply aren’t going to deliver.
“Unless we arrest some of that at a very early age, the reality is people aren’t going to have enough. It’s very hard to change your behaviour when you get to retirement if you’ve never adapted to your current budget. There are an awful lot of people who need help.”
Vernon admits the industry could do more to win the confidence of consumers, put off using advisers due to the blurred lines between their sales and advisory roles. This is another issue being addressed in the FAA Review.
Robo-advice can’t change attitudes
Vernon says we will only know whether the rise of robo-advice will the plug the gap left by retiring advisers in time.
“Even if the tool was there today - and I would contend there are lots of tools - are people actually spending any time with them?”
He admits robo-advice will have its place, but this still requires consumers being organised and plugging sufficient information into advice programmes, to get the most accurate response.
“That requires a change in consumer attitudes.”
By Elizabeth Kerr
Is that it? Are you sure there is nothing else under the tree for me?
Budget Day. It bears all the anticipation and excitement of Christmas morning, but this year I can’t help but think we all were left holding business socks and hankys. Sure, both are useful and I know I should be grateful but where were the toys?
“Santa, I’ve been good all year and my list clearly requested something fast and shiny….. maybe some tax cuts, a building developers grant maybe, and some extra incentives to save for retirement. We have after all had a good year... surplus you said”. But nada, nothing. Unless you are on the receiving end of social services you can expect this year to be same-same.
So what does it include this year?
National are sticking to their story with the focus being on growing our economy, investing in health, education and infrastructure. There isn’t too much in here that we weren’t told about in the lead up to the announcements which is a bit disappointing to be honest. Some of the things that stick out for me are as follows:
- Clearly the biggest winners are those receiving $411m for science and innovation.
- $257m for tertiary education and apprenticeships programmes
- $94m for regional economic development
- Any surpluses over the next 5 years will be used for paying down of debt to 20% of GDP in 2020 so that we can handle another GFC or natural disaster.
- An ambitious growth target of 2.8% by 2020. (Yes please!)
- Sucks to be in dairy, but total exports increased by $200m which is good.
- $883m investment into schools with 9 new schools and 480 new classrooms, two school expansions and rebuilding of 3 schools and Kura.
- Hidden inside infrastructure spending along with schools and bridges is $857m for a new tax computer system over 4 year (totalling $1,421b). Does anyone else find this amount slightly eye-watering for essentially just an IT project?
- $115m for road projects in Gisborne, Marlborough and Taranaki and $19m for a national bio-containment laboratory.
- Tourism - a $45million package over 4 years. (not bad). Our lucky tourists are going to be wowed by $12m of brand new toilets and car parks. Extra lucky are those that like cycling as they will benefit from the $25m investment in upgrading and extending the bike trail. But something is missing here!! Cruise - where is the investment in our growing cruise tourist numbers? Why isn’t there anything set aside for this industry which shows no signs of slowing? Sorry cruise… maybe next year.
Nothing exciting here. They are sticking by their view that the reason there is a housing
crises issue, is because there is not enough land. I can’t help but feel it’s a slow train crash this one, but lets see them woo us back over to their side in next years pre-election budget.
However there is still $36m going into the warmer, drier healthy homes initiatives and $100m to free up underutilised Crown and in Auckland.
There is no denying that child abuse is too high, that people are living in cars, and we have a no emergency housing left. But lets take a moment to say Halleluiah that 40,000 fewer children now live in a benefit dependent household…and the number of people on benefits is the lowest its been in 8 years, saving over $12billion. Crime is also down 16%. But it doesn’t end here and there is more spending being allocated to this area.
- $200m to support vulnerable kids and $384m to reform the CYFS system.
- $50m to reduce long term welfare dependence.
- Whanau ora received $40million for 2500 more families. (That is exactly how it is written in the Budget documents. Inferring that is $16,000 per family?)
- $20m to reintegrate prisoners returning to the community.
- $258m including 750 additional places in social housing and 3000 emergency housing places. This is on top of recent social housing announcements this week.
- Too bad if you’re a smoker. Never have those patches looked so good seeing as there is a 10% tax increase expected every year for 4 years.
- $73m towards primary healthcare and continuing of free GP visits for children until 13years.
- $169m for disability support services.
- $15m to support air and road ambulance.
- $12m to improve access to mental health services.
- $39m to roll out a national screening programme. This was also allocated for last year but news of when and how this bowel screening programme will look is still to be advised.
The ambulance is at the bottom of the cliff for the environment with the Budget focus on cleaning up after ourselves:
- $100m over 10 years to clean up our waterways and $21m & $16mm respectively to eradicate pests and invasive wilding pines.
If you’re one of the 670,000 Gold card holders – you’re all good with an extra $41million to provide certainty (or buy your votes) for the coming year.
The only people putting on the party hats and toasting champagne from this Budget are those public agencies who now have more funding support to do what is already expected of them.
From my perspective this years Budget is very much focussed on the drivers that lead people to needing support from social services in the first place; and the way they are doing this is by boosting our economy to support itself and by boosting the social services we already have.
There is nothing in my view for the hard working folk who pay their bills on time and expect to have something left over to play with. Those people just need to walk away, there is nothing under the tree for you this year, but a vague promise of income tax cuts in the coming years provided surpluses continue.
Kiwibank has raised its "special" two year fixed mortgage rate from 3.99% to 4.15%, ending the availability of carded, or advertised, mortgage rates below 4% from the major banks, for the time being at least.
Kiwibank's standard two year fixed rate remains at 4.75%.
Kiwibank's "special" mortgage rates require a minimum 20% deposit, so borrowers with less than that will need to take out a mortgage at the higher standard rate.
This latest move by Kiwibank to raise its special rate has come as economists have been re-evaluating the likelihood that the Reserve Bank will cut the Official Cash Rate (OCR) at its next review on June 9.
Kiwibank's own economists have pushed back their expectation for when the next cut will happen to August from June. The OCR is currently at a record low of 2.25%.
Kiwibank was the last of the major banks to have still been offering a mortgage rate under 4%.
HSBC recently raised its special 18 month fixed rate from 3.95% to 4.19%.
|below 80% LVR||1 yr||18mth||2 yrs||3 yrs||4 yrs||5 yrs|
Sometimes the best home loan choice is not what you might expect.
You may seek out a good broker because you want the ‘best interest rate’ on your loan.
But surprisingly, the ‘best’ may not be the ‘lowest’.
In fact, it might be one of the higher rates, a floating rate.
The key is to shift your focus; it is not the interest rate you pay that you should concentrate on, but the rate (speed) you pay your loan off.
The faster you pay your mortgage down, the lower the interest you will pay.
The benefits of a faster pay-down will far out-weigh the benefits of a lower interest rate.
You can achieve this by signing up to a revolving credit account. These combine your home loan and everyday banking in one account. When your salary is paid into your account it reduces what you owe on your loan – which means you pay less interest. If you have a credit card, you could put all your month’s purchases on the credit card and then pay it off automatically up to 55 days later, interest free.
That’s the idea. Here is a graphic that shows the principle:
(This hypothetical also shows how a lump-sum bonus can boost the benefits too, and allows a slower pay-down over the last four years.)
But there is a big ‘but’ – you need to be disciplined over a long period.
The benefits don't really show up in the early years, but they magnify in the later years. The sooner you start, the better.
If you don’t use it as intended you could easily end up paying more interest, even getting trapped in an out-of-limit situation you can’t easily get out of.
The same bank that was happy to see you sign-up to the revolving credit facility will love to point out that the more you use that credit card ‘interest free’ the bigger the savings – ignoring you need to pay in full, on time.
The same bank that was happy to see you sign-up to their revolving credit facility will readily let you draw it back up to its limit for that latest ‘must-have’ purchase – perhaps a new car, perhaps that special trip away with the All Blacks, the latest smart phone. If you run a revolving credit facility at its limit you will have wasted the benefits and the reason for signing up in the first place.
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The goal is to save interest - by spending less on an interest incurring account. Every action that doesn’t save is a backward step.
Which is why you need long-term personal discipline.
And a good broker can provide that moral support to stay on the plan. An outside professional can be the counter-influence when you are tempted. And you will be tempted often because this strategy only works over a long time period.
However, the effort is well worth it.
You could pay off your loan years earlier saving tens of thousands in unnecessary interest. All from a disciplined plan, one where you actually paid a higher interest rate.
Your broker or mortgage manager can show you how it will work for you, using the detail of your personal circumstances.
This article was written for the Global Finance (GFS) website and newsletter and is here with permission.
By Greg Ninness
Earlier this month Housing Minister Nick Smith told Parliament housing was now 24% more affordable than it was in 2008, when Labour was in government.
In making the claim he pointed to interest.co.nz's Home Loan Affordability Reports (previously called the AMP360 Home Loan Affordability Reports), which track movements in house prices, incomes and mortgage interest rates to give monthly measures of affordability throughout the country.
Since interest.co.nz began producing the reports in 2007 they have regularly been quoted in parliamentary debates by politicians on both sides of the house.
But Smith's claim that housing is now 24% more affordable than it was when Labour was in government would have taken many by surprise, given the extraordinary increase in house prices that has occurred over the last couple of years.
So how well does the Housing Minister's claim stack up?
The Home Loan Affordability reports contain a great deal of data that can be sliced and diced in various ways, but the information in them that is probably the most relevant to the current housing debate is the section on affordability for first home buyers.
This tracks regional movements in the lower quartile selling prices around the country and matches these with the movements in the median after tax income for couples aged 25-29 in the same regions, to estimate how much of their weekly income would be taken up by mortgage payments.
The reports show that in April 2008 the mortgage payments on a lower quartile-priced home would have taken up 33.9% of typical first home buying couple's after tax pay.
But in April this year, that percentage had dropped to just 22.8%, driven mainly by declining mortgage interest rates, with the average two year fixed rate dropping from 9.61% in April 2008 to 4.47% last month.
Which suggests the Minister was correct.
By that measure housing is more affordable now than it was back in 2008.
Affordability has worsened in Auckland
However he should probably hold off on breaking out the Champagne, because those figures only tell part of the story.
Although they show that housing affordability has improved over the last eight years, they are national figures and do not reflect the situation in Auckland, which is the only region in the country where affordability, or the lack of it, has become a major issue.
In Auckland, the amount of money typical first home buyers would need to set aside for mortgage payments on a lower quartile-priced home has risen from 48.8% in April 2008 to 50.5% in April 2016.
So affordability has worsened in Auckland over the last eight years, even though mortgage interest rates have more than halved in that time.
Although the decline in affordability seems relatively modest, it masks a bigger underlying problem.
Between April 2008 and April 2016 the lower quartile selling price of homes in Auckland increased from $353,600 to 666,600, up 88.6%.
Over the same period, the median take home pay of an Auckland couple aged 25-29 increased from $1297 to $1579 a week, up just 21.7%.
Which means house prices in Auckland have increased at more than four times the rate of incomes for typical first home buyers.
That creates problems for first home buyers trying to save a deposit.
The Home Loan Affordability Reports track how much money typical first home buyers would have to put towards a deposit, if they saved 20% of their take home pay for four years and earned interest on it at the prevailing 90 day bank deposit rate.
In April 2008 that would have given them $59,528 to put towards a deposit, which would have been 16.8% of the price of a lower quartile-priced home.
In April 2016 they would have saved $72,228, which is more money than in 2008, but house prices in Auckland have risen so much that it would be just 10.8% of the [price of a lower quartile-priced home.
That contrasts sharply with the figures for the whole of the country.
They show that in April 2008, typical home buyers would have saved a 22.6% deposit for lower quartile priced house,and in April 2016 that figure had declined only marginally to 22.1%.
So while the national figures show that first home buyers should be able to save a 20% deposit for a home within four years, in Auckland they would have saved only slightly more than 10% of the purchase price.
Out of kilter
That illustrates how far out of kilter the Auckland housing market has become compared with the rest of the country.
And because first home buyers outside of Auckland are more likely to have a deposit of at least 20%, they are also more likely to qualify for the extra low "special" mortgage interest rates that banks advertise from time to time, while typical Auckland first home buyers probably wouldn't qualify because of their low deposit, compounding their problems.
But perhaps the most worrying change in Auckland's housing market over the last eight years is the amount of debt first home buyers need to take on to get into their own home.
In April 2008, if typical first home buyers in Auckland had saved a deposit of 16.8% of the purchase price of a lower quartile-priced home, they would have needed to borrow $294,072, which would have been been 4.4 times their annual take home pay.
But in April this year they would only have a deposit equivalent to 10.8% of a much higher purchase price and would need to borrow $594,372 to buy a lower quartile-priced home.
That is 7.2 times the annual take home pay of typical first home buyers and is a worrying large amount of debt for young couples to take on to get into their own home.
So are first home buyers in Auckland better off now than they were in 2008?
By almost any measure you care to use the answer would be no.
They are likely to be considerably worse off than they were in 2008.
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By Jenée Tibshraeny
'It’s Thursday morning and I’m off to work… again. Lucky me!'
No, I’m not being sarcastic. This is what all us working people should be thinking as we hit the snooze button at the crack of dawn and battle the traffic to work.
Why? Because our income is our most valuable asset.
If you had to stop working due to an injury or sickness, the Government’s safety net would catch you, but only just.
ACC would reimburse you 80% of your income, if you were injured. But you might not be so lucky if you had to stop working due to illness.
If you’re a single person without any children and get cancer for example, you could be eligible for a Living Support Benefit of $262. You may also qualify for an Accommodation Supplement and a Disability Allowance.
While this may be just enough to get by day to day, it will be a struggle, especially if you’re servicing a mortgage.
Unless you have a very healthy savings account or enough assets that can be monetised when necessary, insurance is vital.
Something is better than nothing, right?
Income, trauma and mortgage/rent protection will all go some way to easing the pressure.
While trauma pays out a lump sum for you to use on whatever you wish if you suffer a major illness, income and mortgage/rent protection provide regular payments to help you get by.
Insurance companies are starting to launch cheaper and often weaker products that target the majority of New Zealanders without any form of life insurance. Something is better than nothing right?
Cigna for example has just this week launched a new mortgage/rent protection product.
Its Head of Product, Adam Rudland, says the company saw a need for a simple and affordable alternative to full income protection insurance. This was further reinforced by the recent financial results of the Cigna 360° Wellbeing Score research.
“While the research found that the cost of living is the top social concern for Kiwis, only 16% of us believe that we have financial security if we are unable to work. In fact almost half of Kiwis can’t pay the bills for more than a month if unable to work,” Rudland says.
“Some people are concerned about the additional cost of income protection insurance, particularly when they’re already struggling to make ends meet. But there are options available to protect just a part of your income - sometimes a little bit of insurance is all that’s needed to keep a roof over your head or food on your table if you can’t work.”
The questions are, how much money are you saving by opting for mortgage/rent protection over income protection, and is this saving worth it?
How much dearer is income protection compared to mortgage/rent protection?
Income protection is around 50% more expensive than mortgage/rent protection (according to an Interest.co.nz study).
This is what a 35-year-old teacher, earning a gross salary of $70,000 a year, would pay for mortgage versus income protection each month.
|How much more income protection costs compared to mortgage/rent protection (%)|
|Quotes sourced from LifeDirect and Cigna as at May 18, 2016 and are subject to change.|
As an aside, it's worth noting premium prices are fairly similar across different insurers in each product category, which highlights the importance of focussing on the quality of cover when selecting an insurer.
We can assume the person in this exercise has a $480,000 mortgage, which she’s paying off over 30 years, at an interest rate of 4.75%. Her mortgage repayments accordingly cost her $2,504 a month (not all insurers quoted above will cover her for this full amount).
Under her income protection policy, we can assume she receives cover for 75% of her income, which equates to $4,375 a month.
She has selected a wait period of 4 weeks on both policies, and will be covered for the two years after she stops working.
How much are you sacrificing in terms of cover, opting for mortgage/rent over income protection?
While a robust comparison between the two types of insurance is a job for a financial adviser rather than a financial journalist, this table details some of the differences between the two types of cover.
Lighter weight cover = cheaper premiums.
Heavier weight cover = more costly premiums.
You get a regular payment to cover your rent/mortgage if you can’t work due to illness or injury.
You can sometimes get limited cover if you’re made redundant, but you often have to pay for this as an add-on.
Some insurers also allow you choose the level of cover you’d like. AIA for example lets you can choose to get cover equivalent to 45% of your income or 115% of your rent or mortgage repayments.
You get a regular payment if you can’t work due to illness or injury. Some policies allow you to add on cover for redundancy. You can choose from two variations of income protection:
Indemnity value: A value calculated based on the income you can prove you were earning just before becoming disabled. This is usually calculated as up to 75% of your gross annual income.
Agreed value: A set amount you agree on with your insurer, which isn’t assessed again at claims time. The agreed value can vary depending on your income.
Fidelity Life for example will cover you for up to 62.5% of your gross income if you earn less than $70k, up to 60% if you earn between $70k and $100K, and up to 55% if you earn more than $100k.
You will still receive cover, even if you receive payments from ACC for the injury that’s stopped you from working.
Any ACC payments or sick leave you’re paid in relation to your injury will be deducted from your cover. Your income protection will be worthless if you have an accident and ACC covers 80% of your income. ACC does not however provide cover for if you get sick.
You don’t have to pay tax on the insurance cover you receive.
Generally, you have to pay tax if the cover you receive is an indemnity value. The premiums you pay are accordingly tax deductible. Agreed value policies are often exempt from tax payments and deductions.
An Authorised Financial Adviser for Goldsworthy Financial Solutions, Jeff Goldsworthy, acknowledges affordability is a key consideration when weighing up the options. Generally speaking he says:
“If you’ve got a one income household, the financial impact of disablement is going to be much higher, therefore you want to have the maximum benefit [ie income protection].
“Where the mortgage repayment coverage can kick in is where you’ve got a two-income household. Generally the mortgage is the single biggest expense, so if you can cover the mortgage, and still rely on one income, generally you can balance it. The downside to that is if you get a major health condition.”
He points out that for some people mortgage/rent protection could be advantageous as it doesn’t usually take your income into consideration.
Cigna is a little different in this regard, as it will only pay an amount equivalent to 40% of your income, if your income isn’t at least 2.5 times larger than your mortgage repayment/rent.
In other words, you’d need a gross annual income of at least $75k if you’d like your insurer to cover the full $2504 monthly mortgage repayment in the case study used above. If you were servicing that mortgage on an income of $70k, you’d only receive cover of $2333 a month, which leaves a shortfall of $171.
What are the other ifs and buts to consider?
It is worth nothing the claim period you can select - the length of time the insurer will cover you for after you have to stop working - varies between insurers. Most insurers give you an option of two years, five years or to age 65. However some insurers have more extensive offerings, while others are more limited.
Cigna for example caps its claim period at two years, meaning if you have to stop working at age 45, you will only be covered by your insurance until age 47.
Goldsworthy says he usually advises his clients to opt for a claims period of five years. He says 81% of disability claims are settled within two years, while 96% are settled within five years.
By industry standards, the average period of disability is between 14 and 16 months.
The wait period you can select - the length of time before your cover kicks in following you stopping work - also varies between insurers, with the minimum usually being four weeks.
In the case of both mortgage/rent and income protection, the cover you receive will often be reduced in the case of redundancy, and payments may stop after a certain period of time.
Redundancy cover may also not kick in until after the redundancy package from your employer runs out.
Goldsworthy suggests his clients should therefore think hard about whether redundancy cover is worth their while.
Indemnity or agreed value?
If you go down the income protection path, Goldsworthy admits the difficulty is deciding whether to opt for an indemnity or agreed value policy.
While the indemnity value could be higher (ie 75% of gross income) and the premiums are tax deductible, he says it provides less certainty at claims time.
Because it considers your income directly before you suffered the condition that’s made you stop work, you risk ending up having no cover if you have to stop work a few months after returning to work, having just had time off due to sickness.
For example, one of Goldsworthy’s clients was covered under his indemnity policy when he stopped working for a year due to suffering from severe stress. After returning to work after three months, he relapsed and had to stop again. Given he had hardly worked over the previous year, the indemnity value of his insurance was worthless.
While this might not be the case with every policy, as many look at your income over the past three years, Goldsworthy says opting for an agreed value policy can provide more certainty.
No matter which policy you opt for, he says it’s essential to be honest and upfront when filling out the application form. Your insurer may not pay out your claim if you don’t disclose all the right information about yourself.
By Susan St. John*
Among developed countries, New Zealand has taken a unique approach to the provision of retirement income. At its centre is universal New Zealand Superannuation (NZS), supplemented by KiwiSaver and other forms of voluntary private saving. Along with high rates of home ownership, residency-based NZS has been outstandingly successful in reducing poverty among those over the age of 65. Indeed, this group has the best living standards profile of any age group in New Zealand.
The fiscal cost of NZS, in net terms, is relatively low by international standards at around 4.1 per cent of GDP today, rising to 6.1 per cent in 2050 and just 6.7 per cent by 2060. While this appears to be a modest increase, associated fiscal pressures from an ageing population, including healthcare costs, make the picture less benign.
NZS does not discourage saving or working since it is not income- or asset-tested, and there is no requirement to actually retire from work. Wealthy recipients of NZS may still be in well-paid work and/or have other significant private incomes and assets.
Some of this group may have accumulated their wealth with tax-free capital gains and may have benefited substantially from the 2010 income tax cuts and lower Portfolio Investment Entity (PIE) rates of tax. The amount of NZS retained, after-tax, by individuals taxed at the top income tax rate of 33 per cent – perhaps because they still work full-time – actually exceeds the net Jobseeker Support benefit rate paid to an unemployed adult (Table 1).
The argument for cost containment may become compelling over the next two decades as increasing numbers of baby boomers reach retirement with ever larger, subsidised KiwiSaver lump sums and qualify for NZS, which under the pay-as-you-go system must be funded by current taxpayers.
NZS is partially prefunded, but the New Zealand Superannuation Fund (NZSF) in itself does not reduce the cost of NZS, and accumulation in the fund has opportunity costs. A simplified visual picture of the scale of demographic change is provided in Table 2.
Future pension payments may be reduced through the use of one or more of three main levers: the age of eligibility, the level of payments, and means-testing. While raising the eligibility age is often discussed as if it were the only option, a carefully considered mix of the three levers might most effectively maintain the best features of NZS. The first two levers are briefly discussed below, followed by a more detailed proposal for use of the third lever: income-testing. This third lever has been seldom discussed seriously in New Zealand since the late 1990s when the surcharge was abolished.
Lever 1: Increase the qualifying age
The New Zealand Treasury has investigated the possibility of raising the eligibility age for NZS. This may appear inevitable in the face of an ageing population and increasing longevity. Nevertheless, caution is advised. An important disadvantage of relying on this strategy to improve NZS sustainability is that many people with physically demanding jobs are disabled or sick by age 65 and unable to work further. Others lack the required skills or education to meet market requirements, or have full-time unpaid caregiving duties, such as looking after parents or grandchildren. The savings accrued from raising the age of eligibility would need to take account of the costs of supporting such people and would require another form of state assistance. The use of conventional welfare benefits with stringent income tests may mean that those who cannot continue to work exhaust their private retirement resources before reaching the new, higher age of eligibility.
In Australia, for example, the increase to age 67 for the Age Pension will begin in 2017 and is to be achieved over only six years, with talk of a further extension to age 70 by 2035.
However, New Zealand runs some fiscal risk by being out of step internationally. In Australia, for example, the increase to age 67 for the Age Pension will begin in 2017 and is to be achieved over only six years, with talk of a further extension to age 70 by 2035. New Zealand’s current reciprocity agreements with Australia and other countries mean that individuals’ residency there can be used to qualify for NZS if they emigrate to New Zealand. This potential for people from other countries with higher qualifying ages and higher residency and/or contribution requirements for the age pension to benefit from our less stringent conditions is another risk to the future affordability of NZS.
While an increase in the qualifying age is inevitable to reflect improved average longevity, greater participation in the workforce, and to align with other countries such as Australia, if the only way to do this politically is to give a long lead-in time, there will be little or no potential for immediate savings from using this lever. To date, both major parties have shown a lack of political will to signal a timetable for any such rise.
Lever 2: Decrease the payment
A second lever to reduce the cost of NZS is to reduce the payment level. One approach is to change the indexation basis for NZS. Projections show that fiscal savings from indexing the annual payment of NZS to inflation rather than wages would lead to significant long-term savings. The real spending power of NZS would be protected but the rate of NZS would fall relative to average wages.
However, the baby boomers now aged 49-69 are very diverse in both health status and resources. Many are not well-off, and some have lost money in New Zealand’s finance company meltdown and in the leaky homes fiasco. Others have suffered through divorce and ill health.
The level of NZS needs to be high enough to prevent hardship and it does that for most, particularly for those who are home-owners, though some pensioners clearly still struggle. While the Retirement Commissioner has suggested there is a case for a moderation of the indexation formula, reducing either the level of NZS or the relativity to wages over time may undermine the desirable achievement of low hardship rates for the 65-plus group.
Another approach is to rationalise the three different rates for NZS. As shown in Table 1, there is a married rate, a single sharing rate at 60 per cent of the married rate, and a single living alone rate at 65 per cent of the married rate. As previous Retirement Commission or Periodic Report Groups Reviews have noted, these differences are hard to justify. The rates are historical and are unsuited to a modern world of flexible living arrangements and relationships. There is a case therefore to pay the same flat rate to everyone, set somewhere between the married person and single sharing rate, with an additional means-tested payment where housing costs are high.
About 27 per cent of superannuitants live alone and possibly the majority would still need accommodation assistance. Nevertheless, savings can be made here without affecting the living standards of those dependent solely on the pension. Whether or not there is a separate rate for living alone, the alignment of the married and single rates appears justified. To save costs without direct cuts, the single sharing rate could be frozen until the married rate catches up through normal annual adjustments.
In summary, apart from modernising and improving simplicity by aligning the rates of NZS, there appears little justification for reducing NZS costs by lowering the level of NZS payments as this approach risks increasing old-age hardship.
Lever 3: A means test
This leaves some form of means test – sometimes referred to as the ‘third rail’ of superannuation policy, by analogy with the potentially lethal electrified third rail of a railway track. "Touch it and you die". New Zealand’s income-test history has made it a politically unattractive option (see sidebar). Yet there is a way to apply an income test fairly, and with enough useful savings to take the pressure off sole reliance on raising the qualifying age or reducing the rate of NZS.
In Australia the means test on the Age Pension takes account of both income and assets. It is likely that New Zealanders would find that a step too far. This paper therefore concentrates on an income-based means test, but that does not preclude an attempt to include as much imputed income from assets as feasible over time.
Using 2014 figures, if there is no other income, the gross amount of NZS is taxed at the lowest tax rate and net disposable income is $14,677 for a married person (see intercept on vertical axis in Figure 1). For a superannuitant with enough other income to be in the top tax bracket, the net NZS payment after tax at 33 per cent increases his or her disposable income by $11,121.
In the context of the overall population, the net $11,121 of NZS paid to the wealthiest married superannuitant is more than the net Jobseeker Support of $9,059 (annualised) paid to an unemployed married adult. The current net gain to single sharing and single living alone wealthy superannuitants is even greater: $13,503 and $14,692 respectively, compared to $10,871 (as an annual rate) for a single person on Jobseeker Support.
Using the tax system
Finding a way for the top line to meet the bottom line in Figure 1 by reducing the generosity of net NZS at the top end may reduce the degree to which the other two main levers must be employed. The intent is to save costs by affecting only those with significant ‘other’ income, while leaving the disposable income of the vast majority of superannuitants virtually unchanged.
To make the lines meet, a ‘negative income-tax approach’ could be used. In the past, when the surcharge operated, such an approach was suggested as a sensible rationalisation. This reform option means that the flow of tax to the IRD on gross NZS and other income, and the surcharge paid by a superannuitant, is offset against the gross NZS payment from the IRD. Money would flow one way only.
However, a ‘basic income’ approach may be simpler to implement and understand. A Universal Basic Income (UBI) is already part of the current discussion in New Zealand about the future of work. The UBI is based on principles of non-conditionality and individual treatment, and changing NZS into a basic income would demonstrate how such a policy would work for the group aged over 65.
To illustrate, the basic income, called here the ‘New Zealand Superannuation Grant’ (NZSG), would be paid to all superannuitants as an unconditional weekly non-taxable basic income. Then, a separate tax scale would apply to all of a superannuitant's gross earnings, whether from wages, dividends, or interest. In this example, it is proposed that the NZSG is the same for everyone (married; single sharing; single living alone) and that any extra supplement for high housing costs would be part of the welfare system. While the NZSG could be set at any level, Figure 1 shows it as equal to the current (after-primary tax) rate of NZS: i.e. $14,677 for a married person.
A break-even point exists where the NZSG, plus extra income from work or investment, net of the new tax rate, is equal to the disposable income of an ordinary taxpayer paying the usual rates of income tax. This point is effectively where the gain from the NZSG has been offset by the new tax. Any over- payments of tax by high-income earners could be claimed back at the end of the income tax year.
Technically, this proposal differs from the surcharge of 1985-1998 in that the NZSG payment is not part of taxable income. The surcharge was exceedingly complex, applying until the net advantage from NZS was equal to the surcharge paid, and could mean different end points (when NZS had been fully clawed back) for different taxpayers. Few could follow the calculations. The surcharge was also perceived as an additional, discriminating tax that could result in marginal rates of tax exceeding 50 per cent.
Under the NZSG, an individual could either opt for the NZSG and the new tax scale for all other income, or wait until end of the tax year and take any NZSG due as a rebate. For high-income earners, whether that income is earned from paid work or from investments, the new tax scale would not remove their right to the basic income floor of the NZSG if other income reduces or disappears. Thus the NZSG is the prototype of a basic income that provides automatic income security as of right.
Given that for 80 per cent of NZS recipients, NZS provides at least 55 per cent of their income, a tiered tax structure is needed to protect those with limited extra income. Figure 2 illustrates a tiered scenario; with rates of 17.5 per cent for the first $15,000 of other income, and 39 per cent on each dollar above that.
Features of the New Zealand Superannuation Grant
The NZSG would be far less complicated than other forms of clawback such as the surcharge, a welfare type means-test directly on NZS, or even a negative income-tax approach. As with any targeting regime, an increase in the degree of targeting will result in some avoidance activity. However, the NZSG proposal is not nearly as harsh as the welfare means-test that applies to rest-home care subsidies or welfare benefits. It provides a gentle clawback using the principle of progressive taxation which, it can be argued, is the natural counterpart of the universal provision of a basic income.
Another concern may be that the NZSG would need to be carefully packaged so as not to adversely influence the decision to save. This, of course, would be much more of a problem with a full means-test that included assets than the proposed income-test operated through the tax system.
The integrity of the NZSG approach would require that the top PIE rate be aligned to 39 per cent. Alternatively, gross PIE income could be included as ‘income’ to be taxed at 39 per cent, less the tax already paid by the PIE on the member’s behalf (similar to the imputation regime). The same argument applies to income earned through trusts, companies and overseas vehicles. Treatment of current annuities and defined benefit pensions raise other complex but not insoluble problems.
This preliminary analysis suggests that the combined approach of adopting the two-tiered tax scenario, freezing the single-sharing rate so that over time it aligns with the married rate, eliminating the livingalone rate, and increasing supplementary assistance for accommodation costs, will result in immediate savings of more than 10 per cent of net NZS, and that this should increase gradually over time.
These savings are possible without imposing hardship or affecting those with modest additional income and can be achieved relatively quickly. The inevitable increase in the eligibility age to reflect improved longevity could be more gradual, reducing the disadvantages for individuals who, given the arduous nature of their employment, may expect to retire earlier than others. It would also continue to recognise that many older people contribute valuable unpaid caregiving and other voluntary work and should be supported by a basic income.
The proposed NZSG after a phase in period would aim to pay a single rate to all independent of relationship status or living arrangements. This would remove unfair classifications that are difficult to police. It would reduce the cost of NZS, although additional payments for those with high accommodation costs, whether living alone or not, would be required.
As with any targeting regime, efforts to maximise returns will lead to some tax planning activity. However, those who should be paying the top rate of tax of 33% already have an incentive to reduce their taxable income and some already pay little or no tax. It is debatable as to whether a marginal 39% tax rate would substantially change behaviour but there is the possibility that it could provide the impetus for a full investigation into, and exposure of, current and potential tax avoidance activities by wealthy individuals. Under the proposed NZSG, a wealthy person would need to reduce taxable income to under $15,000 to avoid the 39 per cent rate completely.
The proposed change would decrease the fiscal cost of NZS through reductions in payments to high-income superannuitants and thus allow more spending or lower taxes for younger New Zealand taxpayers. It may therefore lead to improved perceptions of inter-and intra-generational equity.
If it is agreed that the cost of NZS should be reduced by increasing the degree of targeting, using the tax system and the proposed NZSG offers several potential advantages compared with other targeting regimes. It is relatively simple to administer, and it is flexible. The choice of tax rates for other income allows flexibility and clarity in reaching a desired breakeven point and required fiscal savings. It also provides choice and clarity for high-income superannuitants who are not denied access to the basic income floor of NZSG if their situation changes.
NZSG illustrates a possible reform to NZS as a means of enhancing the sustainability of an already world-class retirement system.
Susan St John is an Honorary Associate Professor in the University of Auckland Business School's Department of Economics and Director of the Economics of Ageing Programme in the Centre for Applied Research in Economics (CARE). Her research is focused on public sector and retirement policy, including decumulation of savings, tax and poverty, and applied macroeconomics. You can contact her here.
Acknowledgements: The assistance of Dr Claire Dale, Michael Littlewood and Siu Yuat Wong, of the Retirement Policy and Research Centre, with this article is acknowledged. Thanks also to Matthew Bell, Senior Analyst at the New Zealand Treasury, for costing the options.
This article was first published in the Autumn 2016 issue of the University of Auckland Business Review, and is reproduced with the permission of the University of Auckland Business School.
The World Gold Council has released its demand and supply data for the first quarter of 2016.
And there are some big movements occurring in this market despite the net balance between demand and supply being its closest over the past four quarters.
Central banks purchased the least in any quarter since June 2011. Western central banks have long ceased buying gold; this pull-back comes despite continued buying by the central banks in Russia and central Asia.
Russia and China – the two largest purchasers last year – continue to accumulate significant quantities of gold. Russia increased its gold reserves by 46 tonnes in the first quarter, 52% higher than the same period in 2015. But others slowed the pace. China purchased 35 tonnes between January-March, adding to the 104 tonnes bought in the first half of 2015. Kazakhstan’s gold reserves increased in each of the first three months of 2016, extending the country’s impressive buying streak to 42 consecutive months. Sellers included Canada who sold 1.7 tonnes in Q1, ending its holdings altogether. Malaysia sold almost 2 tonnes, Mozambique sold a similar amount in the quarter, and Mongolia sold 1.3 tonnes.
Although total Gold demand reached 1,290 tonnes in Q1 2016, a 21% increase year-on-year, making it the second largest quarter on record, this was driven almost solely by huge inflows into exchange traded funds (ETFs), a remarkable increase of +364 tonnes. But a closer look at the data shows that just two American funds, SPDR Gold Shares and iShares Gold Trust, accounted for almost a third of the buying. Not all ETF's raised their holdings, but 7 of the top 10 did.
Without this sudden demand switch by ETFs, demand from traditional sources was soft.
The jewellery demand was down -21% to its lowest level since September 2012.
Total demand for gold bars and coins was flat (+1%).
Industrial demand for tech manufacturing slumped to just 81 tonnes in the quarter, the lowest level ever recorded since this sector was included in 2000.
Here are the long-run charts for the components of gold demand:
On the supply side, mine production was flat, although producers reduced their hedging inventories onto the market, making an additional 40 tonnes available.
And recycled gold levels were unchanged from the same quarter a year ago.
The net result is that in the March 2016 quarter, there was 1,180 tonnes of demand (including the 364 tonnes of ETF demand) while there was 1,135 tonnes of supply. Central banks bought a net 109 tonnes in addition.
This rough balance saw prices slip -3% when comparing Q1-16 with Q1-15 in US dollars.
In New Zealand dollars, these same average prices rose +12% as our currency declined against the greenback.
This World Gold Council report can also be downloaded here.
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By Jenée Tibshraeny
The tug of war between the heavyweights interested in the review of the Financial Advisers Act 2008 (FAA), is on.
Yet the question is whether the Government will cave to the banks who broadly support the way the lines between salespeople and advisers are currently blurred, and a number of insurers who are calling for the two to be distinguished from each other.
Introducing an Options Paper as a part of the review in November last year, the Minister of Commerce and Consumer Affairs Paul Goldsmith said:
“We have heard concerns that the regime has had the unintended consequence of making it more difficult for New Zealanders of modest means to gain access to financial advice, because of the costs imposed.
“We have also heard that the regime is unnecessarily complex which is making it hard for consumers to know where to seek financial advice from.
“We have also heard that the distinction between advice that puts the interest of the customer first, and what is essentially sales activity, remains blurred. There are concerns that consumers may not be receiving advice from people with adequate skills to deliver the best outcomes for them.”
Of the 545 consumers who responded to a simplified version of the Options Paper, 87% said distinguishing between ‘sales’ and ‘financial advice’ would help them better understand what they were receiving.
Furthermore, 94% thought all financial advisers should be required to put consumers’ interests first. When asked what information about a financial adviser was most useful to them, the largest number said information about how they’re remunerated.
Yet ANZ, ASB, BNZ and Westpac, in their submissions to the Options Paper, have turned their noses up at proposals to alleviate these problems by making a clear distinction between salespeople and advisers.
Of the sample of submissions from major general and life insurers Interest.co.nz has reviewed, Southern Cross and Sovereign don’t propose separating the two out, while AMP, IAG, Partners Life and Vero do.
While the scope of the FAA review extends beyond this distinction, and institutions have provided much more holistic solutions, the salesperson/adviser issue is a simple way of getting to the heart of the debate for the purpose of a news article.
Banks say they’re comfortable with the current system where as Qualified Financial Entities (QFEs), they’re responsible for training, mentoring and overseeing their advisers, so they have the competency to sell products or give advice on them.
BNZ says, “Finding a suitable definition that will distinguish “sales” from “advice” is a challenge given that there is a spectrum of customer interaction. At what point on the spectrum should a sale be distinguished from advice? The desired outcome is that a consumer is sold a product that meets his or her requirements and objectives but need not be the best product in the market.”
Westpac points out: “Sales by financial services providers that issue and distribute products are already subject to suitability requirements under the Responsible Lending regime and, in the case of derivatives, under the FMCA. The focus of the FAA should be on the regulation of financial advice services rather than on product regulation.
“The proposal that salespeople provide a prescribed notice to the effect that they are not required to act in the consumer's best interest would make the sales regime very unattractive.”
ASB goes further to say: “An explicit sales/advice distinction could result in an influx of salespeople who are less regulated than those currently permitted to give class advice.
“It also would incentivise sales due to a lesser compliance burden, and therefore reduce the availability of comprehensive advice. When similar changes were introduced in the United Kingdom the provision of advice and the number of advisers actually decreased.”
ANZ has put a slightly different emphasis on its submission, as it’s focused on calling for the distinction between class and personalised advice to be removed.
“Sales of financial products inherently involve some financial advice. At its most basic, that financial advice is a recommendation by a salesperson to buy the product,” it says.
“Drawing an effective line between class advice and personalised advice is often difficult… For example, a distinction may begin as class advice and evolve into a personalised service.
“QFEs should be able to provide financial advice their customers want and need without trying to distinguish between whether that advice is class or personalised.”
ANZ maintains it’s important for QFE salespeople to explain to customers the scope of advice being provided.
It’s not as easy to group insurance providers together as it is banks, as different insurers have different distribution models.
Sovereign for example – New Zealand’s largest life insurance company – largely distributes its products through advisers, while Partners Life sells its products direct.
This goes some way to explaining some of the differing views between insurers.
Sovereign doesn’t support drawing a distinction between sales and advice, saying:
“We believe that every salesperson should be satisfied that the product being sold meets the consumer’s need. That need might be established by a full needs assessment or by simply asking the consumer. But even in the latter case the salesperson should be satisfied that the product is suitable to meet that need. That process by its very nature is a recommendation or opinion in relation to acquiring the product.”
Southern Cross Health Society adds that unless a business can compress its activities either side of the line, a separation will hike compliance costs.
Partners Life on the other hand says advice and sales should be clearly defined under the Act.
“Someone who is transacting a sale rather than providing advice can only provide factual information about the product they are selling and take the client’s order for that product. They cannot make any comparative statements or offer any comparative opinions regarding competitors or their products, and they cannot suggest or recommend any replacement or cancellation of existing products.
“If this were to be implemented then sales people would not need to be held to the same obligations as advisers but should be required to prove competence in the product(s) they are selling and should disclose what they can and cannot do in respect of the above.”
AMP echoes a similar sentiment, adding salespeople should be required to disclose how they’re paid.
Vero – New Zealand’s second largest general insurer – says sales activity should be outside the scope of the Act altogether, due to the consumer protection available under the Fair Trading and Consumer Guarantees Acts.
It says: “By making this clear distinction consumers would be in no doubt as to the difference between advice and sales, and would then be able to seek out the most appropriate adviser or salesperson depending on their own needs and requirements.”
IAG – New Zealand’s largest general insurer – says the definition of an adviser should be tightened, so there are Licensed Financial Advisers and non-advisers.
It suggests this system replaces the one we currently have, whereby there are Authorised Financial Advisers, Registered Financial Advisors and Qualified Financial Entities, which all have to meet different standards of competency and disclosure and have different obligations around their clients’ interests.
“We believe that a far simpler and less burdensome regime can be established by using a tighter definition of Financial Adviser. This regime would establish a regulated profession of Licensed Financial Advisers and not seek to regulate all financial advice,” IAG says.
The Ministry of Business, Innovation and Employment will report to the Minister of Commerce and Consumer Affairs its recommendations on the FAA review by 1 July.
Peer-to-peer lender Harmoney has announced potentially substantial increases to its fee structure for lenders, effective from June 13.
The new, much higher, fees will apply to just new amounts lent out and not to existing investments.
The changes follow the restructuring of fees to borrowers in December 2015, at which time the company significantly reduced the Platform Fee for all borrowers. See here for previous articles about Harmoney.
In a paragraph that was included in a newsletter to Harmoney investors today, but was not included in the press release the company sent out, Harmoney explicitly stated that at the time it reduced the platform fee for borrowers in December, it raised the interest rates charged them to compensate.
"At that time we significantly reduced the Borrower Platform Fee, adjusting interest rates so, on average, borrowers paid around the same amount overall," Harmoney told its investors.
And it is these higher interest rates that Harmoney is now charging borrowers that the company, in part, uses as an offsetting point for the much higher fees it's now going to charge lenders.
For new loans made from June 13, 2016 Harmoney has removed its Service Fee (1.25% of the principal and interest payments collected on each repayment, including any repayment as a result of a rewritten loan). Instead a Lender Fee will be charged only on interest, and is charged on a sliding scale that recognises the amount lenders have invested through the platform – the greater the lending, the lower the fees.
"The interest-only application of the Lender Fee means Harmoney has to keep delivering returns to receive this fee," the company says.
That December change to borrowers' fees came against a backdrop of the Commerce Commission looking into whether fees charged by peer-to-peer (P2P) lenders are covered by the fees provisions of the Credit Contracts & Consumer Finance Act (CCCFA).
Previously the platform fee for borrowers ranged from between 2% and 6% of the loan amount, based on the loan's risk grade. It was changed, without fanfare in December, to a one-off fee of $375.
However, as the company has now disclosed, it raised the interest rates charged to borrowers to compensate.
Now it has come up with the new fees structure for lenders.
According to the example Harmoney itself gives of the new lending fee structure, somebody investing $15,000 for 36 months would potentially see their service fee paid increased by over 174% (its a nearly $1000 increase according to the example), assuming returns were as Harmoney outlines.
Harmoney says the end result for the investor will be largely unchanged - because the interest rate charged to the borrower is going to be higher. However, the example given does show a slightly lower (21bps) rate of return than before the fee change.
Harmoney founder and joint CEO Neil Roberts said that the changes were being made "in order to ensure the sustainability and longevity of the platform and maintain the value we deliver to Lenders and Borrowers".
No recent detail of the company's financial performance is publicly available, but in the first 11 months of operation to March 2015 it lost $6.26 million.
Roberts said the Harmoney platform was delivering returns to retail lenders that exceeded those originally targeted. "Retail lenders are enjoying an average Realised Annual Return (RAR) of 13.05%."
Harmoney’s RAR has been published since December 2015 at a platform level, within the market statistics page, and as an individual return, within each lender’s dashboard. "Harmoney has the tenure and scale to provide an actual realised return with almost two years of tenure and $250 million in lending."
Roberts said the new fee structure" will allow Harmoney to continue to invest in growth, which will drive more loan value for all lenders". In "just 20 months" of operation, he said, Harmoney has:
- raised $30 million in working capital and invested substantially in the platform infrastructure and improvements;
- assessed more than $2 billion in loan applications;
- facilitated $250 million in lending;
- paid $20 million in interest to Lenders;
- processed more than 7,500,000 transactions.
"Thousands of New Zealanders have contributed to its success, and the team will continue to work hard to justify the faith and support of those who use the platform," Roberts said.