Synergy surges to $800m, adds Morningstar models

Synergy Investments has pushed above $800 million in a year that has seen stellar growth and the addition of five new Morningstar model portfolios to the discretionary investment management service (DIMS).

Scott Alman, Consilium head, said Synergy funds under management had increased by about 50 per cent year-on-year on the back of buoyant markets, strong flows from existing clients and new users. Alman said the rising demand for implemented investment solutions had also sparked the addition of the five Morningstar models to the Synergy mix.

“Morningstar approached us to give NZ advisers who use their research a more efficient implementation tool,” he said. “And we were happy to introduce new options for advisers… Synergy is becoming a model portfolio supermarket.”

The Morningstar models bring the total Synergy selection to 33, including the 22 Consilium-constructed portfolios and six from Auckland consultancy firm, MyFiduciary. MyFiduciary, which uses some Morningstar data, joined the Synergy service last October to bring a more active management style to complement the Consilium ‘smart beta’ approach.

The Consilium portfolios tilt strongly to factor-based funds managed by US giant Dimensional Fund Advisors – with other mostly index-tracking strategies offered by Harbour, iShares and AMP Capital.

Despite some fund cross-over between the MyFiduciary and Morningstar models – both use Hunter and Bentham (among others) for fixed income, for instance – the two researcher-built portfolios still vary in manager choice and asset allocation.

The Morningstar Synergy investment fees range from 0.49 per cent to 0.95 per cent compared to 0.34 per cent to 0.53 per cent for the MyFiduciary model set. Meanwhile, the Consilium in-house portfolios cost between 0.25 per cent to 0.39 per cent.

Synergy also levies administration fees ranging from 0.25 per cent to 0.55 per cent depending on client portfolio size. Including the Synergy assets, the total Consilium wrap platform – built on FNZ technology – now holds about $6.7 billion, Alman said. “And that’s real funds under management sourced from many independent financial advisers – rather than a few large institutions,” he said.

Earlier this year Consilium also went live with its new KiwiSaver scheme that targets higher-balance clients (at least $50,000) looking for broad, adviser-guided investment choice.

The KiwiWRAP scheme, administered on the FNZ-run Consilium platform, has been steadily growing support from advisers, Alman said. “We’ve made the [KiwiWRAP] adviser accreditation process very thorough as we want to make sure they are truly providing the advice and service commensurate with any fees they charge,” he said. Advisers using the Consilium KiwiSaver scheme can charge annual advice fees of up to 0.75 per cent plus a one-off account establishment fee of 0.2 per cent – in addition to any underlying investment and administration charges. Alman said KiwiWRAP has taken on some “incredible” KiwiSaver account balances with of over $1 million. “The average KiwiWRAP balance is over $100,000,” he said.

For the first time this year, Consilium also sponsored the 2021 edition of the long-running Massey NZ Fin-Ed Centre cost of retirement report released at the Financial Advice NZ conference last week.

“We are really pleased to co-sponsor this report which helps the financial literacy of New Zealanders. It provides evidence to pre-retirees about their retirement income needs,” Alman said in a release. “It helps them be better informed about what sort of lump sum they will need to accumulate to fill the retirement savings gap between their NZ Super and private savings.”

As usual, the Massey study found retirement costs are rising with a city-dwelling couple now requiring savings of at least $809,000 to fund a ‘choices’ retirement lifestyle.

Originally published on Investment News: Synergy surges to $800m, adds Morningstar models — 21 November 2021