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Simplicity forges new relationship with fee-based only advisors as it celebrates $300 m mark


Another breakthrough week for Simplicity. 

Today we hit $300 million under management, between our KiwiSaver Scheme and our lookalike investment funds. It means our 9,800 members are saving more than $3 million per year in fees, thanks to our low-cost, 100% online, nonprofit model. Our pool of charitable funds  (accrued through 15% of management revenue) has grown to more than $135,000 a year.

Managing director Sam Stubbs says the company's latest milestone demonstrates the potency of people power.

\"We operate a lean, mean, smart machine with limited resources and an incredibly talented team but our members are our secret weapon. Without incentivising them, or even asking, they've been our strongest referral source.\"

Simplicity abstains from the use of conventional marketing techniques, ie. expensive advertising and lavish above-the-line marketing budgets. Old school methods, like welcome calls from the CEO, roadshows, education sessions in the workplace, have powered a phenomenal growth rate and popularity seldom seen in the financial service sector.

Stubbs said the growth rate has been about double “the most optimistic forecasts”, putting Simplicity on a path to “cash-flow break-even” at the end of this year, well ahead of forecast.

Earlier this week, Simplicity expanded its reach on another level, extending its range of passive products on two major investment platforms: ASB-owned Aegis and FNZ.

Although Simplicity was reluctant to go down this road earlier, Stubbs said working with fee-based only advisors and keeping Simplicity in the driver's seat with direct communications, made the arrangement more attractive. 

“We’re also compiling a list of fee-based advisers who we will recommend to our clients – and we welcome any genuine fee-based advisers to get in touch with us,” he said. “Many of our members may want to speak to a financial adviser, we’re supportive of the goal to deliver good financial advice to as many people as possible.”

Stubbs said any member referrals routed via the Simplicity-vetted adviser list would be no-strings arrangements without any “economics” involved.

“There won’t be any referral fees or requirements to sell our products,” he said, estimating the final approved adviser list would number between “20 to 40”.

As part of the platform effort, Simplicity would also offer a “portal” for advisers to access their client's KiwiSaver accounts.

For more details, see Investment News story here.

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