Business Hub: Fisher Funds Bruce McLachlan on managing $14 billion

In April last year, fewer than 100 people were working at Fisher Funds’ Takapuna offices.

Now there are more than 130 and the fund manager is expanding to fill up more office space as it experiences a record inflow of people looking for a better return on their money.

“It has been non-stop recruiting here,” says chief executive Bruce McLachlan. “We have hired 25 people in the last two months.”

The amount of money the company manages has grown by 40 per cent in the last year to hit a record $14 billion.

McLachlan, who has headed the firm since April 2017, says it has been a combination of factors that have driven the business’ growth.

“There has been good returns in the market which fuel growth, there has been the population effect, which is more and more people reaching retirement.

“Then you have had low interest rates, and barring that four-week period [in March-April last year], we have had incredibly favourable markets. We say we have had both a rising tide and a tail wind through this period – there are strong market factors.”

Fisher Funds’ latest financial results won’t come out until the end of this month but McLachlan hints that both its revenue and profit will be up by about 18 per cent.

That will put its net profit close to a record $50 million for the first time and result in a bumper dividend to its shareholders. The record inflows of money mean that its 2022 figures will look even healthier.

Fisher Funds was founded in 1998 by Carmel and Hugh Fisher, who gave up their ownership in 2017. The company is now 66 per cent owned by the Toi Foundation – a charitable trust which also owns TSB Bank. The other third is owned by US private equity investor TA Associates.

Carmel Fisher will leave behind her connection to the business this month, when she steps down from the boards of its three listed investment funds.

McLachlan says it was Fisher who enticed him to move to Fisher Funds, leaving behind a long career in banking.

“Carmel picked up the phone one day and said she was leaving the business and she’d like it if I stepped in and managed that transition for her.

“I hadn’t necessarily been lining up funds management before then, but had been lucky enough to be advocating this business from The Co-operative Bank beforehand. For a number of years we put tens of thousands of Co-op clients into Fisher Funds, so it was a very easy thing to do to move from advocating from the outside to suddenly advocating it from inside.”

Also making the move attractive was the switch from an Auckland-to-Wellington commute to a 10-minute drive down Lake Rd to Fisher Funds’ offices.

Based on Hurstmere Rd, the business has a prime view of Rangitoto and was front and centre for the America’s Cup practice races this year.

But it has not all been smooth sailing for the business. Like many, it went through a rough patch last year as the Covid-19 pandemic hit.

“We started the year obviously with tremendous uncertainty, with teams in lockdown and clients concerned, and finished the year with fantastic momentum,” says McLachlan. “It ended up like the dream year but who would have ever guessed that at the start of the year?”

In May this year, Fisher Funds also lost a bid to be reappointed as a KiwiSaver default provider, alongside four other fund managers.

“We were sad and disappointed for about an hour and then we were too busy with our growth. It is a minor blip for us.”

What has been a bigger issue is reinforcing that fact that despite losing that default status, it remains a KiwiSaver provider.

“The biggest issue has been the publicity,” says McLachlan. “Many clients thought we would be pulling out of KiwiSaver altogether. So we have really had an active communication programme over the last two months, really saying we are here, we are here to stay.”

About half of its $14b in funds under management is invested via its KiwiSaver schemes, making it the fourth largest KiwiSaver provider behind ANZ, ASB and Westpac.

McLachlan estimates that Fisher Funds will lose about 35,000 clients and about $400m when it stops being a default provider in December. Those clients will be transferred to the newly-appointed default scheme providers.

McLachlan says he wishes the new default providers the best of luck. “We know that they are going to need it.”

Default members are those who don’t choose which provider to join when they are automatically enrolled in KiwiSaver. Typically they have lower balances, often don’t contribute regularly and can be hard to contact because details are out of date.

McLachlan says despite its best efforts, Fisher Funds found it tough trying to educate that group, get them confident in investing and making an active decision on where to put their retirement savings.

“Even we can’t get to a certain group of these people. I just don’t believe the new players are going to be able to do it.

“It will take an extraordinary amount of resources to do it and of course they haven’t priced for using any resources.”

A big factor in the appointment of the new default managers was low fees, resulting in a number of new and existing providers offering passive funds where investments are made based on tracking certain market indices.

While the low fees will mean savings for members, McLachlan says the other side of the coin is that providers will potentially have limited ability to invest in other services.

“The other side of low fees is you can’t invest in all those other services to the extent that you need to. And even if you do, I’m not sure that any amount will get to a group of these.”

McLachlan believes KiwiSaver has been a success, although he suggests it could be improved by changing the incentive to get more people contributing regularly.

“I think the one thing that is not working well is the government contribution – that costs the government – I know they allow hundreds of millions for that a year – I don’t think that is good government spending in my opinion.

“We still have 40 per cent of New Zealanders not contributing to their KiwiSaver. Everyone talks about the 3 million people in KiwiSaver, but around 40 per cent are not contributing. Who is picking up that $521 [annual government contribution]? People like me.

“Personally, I think the hundreds of millions of dollars – I think if you looked at that in a far more targeted way and said how could we use that money to drive better outcomes, I think you would spend it in a better way.”

He is also keen to see the minimum contribution rate rise, but won’t be drawn on how much it should increase to.

“Our average client is contributing a bit less than 4, about 3.8 per cent – add that to the employer’s 3 per cent and you end up with a number that is 50 per cent less than Australia and obviously theirs is compulsory and is stepping up.

“The way I look at it is, clearly we need contribution rates to increase. We need to look at what we have to do as a society to make that happen – one option is compulsion; if compulsion is not the answer then better use of the incentive could be another.”

But he says KiwiSaver shouldn’t be looked at in isolation as it makes up just one part of the whole retirement policy.

Fisher Funds’ other managed funds business is outpacing the growth of KiwiSaver and McLachlan doesn’t see that changing, even with the much-predicted rise in interest rates.

“I think interest rates would have to go up a long way to suddenly have a structural change in the market. Our view at Fisher Funds is we will see some increase in interest rates but inflation is not going to strongly rebound, and one of the reasons for that is the sheer volume of debt that is out there.

“I think that will act as a natural depressant on interest rates into the future, so therefore we don’t see that the structural change we are seeing between the term deposit market and managed funds, we don’t see that turning around any time soon.”

The retail managed fund market in New Zealand is growing but remains quite small when compared with the amount Kiwis have in the bank. McLachlan estimates it is about $35b compared to household deposits which remain high at $125b or so.

“It is relatively small – that is why you don’t need lots of money coming out of term deposits to make a big difference to us.”

While growing pains might be Fisher Funds’ biggest challenge, outside of that McLachlan says the whole investment market faces the challenge of educating investors.

“Markets don’t always go up and what we have got at the moment is almost euphoria around investment returns in equities – markets go up, markets go down, you have to invest for the long term and we see a lot of short term behaviour going on at the moment.

“We believe ourselves and the whole industry have a job to educate people around what it means to be an investor, which is around looking at long term opportunities.”

Bruce McLachlan


Chief executive Fisher Funds




Kāpiti College, Bachelor of Commerce and Administration at Victoria University


Began as school leaver at the Reserve Bank when they took students fresh out of high school. He studied for his degree at the same time and stayed there five years. Worked in banking for National Australia Bank and was then a general manager at Westpac for 11 years before becoming chief executive of The Co-operative Bank in 2012. Became chief executive of Fisher Funds in April 2017.


Married to Sandra for 35 years with three children -one son is an engineer in Holland, a daughter works as a brewer at the Garage Project in Wellington and another son works in finance in Auckland.

Last movie seen?

James and Isey

Last book read?

A Promised Land by Barack Obama

Last holiday?

Matapōuri, but is hopes to escape to Rarotonga next month

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