KEYINVEST plans to grow its investment bond business using financial planners, managing director Ian Campbell told Money Management
“Currently, we have $200 million in funds under management in our investment bonds and we plan to double this by 2011,” he said.
“We achieve 90 per cent of the sales of bonds through financial planners, and they will play a key role in growing this business.”
KeyInvest’s biggest segment of the investment business is its funeral bonds, which have $100 million in funds under management.
“Again, financial planners play a key role, as we sell more funeral bonds through them than through funeral directors,” Campbell said.
“Our focus on growing the investment bond market has been supported by inflows of $580 million to these products in the 2006 financial year.
“This suggests these products account for about 10 per cent of inflows into the funds management industry.” Campbell said while superannuation is the main focus for retirement saving, investment bonds play a role in saving for events outside retirement.
“There are events in people’s lives, such as buying a house or a car, that need them to save in a tax effective way,” he said. “Investment bonds allow people to save for these events while getting stock market returns in a tax-effective way. “After superannuation, it is the second most tax effective way of saving.” Investment bonds are not distributed through platforms, as this would create complexity in what is a simple product, Campbell said.
And the company has no plans to enter into that market. “We are a small organisation that doesn’t have large overheads,” he said.
“We don’t need to create our own platform for product distribution as we are on 50 of the top 10 dealer groups’ approved lists.” Campbell said the expansion plans for the company include growing its mortgage business and expanding its retirement home properties in South Australia.
“The retirement living sector offers an opportunity for KeyInvest to create a substantial, profitable business unit,” he said. The company is building a new retirement village in the Adelaide Hills and expanding its McLaren Vale property with an additional 11 units.
KeyInvest was formerly the South Australian friendly society IOOF SA.
Campbell said the company decided to change its name earlier this year to avoid confusion with the listed IOOF company based in Melbourne, which also operates in South Australia.
“There was brand confusion, so we decided to rename the business,” he said.
