NH Investment & Securities revised its terms and conditions for performance fee charges applied to retirement pension robo-adviser (RA) products, saying it would set them by agreement with customers, but the fee rate appears unchanged. The performance fee rate for the related products is 15%, a level higher than the industry average.
According to the financial investment industry on Dec. 11, NH Investment & Securities has implemented revised terms and conditions for its retirement pension RA discretionary service since on the 10th. It uniformly changed the performance fee provision for 20 related products from "15% of revenue above a 0% benchmark return" to "pay a fee agreed with the customer on the portion exceeding the benchmark return agreed with the customer."
The retirement pension RA discretionary service is an artificial intelligence (AI) auto-investing service in which the RA constructs and adjusts a portfolio according to the customer's risk profile in an individual retirement pension account (IRP). Since the end of March this year, investment advisers designated by the Financial Services Commission (FSC), including NH Investment & Securities, Samsung·Quarterback Asset Management, Mirae Asset Global Investments, Fount, and Samsung Securities, have sequentially launched the service. Investors can choose the discretionary fee basis between a flat-rate type or a performance-linked type that charges fees only when revenue is generated.
NH Investment & Securities announced that the revision reflected requests from the Korea Financial Investment Association. Under the Financial Investment Services and Capital Markets Act, performance fees must be calculated in linkage with a benchmark index meeting FSC notice requirements or a benchmark return agreed with the investor. The association conveyed to NH Investment & Securities in June that a definitively fixed 15% fee level could be problematic, and the latest revision reflects that view.
However, the fee rate is the same as before. Also, the revision does not allow investors to choose the fee rate. A NH Investment & Securities official said, "The 'agreement' mentioned in the revised language means agreeing to contract under the relevant terms, including the fee rate, and does not mean the existing fee rate can be changed," adding, "Because the fee rate is part of the common terms, we changed how it is presented by not listing the figure in individual product brochures, in line with the association's view."
Meanwhile, NH Investment & Securities' performance-linked fee is 15% per year, higher than other firms such as Mirae Asset Global Investments (8%), Fount (9.5%), and Samsung·Quarterback Asset Management (10%).