Ron Hodge

Digital wealth provider InvestSMART has announced an industry-first pricing model that will enable advisers to offer their clients access to diversified portfolios at a fraction of the cost.

Using the InvestSMART’s recently launched Professionally Managed Account (PMA) platform, investors will pay no more than $451 per annum, regardless of the amount they invest.

Fees start at just $99 per annum for clients with lower balances of $10,000 to $18,000, capped at $451 for those who invest over $82,000, excluding brokerage costs and indirect costs.1 Investors can also benefit from low brokerage costs of $5.50 or 0.11% (whichever is greater) on buys and sells.

Commenting on the unique pricing structure, InvestSMART CEO Ron Hodge said: “We know from our discussions with financial advisers that servicing a broad range of clients in a cost-effective way is an ongoing challenge for the industry.

“This platform can assist advisers in delivering personalised service and value for money to all, from lower balance clients through to the more sophisticated.”

Personalised portfolios

Advisers can combine the underlying model portfolios in any proportion they choose, creating a portfolio that is tailored to their clients’ individual investment objectives.

“We are getting a lot of interest from advisers who would like to use the platform to run their own portfolios for their clients. InvestSMART PMAs cater for all types of financial advice businesses, allowing advisers to outsource investment management or take a more hands-on approach.”

Under InvestSMART’s PMA model, investors hold their shares directly, with an individual holder identification number (HIN) providing full transparency over the underlying assets. This differs from the traditional Separately Managed Account (SMA) model, where shares are held by a custodian.

“The HIN-enabled model is not only cheaper and less complicated but also offers real-time transparency, making it easier for advisers to keep track of their clients’ holdings,” Mr Hodge said.

In addition to the capped pricing, InvestSMART’s PMA platform gives advisers complete visibility over their clients’ portfolios. Through the PMA platform, advisers have the ability to generate reports and tax statements and can easily track transactions within the portfolio. They can also offer their clients 24×7 access to their portfolio with their own login.

“With improvements in technology bringing down fees across the board, we will continue to look for new ways to help advisers lower the costs of investing for their clients,” Mr Hodge said.

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Ron Hodge

New research from digital wealth provider InvestSMART is putting the spotlight on the devastating effect high fees and costs can have on investor nest eggs.

Data modelling in InvestSMART’s new paper, How fees can destroy your wealth, shows someone who had invested $100,000 in Australian shares over the 30 years to June 2018 at a fee of 0.5% would have $1,207,807 at the end of the period, while a fee of 1.5% would have netted them just $896,508^[1] – almost 26% less.

From financial advice fees to platform and fund manager fees, the total costs involved in investing are having a significant impact on investment outcomes.

Commenting on the findings InvestSMART CEO Ron Hodge said in most cases, fees rather than returns make the biggest difference to investors’ quality of life in later years.

“What we found is that many investors are paying for outperformance and getting the opposite. Our research shows that on average fund managers are underperforming by the amount of their fees,” he said.

“We want to help investors to understand the depth and the extent of the fees they are paying and the impact it has on their savings over time, because a small number can make a big difference.”

The effect of ‘fee stacking’

According to Mr Hodge, the high total costs of investing are caused by ‘fee stacking’ – an accumulation of apparently small fees including financial advice fees, implementation fees, platform administration and investment management fees, which can easily add up to 2% per annum.

“The impact for investors is huge. The money is lost to fees, and the corresponding loss of the benefits of compounding ends up in the pockets of the middlemen and women of finance,” he said.

Mr Hodge encouraged investors to do their homework when it comes to fees, many of which are avoidable or reducible.

“There are now plenty of low-cost alternatives to financial advice, including scaled advice offered by super funds and independent research.

“Across the board, product fees are also coming down. If you’re heading down the passive route, just look for a low fee and if you prefer an active manager, make sure it has the performance track record to justify the fees being charged,” he said.

Take action

InvestSMART offers a range of products and resources to help investors to reduce their total costs of investing. These include a popular free online Portfolio Manager; low fee investment products independent research from an experienced investment team; and Compare Your Fund, an online resource that allows investors to compare the fees and performance of managed funds and superannuation funds.

“As technology continues to level the playing field for investors, we believe there is no reason anyone in this day and age should be paying excessive fees,” Mr Hodge said.

“That is why InvestSMART is currently investing heavily in a range of technology-based products to help investors lower the cost of investing.”

Download the paper, How fees can destroy your wealth here.

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[1] InvestSMART data, based on the average annual return of 9.2% p.a. over the 30 years to June 2018

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Ron Hodge

Digital wealth provider InvestSMART, has called on the finance industry to stop confusing Australians with unnecessary jargon and to keep things simple.

InvestSMART has this week launched an enhanced offer and new-look brand as part of its mission to provide all Australians with access to the advice, tools and investment products they need and want.

The move follows quantitative and qualitative research* of over 1,600 InvestSMART members, which showed a strong preference for independent financial decision-making. The findings showed 96% like to be in control of their financial decisions and 74% prefer to do their own research. The qualitative survey also uncovered a wariness and, in some cases, an outright rejection of seeking financial advice, with fees and opaque commission structures among the biggest concerns.

InvestSMART CEO, Ron Hodge, said the current regulatory environment was only likely to further contribute to questions around trust.

“The Royal Commission has highlighted some questionable and unethical behavior from some well-known organisations.

“Australians have had enough of the finance industry using jargon and unccessarily complex ways of showing critical information. Our re-brand, new website and enhanced research services are all about keeping things simple, and being a trusted voice in a sea of uncertainty,” he said.

Useful services to help Australians get ahead

InvestSMART’s recently launched Compare Your Fund tool which allows investors to easily compare the fees and performance of nearly all managed funds, superannuation and pension products in Australia. The free to access tool analyses the long term performance of 9,580 funds against peers and industry standard benchmarks, and also allows investors to see the full cost of fees of each fund.

“Just as Australians are wary of the concept of fees for no advice, the Compare Your Fund tool exposes how some fund managers may be charging fees for underwhelming performance,” said Mr Hodge.

Additionally, the intuitive HealthCheck function of InvestSMART’s free to use Portfolio Manager, provides investors with a simple way to track their investments and rebalance their portfolios to meet their risk tolerance and financial objectives.

“These simple and easy to use tools are just some examples of how we are putting the power back into the hands of the investor to help Australians grow and protect their wealth,” said Mr Hodge.

As part of the re-brand, InvestSMART has embarked on an extensive multi-channel advertising campaign, which is set to be rolled out nationwide over the coming months.

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