Innovate with caution: why start-ups should be wary of bank-led fintech hubs

Sharesight General Manager Doug Morris shared his thoughts on fintech hubs in today’s AFR — Read the full article here

Doug Morris, GM Sharesight (AFR)

Save the date: mFund Roadshow

Details are still pending, but we wanted to give you a heads-up on ASX’s upcoming mFund forum series targeted towards individual investors and financial planners:

Sydney – 26th May 2015
Melbourne – 2nd June 2015
Brisbane – 14th July 2015
Adelaide – 21st July 2015
Perth – 23rd July 2015


Currently, we’re planning on exhibiting and speaking at the Sydney, Melbourne and Brisbane events.

For more information, join the mFund mailing list and follow our Twitter feed.

Thoughts on the Senate Inquiry

Like many of you, we’ve been keeping an eye on the Senate Inquiry in Canberra into problems facing the financial planning arms of Macquarie, ANZ, NAB, and CBA.

Depressing as the individual stories coming out of the hearings are, painting all banks and financial planners as evil is foolish and a bit lazy. On balance financial planning is a good thing. The industry puts Australian families’ money to work in the markets and provides a secure retirement for millions. Sharesight services dozens of financial planning firms who’ve turned to products like ours because they value transparency and do the right thing by the client. Have a look in our partner directory if you want to find a high quality planner. We have several in every major Australian city. However
Australian Coat of Arms

There are undeniably big problems in the industry. Fees have crept far too high (combination of commissions and investment fees), disclosure is inconsistent, and reporting requirements are paltry. Vertical integration makes sense if you’re a bank, but even with the best intentions, putting client money into a bank-built product is at worst incentive laden and at best convenient (due to portfolio admin). Paradoxically, compulsory superannuation creates problems for ordinary savers. With all that guaranteed money coming in, advisers don’t need to hustle for business.

Changing an entire industry overnight and ferreting out all bad actors is impossible, but from our perspective, an area that can be easily improved is reporting.

One of the questions put to banks is whether or not they can identify bad apples before it’s too late. One of the banks even admitted that they didn’t provide documented annual reviews.

We’d argue that a system like Sharesight would go a long way towards solving the current reporting deficiencies. Words like “annual” and “report” are archaic. Showing a client what happened to their portfolio last year is a waste of time.

Here’s an idea for the Senate: mandate a live login to a portfolio. Australian banks’ mobile apps are some of the best in the world. Why can’t their financial planning apps be just as good?

With Sharesight, investors can login and see exactly how their investments are going in real dollar terms. You don’t need to be Warren Buffett to make sense of our interface.

And from the top down, banks and financial planning groups could identify poorly performing advisers, portfolios, and even individual investments with the click of a mouse. Institutions and compliance teams could take a firm-wide view across all client portfolios to ensure they’re within model portfolio rules. This is achievable today with our Dashboard feature and our API.

It’s convenient to conjure up a scene of a smoke-filled board room filled with moustache-twisting fat cats, but the problems facing the financial planning industry today are as much the result of decades of bureaucratic inefficiency and sclerotic technology as they are reckless profiteering. Ironically, from an investing standpoint, this serves as a handy reminder that the big banks are insanely profitable and likely deserve a spot in our portfolios!

As we noted in our response to Cuffelink’s take on the future of wealth management, investor-led advocacy will come from a collection of purpose-built technology working in unison.

Manage your SMSF with Sharesight & Xero

We’re ecstatic that our friends at Xero now support SMSF tax return lodgement. This means it’s even easier for our Australian Pro Partners to use our ecosystem of connected apps to manage self-managed superannuation funds and yet more evidence that unbundling is real and here to stay. From Xero:

With the release of the SMSF tax return for 2014 last week, our essential form types on our Australian Tax roadmap are now completed. We now have Individual, Partnership, Company, Trust, FBT, and SMSF. That means Xero Partners can now use Xero Practice Studio for all of their ATO lodgments.

There are a couple of steps left towards total SMSF automation, such as BAS returns, but you can bet that Xero will keep building out their SMSF feature set – or – specialised partners in their Add-On Marketplace will do the work for them. One area we’d love to see developed is a dedicated paperwork add-on. Such a product could read data from Sharesight and Xero to prep the necessary SMSF paperwork automatically.

Manage your SMSF with Sharesight + Xero

Unless you’ve been living under a rock, you’d have noticed the SMSF acronym dominating the Australian financial services headlines. In their intended form, SMSFs are a win for investors. They represent asset choice, lower fees, and certain tax advantages. They put the individual in the driver’s seat. Unfortunately, so much of the SMSF buzz comes from the big institutions muscling their way in. I scratch my head every time I pass a bus stop and see an ad for one of the big asset managers touting their SMSF product. How could a big bank not cram an SMSF with company-made sausage?

But the more tools investors have at their disposal, the better the chance that SMSFs are wielded in the right way. That is, from the investor up. Someday running SMSF will be as simple as downloading a few apps to your phone. We’re not quite there yet, but it will happen.

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