Sharesies did a PR piece recently stating that their investment platform now has more than 1,500 portfolios with over $1 million invested per portfolio.
To the untrained eye it may appear that Sharesies customers are doing really well and have a lot invested. But right off the bat I can see that 1,500 customers with over $1 million invested each only makes up 0.25% of all Sharesies customers.
Their target market is younger investors who may be more prone to trading and have lower investment balances than the average investor.
Sharesies has more than $3 billion in funds under management and more than 600,000 customers in NZ. If we deduct $1.5 billion for the 1,500 customers with $1 million+ invested, we are left with around $2 billion under management for the remaining 600,000 customers. If we divide the number of customers from the amount under management, we are left with an average of around $3,300 per portfolio.
For comparison, InvestNow has $2 billion under management but only 30,000 customers, for an average balance of $66,000 or so. Simplicity has $8.8 billion under management and 174,000 customers for an average balance of $50,000 or so. Significantly more per customer than Sharesies.
That in itself is of course fine. But Sharesies pricing structure tends to be better for investors with higher balances and almost punitive for those with lower balances. They are expensive for their target market.
Using our Sharesies pricing plan calculator, we can see that an investor with $3,300 invested in US or NZ shares or funds pays around 0.76% in exchange and transaction fees under the pay as you go plan. Management fees to be added to that amount. 1.7% fees on the $3 plan, 3% fees on the $7 plan, and 5.4% fees on the $15 plan.
Plus add the management and other investing fees and you are close to 1% fees or more for the cheapest option.
That is incredibly expensive.
1% in fees at an amount of $3,300 invested, when you could be paying less than 0.2% with the likes of Simplicity and some InvestNow funds is significant.
With such a low average investor balance compared to alternatives like Simplicity and InvestNow, Sharesies should not really be crowing about a miniscule percentage (0.25%) of investors who have $1 million invested. If they truly believe in the everyday investor, they should help them out with more competitive fees. Otherwise their actions are the opposite of their words. There is a mismatch.
Sharesies have done nothing to help out their target market from a cost perspective. In fact, recent pricing changes have only made it worse for their average customer.
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