Chanticleer channels the MB fund

Shout out to Chanticleer this morning in the AFR (channeling the reasoning behind the MB fund) and talking about the problems with financial advice:

… it provided a stark reminder of why the integrated advice model of the major banks cannot survive.

Argo and WAM Leaders stand for the sorts of things banks struggle to offer through their integrated advice models – transparency, accountability, low costs and hands-on control of investments.

Under the integrated financial advice model there are layers of different fees including adviser fees, platform fees and investment management fees adding up to 2.5 per cent to 3.5 per cent.

The fees are usually as follows: an adviser charge of 0.8 per cent to 1.1 per cent, a platform fee of between 0.4 per cent and 0.8 per cent, and managed fund fees of between 0.7 per cent and 2.1 per cent.

These fees are not only opaque, they are sufficiently high to handicap the ability of the client to quickly earn real rates of return.

A client seeking advice from a bank-controlled financial planner is likely to find themselves with a bunch of proprietary managed funds sitting on a bank-owned investment platform.

Now, fees aren’t everything. But 3.5% in fees in a low-return world is a performance killer.

Chanticleer goes on to channel more MB philosophy:

It is noteworthy the truly independent financial advisory firms in Australia offering separately managed accounts have done everything in their power to avoid using managed funds.

They have made exceptions for international share investments, but that is changing as platform providers are increasingly offering direct international share investment.

Tomorrow we are going to welcome Tim Fuller, our structuring and advice expert to the MB blog. Tim is going to write more about the importance of getting the investment structure right and tomorrow is at the differences between the various superannuation options.

What is the MB Fund?

  • Outsourced managed account platform – full transparency into what is in the portfolio
  • Direct Australian shares, direct bonds so removes a layer of fees
  • Direct international shares for larger accounts (Alphabet trades at over AUD1,000 – you can’t own half a share)
  • Low fees
  • Advice is optional – don’t pay for it if you don’t need it

Damien Klassen is Chief Investment Officer at the MB Fund launching in April 2017. Register your interest now (if you haven’t already):

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  1. Are you guys going to be better than Fat Prophets and the Switzer guys who are also launching new funds at the moment (albeit through listed funds I think)?

  2. boomengineeringMEMBER

    Economists don’t make the best investors, but at least you guys are aware of reality and always having been a property/business man have to trust someone in a field I’m not familiar with. Bank or property is not where to park money today.

  3. The MB Fund is a strategic asset allocation – a wholly failed and increasingly discredited method for constructing a portfolio for the purpose of saving for one’s retirement. The SAA method is characterised by being (i) over-reliant on equities to drive the growth of the portfolio, poorly diversified (with no prioritisation of any diversification benefit and making little to no use of the most useful diversifiers of all – manager strategies), reliant on a crude long-only buy-hold-hope strategy (truly guys…if investing were that simple, everone’d be filthy rich), riddled with a host of ‘constraints’ that make it nigh on impossible for even the most talented of managers to add value in excess of the fee hurdle, no matter how small.

    • Damien KlassenMEMBER

      Trolling 101.

      Make up a new fact (we have never said the fund is SAA because it isn’t) and then proceed to attack your own facts.

  4. boomengineeringMEMBER

    When I was in the gym business a client had to give a investment seminar and mentioned diversification. I responded ”diversification?” DIVERSIFICATION IS FOR COWARDS” He laughed and conveyed the message in his seminar which no doubt got some laughs.
    If you diversify too much you lose your finger on the pulse and risk being out of touch, a recipe for a dull investment.

    • Damien KlassenMEMBER

      As we are looking to run separately managed accounts for each investor with the stocks/bonds held in your name we have considerable flexibility. The plan at the moment is to give you the opportunity to screen out stocks that don’t meet your ethical standards.

      • Hi Damien,

        Have you guys figured out the minimum amounts? And what’s for guys (like me) who cannot easily pony up the required amount?