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The majority of Stash’s revenues are generated through monthly subscription fees starting from $1 a month.
Investment platforms face fee challenge, AFR Mar 29th


At the recent AFR Business Summit former Macquarie Bank CEO Nicholas Moore commented that “we live in a world where the marginal cost of many things…is zero because of ever-increasing levels of software intensification. That means rising demand doesn’t feed through to rising inflation as it once did.

On almost the same day another Macquarie alumni – Ed Robinson – was also being profiled in the AFR.

And the two conversations are inextricably linked.

Robinson is the US-based founder of Stash, an online investment platform that uses a subscription-based revenue model (rather than the traditional fee structure of platforms such as Netwealth, Hub24 et al, which charge a percentage of assets under management).

Stash has 5 million customers, and is reported to be adding some 6,000 per day.

While Stash is focused for the most part on a younger demographic, the microeconomic implications of this shift should not be underestimated, because it will – in due course – result in unprecedented per unit price deflation within the wealth management space.

Deflation and the Opportunity Cost of Capital

To understand why Stash is charging so little one needs to understand what has been happening to the opportunity cost of capital in the 21st century.

Stash has deployed USD230 million in capital, and has raised a total of $400m.

But as a consequence of 20 years of expansionary monetary policy, the opportunity cost of all that capital is now approaching zero.

The intention of that monetary policy – both here and around the world – was to encourage exactly the sort of process that Ed Robinson has been responsible for, but with the expectation that it would lead to inflation (which has historically been correlated with greater levels of investment activity).

However – as Mr Moore has so elegantly pointed out – what those policymakers never understood is that the progressive digitisation of the economy means that the weighted cost of capital now makes up most – if not all – of the marginal cost of many products and services.

(As per the most recent Newsletter – exactly the same process is unfolding in the energy sector).

The microeconomic result is quite straightforward:

As marginal cost approaches zero, prices follow suit.

(The speed and scale of disruption has been amplified by the decline in switching cost, which makes consumers far more likely to shift).


If Nicholas Moore and Ed Robinson were to run into each other, they would have much to talk about.

And by the time they had finished, I suspect Mr Moore would have joined even more deflationary dots than he has to date.


As the AFR article illustrates, mainstream journalists have become adept at writing articles about disruption.

But unfortunately they are using that term to describe a journey, without any explanation of the ultimate destination (or its implication for public policy).

Until those journalists begin using the word ‘deflation’ in the same manner, we will be unable to achieve a broader understanding of what that destination actually looks like.


Ashley Porter
Managing Director
Mclowd Pty Ltd