Welcome to the Mclowd Community Newsletter
The result is that consumers are expected to underwrite NBN Co’s profitability…in a world where consumers expect, rightly, prices to go down rather than up.
Jennifer Hewitt, Turnbull to pay the price for NBN fail, AFR 26 July
Introduction
At the beginning of June Blackrock announced it was slashing the cost of various ETF products by up to 70%.
Now Fidelity has fired the next round in this brutal price war, last week offering new index funds with no fee at all, while at the same time:
- Reducing fees on other index funds by an average of 35%
- Allowing customers to open an account with no minimum balance
Of course it will come as no surprise to readers of the Mclowd Community Newsletter that we live in a world where prices across the asset management industry are in freefall.
In fact, I’m guessing that a large number of subscribers could even tell you why this is happening:
Because the globally-defined marginal cost of accessing all of these products is approaching zero.
Accounting Software Update
Slashing and burning in this manner must be quite painful for incumbents, and is all in the name of attracting assets.
But of course if – like the Mclowd Community – you have anticipated all of this rampant deflation from inception, attracting assets does not involve any gnashing of teeth.
In fact, billions of dollars of SMSF assets are now managed on the Mclowd platform without $1 of marketing expenditure ever having been required.
This growth in users, assets and resulting revenues is now making it increasingly easy to:
- Respond to feedback from an active user base that is now measured in the thousands
- Deliver scheduled improvements to functionality
In the coming months the Mclowd Community will begin to see the first waves of automation appearing within the interface. First in the form of allocation rules, and eventually AI-powered data matching.
All at globally-defined marginal cost.
Conclusion
Deflation is a key driver of structural change across the economy.
In fact, on the same day that Jennifer’s article appeared, Fairfax finally raised the white flag and announced its intention to merge with Nine Entertainment Co.
The proposed transaction has been triggered by deflation in the media / publishing industry, driven by the fact that Google and Facebook (in particular) operate closer to globally-defined marginal cost than Fairfax.
As the Mclowd Community continues to grow, it will drive precisely the same structural change across the SMSF industry.
Regards
Ashley Porter
Managing Director
Mclowd Pty Ltd