Welcome to the Mclowd Community Newsletter

Telstra shares have fallen from $6.74 on February 4th 2015 to a near seven-year low of $2.85 on Friday. Some $46 billion has been wiped out – wealth that would have helped fund many Australian’s retirement.
The call on Penn’s $46 billion problem, AFR May 19th


If someone had – a few years ago – described to you a future where mobile phone plans cost less than $10 per month (inclusive of unlimited data), most people would have been incredulous.

But we now live in a world where skepticism has become a dangerous sentiment.

Having resold Telstra spectrum for many years, on May 9th TPG announced the upcoming launch of its own mobile phone network.

Customers will pay nothing for the first six months, and just $9.99 a month thereafter.

For many consumers who are currently paying $60 per month, the prospect of paying just $60 for an entire year will be too much to resist, and wholesale disruption of the value chain is now inevitable.

Building a mobile phone network from scratch today means deploying a fraction of the capital that was originally required. Not to mention all of the other ways in which the world of work has changed in that time: co-working spaces, remote working, crowdsourcing and of course the ubiquitous cloud.

Whether it is capex or opex, the end result of this process of ‘creative destruction’ is very simple:

Prices collapse towards marginal cost.

Trustee Upgrade Path

As flagged in the February Newsletter, Trustee users can now upgrade to the Pro version of the accounting software.

Attracting the same $33 p.a. price point as that available to practitioners, it has the following features included by default:

  • Transactions screen
  • Online lodgement
  • Ad-free interface
  • TBAR

Active users can simply select the upgrade button at the top of their dashboard.

Accounting Software Update

Driven by the requirements of those firms which have scheduled migration from 1 July, improvements to the software are now being deployed on a daily basis.

Recent releases have included:

  • Asset maintenance now supports asset allocation details for Australian managed funds, so users can look-through to the underlying asset classes
  • TBAR has been upgraded to include the lifecycle status of TBAR events so that users can determine which events have been reported (versus those that are pending)

Practitioners wishing to understand the prospective savings can visit the calculator on the website.


The Mclowd Community was established in order to defend retirement outcomes in the face of declining asset prices and nominal yields, just like those being witnessed by the shareholders of Telstra.

In that context eliminating unnecessary costs becomes an imperative. No where is this more obvious than in relation to technology infrastructure (where replacement costs are in freefall, and marginal cost is effectively zero).

Today SMSF practitioners – and the trustees they support – collectively pay nearly $50 million each year to access cloud-based SMSF accounting software.

Just as with Telstra’s business model, this is simply unsustainable, and is reflected in the fact that Mclowd has now signed multi-year licence agreements with various admin firms.


Telstra’s governance structure reflects a golden age that is fast disappearing: one where well dressed executives like Andy Penn hold court in gleaming CBD office towers (unlike entrepreneurs such as David Teoh, who are more likely to be seen in a noisy coffee shop).

Those executives have been responsible for the deployment of vast sums of capital, with little – if any – grasp of the deflationary forces arrayed against them.

In that context anyone who aspires to a comfortable self-funded retirement (as well as those who seek to advise them, or invest on their behalf) needs to understand the role that deflation is going to play in the years ahead.

That the shareholders of Telstra have misplaced $50 billion (and seen their dividend income shredded) is not a microeconomic outlier.

Quite the opposite.

It is a powerful proxy for the fact that every single enterprise faces exactly the same process – and outcome – based on one very simple marker:

Distance from (globally-defined) marginal cost.


Ashley Porter

Managing Director
Mclowd Pty Ltd