Welcome to the Mclowd Trustee User Update.
Regardless of whether they are held in retail, industry or self-managed superannuation, if those assets are to remain inside the system on retirement, lower costs solutions…must be found.
Soaring public debt to hit retirement incomes, AFR Oct 7th
The recent Federal Budget has been widely viewed as ignoring self-funded retirees, who continue to see declines in investment incomes.
As I mentioned in the above AFR article, soaring levels of private – and now public – debt are driving yields ever lower.
While financial advisers tend to emphasise the benefits of a balanced portfolio approach, the reality now is that:
- It no longer matters what asset class is being targeted, nominal yields are increasingly skewed to the low single digits
- For those in pension phase, achieving even this outcome requires consideration of assets that may no longer fit their risk profile (with term deposits at less than 1%, and cash rates now at risk of turning negative)
While the Mclowd Team have shown enormous dedication over a number of years, with limited resources there remain numerous gaps vis-a-vis incumbent platforms.
Although Mclowd has been recording steady organic growth – while relying exclusively on word of mouth referrals – we still lack the resources to respond to Trustee feedback at the speed and on the scale we would like.
While raising traditional equity capital is one option, an expansion of the Mclowd balance sheet at this point would just put upward pressure on prices, when in fact the marginal cost of accessing the core software is zero.
As a consequence we have decided to run a Trustee-focused crowdfunding campaign. (For those not familiar with crowdfunding this Wikipedia post will be of interest).
The goal of the campaign is to provide the funds necessary to deliver on the feedback received across more than 4,000 registered Trustee users, with a focus on functions:
- Which are accessible within the Free Forever version of the software
- Hence will benefit all Members of the Community
Speaking of his participation, Victorian Trustee David Bennett had this to say:
“We need to back the Mclowd Team so that they can build on the current foundation. The software needs to work just as well with bonds, managed funds or crypto as it does for equities, and just as well with NZD or USD as it does for assets denominated in AUD.
The Team have a proven track record spanning seven years. They just need the funding to deliver a more flexible product, and one that is comparable with the more expensive solutions in the market.”
We have set a target of raising $50,000, and a list of the projects to be funded can be viewed on our website, including:
- Further improvements to support for bonds
- Tax Return Report
- Improved editability for income and expense transactions
- Automation of year end ECPI calculations
- Investment Strategy Report
- Upgrade of the asset architecture for managed funds and alternative assets
There is no lower limit as to contributions, and the campaign will run until the end of November. This timing will allow us to plan our 2021 resourcing – and hence product development goals – with greater confidence.
Recent Deployments and Lodgement
The Mclowd Team continues to deliver as much as we can to enable more Trustees to manage their fund on Mclowd, while also leveraging the Marketplace in order to lower the cost of related services.
Commenting on his use of the Marketplace, Sydney-based Trustee Doug Turner had this to say:
“Users should be aware that there are a number of practitioners who can arrange lodgement of the SMSF tax return from as little as $132.
For Trustees struggling with this process I found this to be a very cost effective alternative, with the added benefit of removing the 31 October deadline.”
Details of recent deployments are summarised in the September quarter Release Notes which are now available from the website.
Mclowd was established because of the excessive fees my mother was being charged for the administration of her SMSF.
Excluding regulatory costs, she has been managing a simple fund over many years for just $400 per annum:
- Audit fee – $330
- Software / data feeds – $70
Were it not for Mclowd and that cost structure, the fund would have already been closed and the pension assets removed from the superannuation system altogether.
This is because:
- The income now being generated from those (predominantly fixed interest) assets are insufficient to generate any tax advantage (in fact would not even require the submission of a personal tax return)
- As I mentioned in the AFR opinion piece, there is now almost no prospect of the yield on those assets reverting to any historical norm
By backing the Mclowd crowdfunding campaign, Trustees now have the opportunity to drive the Community forward so that all users have the chance to lower their fees in the same manner, regardless of fund profile.
Mclowd Pty Ltd