What makes OpenInvest different?
There are lots of people and organisations who pitch to investors that they can help. Some of them are great, others not so much. OpenInvest is the first attempt in Australia to bring some of the world’s most credible and experienced investment managers together in the one place so that you the investor can compare them, and select the one you like the best. Whilst these 'direct platforms' do exist in other countries, OpenInvest is unique in committing to always being free of any conflicts of interest.
How is OpenInvest different from using a stockbroker?
A stockbroker will personally help you manage your portfolio, calling you to discuss possible trades, and making those trades when you agree with their recommendations. The stockbroker may or may not know about asset classes other than Australian shares, and may or may not know about other investments you are making, e.g. with another stockbroker. A stockbroker will generally charge you for making share trades. OpenInvest recognises the value in taking a whole-of-portfolio approach, outsourcing management of your portfolio to a company expert in asset management. The focus is on the whole portfolio, not individual trading, therefore you are charged for the management of the portfolio, not brokerage for share trading.
Why doesn’t OpenInvest offer its own model portfolios?
If OpenInvest offered its own model portfolios we would have a conflict of interest in that we would benefit from investors selecting our model portfolios instead of any of the available investment managers. Therefore, it would be hard for us to resist encouraging you, by subtle or non-subtle means, to choose our model portfolios. The financial services industry is full of conflicts of interest, which is why we have established OpenInvest with a commitment to investors and to investment managers that we will never offer our own model portfolios.
What does OpenInvest get out of this?
OpenInvest is a commercial entity, that receives a fixed and equal component of the management fee paid by every investor to their chosen investment manager. We use this to run the technology, reporting, operations and legal compliance of OpenInvest.
Why don’t you offer Ethical model portfolios?
OpenInvest has gone live with the four most obviously needed model portfolios. However, we will listen carefully to our clients and respond with innovations and new model portfolios that clients want. This includes ethical model portfolios.
How much does it cost to use OpenInvest?
The OpenInvest Administration Fee is 35 basis points, or $35 per annum for every $10,000 invested. This fee covers all the account operation and oversight, custodian, and audit fees, as well as brokerage, which is paid by OpenInvest rather than charging investors for transactions. The OpenInvest fee also pays for the legal structure, technology, and reporting provided by OpenInvest.
The OpenInvest Fee is currently being waived for the first 12 months of your investment (our system will reflect the fee being deducted and refunded to you).
There is also an Investment Manager Fee, which varies by model portfolio. This covers the professional management of your portfolio, including the expertise, intellectual property, research, analysis, modelling, asset allocation, and buying and selling decisions by your investment manager.
The only additional costs are charges that may be levied within some ETFs and managed funds, if those are part of the model portfolio you choose. These underlying costs are the Indirect Cost and Transaction Cost, which occur within those funds rather than within your investment account (see our Fees page or the PDS for further details).
How do OpenInvest’s fees compare with other fees?
It’s hard to compare like-with-like because there is nothing like OpenInvest. The dollar amount of our fees is only half of the equation because what you get for those fees is significantly different from what you can get from any other investment structure.
However, if we look at four different alternative investing scenarios, you can get a sense of the charging basis under each one:
- A stockbroker – Generally, an investor pays for each and every transaction. These fees can add up to a significant amount. There are often additional fees for portfolio administration and tax reporting services, however there is no professional management.
- A financial planner – Generally, the investor pays the planner as well as one or more investment managers and a platform fee to cover the cost of administration of the portfolio. Such fees can often add up to about 2% of your portfolio value.
- Online broker – With an online broker you pay only for each trade you make. If you don’t trade often, you don’t pay very much. Of course, as you have no one to advise you, you may well be in a poorly diversified portfolio, or holding onto stocks that are falling, without knowing if you should sell.
- Pick your own managed funds - If you invest in managed funds you will get the benefit of professional investment management. However, it’s not always easy to access these products, and even if you can, the fees are higher for individuals than institutions and it may not be clear how much you should invest into each fund in order to address each asset class.
Can you explain what the fees are for?
The OpenInvest Fee is the administration fee which covers account setup, operation and oversight, custodian, and audit fees, as well as the legal structure, technology, and reporting provided by OpenInvest, as well as OpenInvest executing the decisions of your chosen investment manager. This fee also covers brokerage, which is paid by OpenInvest rather than being charged to investors on a transactional basis.
The Investment Manager Fee covers their professional investment management expertise, intellectual property, research, analysis, modelling, asset allocation, and buying and selling decisions.
The Indirect Costs are the costs of any underlying funds used by your chosen investment manager in your portfolio, while the Managed Fund Transaction Costs are one-off charges for buying into or selling out of a managed fund (both charged within those funds).
Why do you say OpenInvest’s fees are low?
We’ve started by consolidating the typical value chain of investing – having recognised that there are generally too many people and transactions involved in connecting an investor with an investment portfolio - while still maximising the value investors receive.
Where investors have a good idea of what they want, we’re offering access to professional investment managers without all the in-between practitioners and transactions and their associated costs and fees.
For investors who are accustomed to doing their own trading, unadvised, using OpenInvest costs a bit more, but with significant value for those fees.
OpenInvest believes that the advantages of having extensive professional resources in your corner, including the greater peace of mind you get from mitigating the risk inherent in all investing, make our fees incredibly reasonable.
Additionally, unlike most other platforms or methods of investing, OpenInvest covers the cost of brokerage and ensures you keep 100 per cent of any interest your money earns.
How do I pay my fees?
Your fees are based on the daily value of your investment account, calculated monthly in arrears, and deducted by OpenInvest directly from the cash account which is part of your investment account.
For the first 12 months of your investment, the OpenInvest Fee will not be charged (although, for complete transparency, our system will reflect the fee being deducted and refunded to you).
How OpenInvest Works
Why do I have to invest into OpenInvest in order to access my preferred investment manager?
OpenInvest provides the legal structure, technology, trading and operations to ensure your portfolio always matches what your chosen manager wants it to be. You can’t obtain the portfolio directly from your manager because they don’t provide these functions. They are not expert in these things, only in making the right decisions about investing, just as OpenInvest isn’t an investment manager, but is a technology and operations business. The right way to think about it is that you obtain a managed portfolio, together with updates from your chosen manager, via a partnership between your chosen manager and OpenInvest.
Does my chosen investment manager communicate with me regarding their investment recommendations?
Your chosen investment manager doesn’t make recommendations to investors, it tells OpenInvest what changes to make to a model portfolio, and OpenInvest makes those changes to every investor who has selected that model portfolio. Of course, your chosen manager will always keep you up to date as to why they are making changes, and how they are thinking, generally, through update posts in the investor portal.
If I’m just dealing with an investment manager, what does OpenInvest do for me?
OpenInvest provides the legal structure, technology, trading, operations, reporting and legal compliance to allow your portfolio to be managed by your chosen investment manager.
What are Insights about?
Insights are various articles and videos by investment managers explaining interesting things in the world of investing, particularly the things they think are most important that are affecting how they are investing their model portfolios.
What happens if I register as a Registered User?
By registering as a Registered User you will get the ability to configure your own OpenInvest experience, only seeing Insights on the issues and topics you find interesting and from the investment managers you have decided to follow. You can, of course, update your preferences at any time. There is no charge for accessing OpenInvest in this way.
What is the OpenInvest Portfolio Service?
When you invest via the OpenInvest Marketplace, you are investing in the OpenInvest Portfolio Service ARSN 628 156 052 (Service), an IDPS-Like managed investment scheme that is a financial product registered with ASIC under the Corporations Act. We act as the responsible entity and trustee of the service which means we have a fiduciary duty to you – including to act honestly, with due care and diligence, and in your best interest as an investor.
How does the OpenInvest Portfolio Service work?
The Service provides you with an Investment Account that contains a portfolio of investments that is professionally managed by your chosen investment manager and in accordance with your chosen investment strategy, referred to as a Model Portfolio. Unlike most other managed investment schemes where investors are issued units in a pooled fund, the portfolio of investments in your Investment Account is beneficially owned by you and kept separate to the portfolios of other investors. This means you can view the investments in your Investment Account, change Model Portfolios and contribute to or withdraw your investment at any time.
Your chosen investment manager will manage the assets in your portfolio in accordance with the parameters in each Model Portfolio. Where the investment manager believes it is necessary to make a change to the assets in a Model Portfolio, it tells OpenInvest what changes to make, and OpenInvest makes those changes to the accounts of every investor who has selected that portfolio. This is why we have chosen to use an IDPS-Like managed investment scheme as the investment vehicle for the OpenInvest Marketplace. It allows us to trade on your behalf, in accordance with your chosen Model Portfolio, without having to seek your instructions every time the investment manager wants to make changes to the portfolio, thereby ensuring that your investments are updated quickly and efficiently as market conditions change.
How are my assets held and who ensures everything is handled properly?
When you invest with your chosen investment manager via OpenInvest, you're investing in the OpenInvest Portfolio Service, which is registered with and regulated by ASIC and subject to all the protections afforded under Australian law.
Your investment is administered by OpenInvest and held on trust for you by an independently-appointed custodian, Sandhurst Trustees Limited (part of one of Australia's most respected banks, Bendigo and Adelaide Bank). This means your assets are held for safekeeping, on your behalf, by Bendigo Bank and you hold a right to receive the benefit of the investments in your Investment Account. While investments are held and traded at a ‘pooled’ level (meaning many small investments are handled as one large one) each investor has a separate Investment Account which reflects their position only.
As required by law, the OpenInvest Portfolio Service is regularly audited by Deloitte Touche Tohmatsu, one the world's largest auditors. As an independent and external auditor, Deloitte is responsible for, among other things:
· reviewing our financial statements;
· auditing our compliance with our Australian Financial Services Licence; and
· auditing our adherence to the compliance plan for the Service.
Deloitte also has an obligation to report to ASIC if it believes that OpenInvest has significantly contravened the law. Reports from each audit will be made available to investors, in accordance with OpenInvest’s principle of transparency. All investors will be able to see that everything is being done ‘by the book’.
How do I know what model portfolio category is best for me?
This is the most important part of using OpenInvest: selecting the category that’s right for you. We provide more information to help you make the right decision, in our Learning Centre.
OpenInvest is not able to discuss your circumstances with you and help you decide, as this is “personal financial advice”, something we are not licensed to provide. In any event, this sort of assistance really is better provided by a qualified person. We suggest that, if you are in any doubt, you should talk to your accountant or seek the services of a licensed financial adviser.
Should I consult my accountant (or a financial adviser)?
Yes, by all means, discuss OpenInvest with your accountant, or even a financial adviser if you have one. If they want to talk to us to better understand who we are and what we do, please ask them to get in touch with us at email@example.com.
What sort of returns should I expect?
Can I see the past performance of each model portfolio?
We are collecting the data to present the past performance of each model portfolio, however, we won’t add this information to the interface until all model portfolios have been available for long enough to make that data meaningful (rather than potentially misleading, as a short-term sample might be).
Why can't I invest when I have less than $20,000?
We’re developing the capacity to service smaller investment amounts but, for the moment, we have a minimum portfolio size based on allowances for minimum trade sizes and model portfolio compositions so as to ensure what we offer provides a desirable cost-benefit outcome for investors.
I currently don't have an SMSF but want to establish one. Can OpenInvest help me to establish my own SMSF?
OpenInvest doesn't establish SMSFs or provide fund administration and compliance. Your accountant should be able to help you with this. If you don't have an accountant, you might like to contact our friends at Selfmade. But please be aware, an SMSF is not for everyone. The SMSF Association provides useful information to help you decide if you should establish your own SMSF.
Why should I pay for an investment manager?
Investment management companies are full of educated, trained, experienced professionals, whose job it is to study data and trends and assess different economies and companies in order to make the right investment decisions. By selecting an investment manager to manage your portfolio, you maximise the chances you will obtain a superior return and grow your wealth while minimising the risks inherent in investing as well as being kept informed and up-to-date about your portfolio.
Can I just go directly to my preferred investment manager?
Some investment managers also have advisers they employ, so you can go directly to them to look after your portfolio. But you will also have to pay for the cost of this adviser. You can access some managed funds either online or via the ASX, however, in this case, the investment manager is managing each managed fund separately, not as an entire portfolio. The provision and aggregation of such additional services is what sets OpenInvest apart.
How have you chosen which investment managers are on OpenInvest?
We have chosen some of the best, most highly qualified investment managers, based on their track records, depth of resources and commitment to providing not only managed portfolios, but also clear and transparent explanations to investors.
Will all of these investment managers always be available on OpenInvest?
Yes, that is our intention and the intention of our participating managers. However, OpenInvest reserves the right to remove any manager that is no longer willing or able to meet their commitment to investors. If that were to happen - and, to be clear, it's extremely unlikely to occur - we would contact any investor with that manager and give you the choice of selecting another manager or taking your assets off the OpenInvest platform.
Will you add new managers?
Yes, it is our intention to provide more choice by adding more managers whenever we can. There are a number of major investment management companies getting their model portfolios and content together so they can join OpenInvest as soon as possible.
Can I change from one investment manager to another?
Yes, you are never locked in to your chosen manager.
Can I change from one model portfolio to another?
Yes, if you feel your circumstances have changed or you perhaps weren’t in the right category to begin with, it's very easy to change.
Can I cash out and leave, or take my securities and leave, at any time?
Yes, you are not locked in. All of the securities in your portfolio are yours, and if you decide to leave you can take them with you or instruct us to sell them on your behalf and transfer that amount to your bank account.
What happens to my money if something happens to OpenInvest?
Your securities are YOUR securities, not OpenInvest’s. They are held on trust for you by the custodian, Sandhurst Trustees (a wholly-owned subsidiary of Bendigo and Adelaide Bank). If in an extreme situation something happened to OpenInvest, or even if something happened to Bendigo and Adelaide Bank, they remain your securities and cannot be touched by anyone else.
How can I keep track of my portfolio?
OpenInvest provides an intuitive Investor Portal so you can log in at any time and see at a glance:
- the overall status of your investment account
- the composition of your portfolio
- how your portfolio is performing
- updates from your investment manager
- insight articles and videos from your investment manager
- any communication from OpenInvest
- upcoming events you might be interested in
Are the securities in my portfolio held on my own HIN?
We use a single Holder Identification Number (HIN) as it creates a number of efficiencies for investors while you retain flexibility and control. OpenInvest consolidates the shares held by all investors on a special purpose HIN. This means we are always able to trade efficiently, based on instructions from your selected investment manager, we minimise trading and settlement costs on your behalf and keep your portfolio efficiently aligned with your manager’s model. This allows OpenInvest to offer you the service for a simple, low fee with no brokerage.
As all of the shares, funds, and ETFs held by all investors in OpenInvest are held on trust by the custodian, you can be assured that your assets are safe and readily available to you, and that you always know which shares, funds, and ETFs are yours.
How do I know they really are MY securities? How do I know they’re safe?
You can always see via your Investor Portal which shares, funds and ETFs are yours, how much you paid for them, how they’re performing, what your tax position is, etc. They are YOURS. It's just that they are legally held and protected by the custodian, Sandhurst Trustees (a wholly-owned subsidiary of Bendigo and Adelaide Bank), to ensure we can efficiently manage everyone’s portfolio based on directions from investment managers.
Who looks after my portfolio, OpenInvest or my chosen investment manager?
We both do. Your chosen investment manager is making all of the decisions as to what to buy, hold or sell. But OpenInvest does all of the trading based on instructions to us by the investment managers. OpenInvest is also responsible for all of the legal compliance, technology, and tax and portfolio reporting.
Can I trust OpenInvest and the investment managers you offer?
OpenInvest is regulated by ASIC. It was founded by experienced Australian financial services executives (who work in the business), and staffed by other experts in building technology, running investment platforms, and ensuring everything is always compliant according to the law. The entire team works from our Melbourne office. In addition, OpenInvest doesn’t legally hold on to any of your securities – they are held at all times by the custodian, Sandhurst Trustees (a wholly-owned subsidiary of Bendigo and Adelaide Bank).
The investment managers are experts in making investment decisions. They too are regulated by ASIC.
Does OpenInvest receive any sort of secret commissions from the investment managers so that they can get additional promotion?
No. This is exactly why we founded OpenInvest and why we have structured it the way we have - to do something very different to the way this industry has worked before now. Everything must be transparent, and OpenInvest commits to you, the investor, and to investment managers, that we will never play favourites, that we will treat all managers equally, and that we will never compete against the managers by establishing our own model portfolios. For this reason, the OpenInvest share of the Management Fee has to be the same, so we never have an incentive to treat one manager better than the others.
How do I know OpenInvest is not going to try to steer me to its favourite investment manager?
Not only do we have no incentive to do so, but doing so would completely undermine our business, because OpenInvest has been established based on the principle that we have no vested interests, no conflicts of interest, and no alignments with other entities, and that we will always present participating investment managers on an equal footing. We have also committed to investors and to investment managers that we will never do so.
Does OpenInvest have to comply with any government regulations?
Yes. OpenInvest is a Responsible Entity, regulated by ASIC pursuant to the Corporations Law. We have many obligations we have to comply with, including having an independent auditor who does an annual audit on how well we are satisfying these legal obligations. ASIC has awarded OpenInvest a licence on the basis that we have the skills and experience to operate in a legal and compliant manner, and has appointed two of our co-founders, Andrew Varlamos and James Beckford, to be Responsible Managers on the licence. We also have a full-time, legally-qualified compliance manager (Head of Legal and Compliance) whose role it is to ensure we are at all times acting appropriately, and he has a direct reporting line to our non-executive directors so that if he ever felt uncomfortable with any decision being made, he can discuss this directly with them. Our non-executive directors are experienced and prominent in the Australian business community, and likewise take all of our legal and compliance obligations extremely seriously. You can see more about our backgrounds here.
If I use OpenInvest and have an issue, who can I go to?
If you have a query or complaint, you can either:
- call OpenInvest on 1800 954 549 between 9:00am and 5:00pm;
- write to us at OpenInvest GPO Box 3038 Auburn VIC 3122; or
- send it by email to firstname.lastname@example.org
We will deal with any complaint and respond to you as soon as practicable and may ask you for further information that we think is necessary to enable us to properly consider the complaint. If we cannot resolve the matter within 45 days of receiving your complaint, we will provide a written explanation to explain our assessment.
If your complaint is not dealt with to your satisfaction within this timeframe, you may refer your complaint to the Australian Financial Complaints Authority (AFCA), of which we are a member, and which is an independent entity, at no cost.
The contact details for AFCA are:
What is a PDS?
A Product Disclosure Statement (PDS) is issued by us as the responsible entity and trustee of the Service. It contains information about the Service including its key features and benefits, risks, how it works, as well as the costs, fees and charges that we may receive and what your rights and obligations are as an investor in the Service.
We are bound by the contents of this PDS and cannot act inconsistently with its terms. The PDS may also be updated by a supplementary PDS or replaced by a new PDS. Where such changes are significant to your investment, such as a change in fees, you will be given at least 30 Days written notice before such changes take effect.
What is a Constitution?
Our responsibilities and obligations as the responsible entity and trustee of the Service are governed by the Constitution for the Service, as well as the Corporations Act and general trust law. The Constitution contains a number of provisions relating to the rights, terms, conditions and obligations imposed on both investors and us. You may request a copy of the Constitution from us free of charge by contacting email@example.com.