Since writing this article, I have become a small shareholder in Pearler.
Pearler is a low cost online broker that is focused on serving long term investors, not traders.
I’ve been personally using the platform since early 2020 and I’m very happy with the continuous improvements they’re making and features being added.
In fact, I’ve now moved all of my investments over to Pearler. I explain why in this article.
The platform has been purpose-built for long term investing and they have some pretty cool features.
In this Pearler review, I’ve actually got the co-founder here to answer all my questions, and the stuff you’re probably wondering too.
I hope you enjoy this review and chat with Kurt Walkom as you learn what Pearler is all about, who it’s for and how it’s changing the way people invest (for the better).
Kurt: Pearler is an online broker for long-term Aussie investors, founded by 3 friends from Sydney in 2018 after we got fed up with only having two bad options to refer our friends to when they wanted to start investing – confusing trading platforms or expensive micro-investment apps.
Just like other brokers, Pearler allows investors to invest directly into any Aussie stocks and ETFs (and soon US too). But where we differ is that instead of designing our platform around the buying and selling (‘trading’) experience, we’ve built Pearler from the ground up to focus on the thing that matters most – helping people achieve their long-term financial goals.
To do this we’ve got features like Goals and Autoinvest, which together allow you to set a goal (e.g. Financial Independence), then automate your investing strategy to achieve it and track your progress along the way.
We’ve also embedded community elements in our platform – we make it easy for our investors to compare and share their portfolios with friends, family and ‘Finfluencers’ (e.g. you mate), or see what the most popular stocks and ETFs for a specific goal are, for example.
Our goal is to make it easy for every Aussie to invest in shares the right way – incremental amounts in diversified portfolios, for the long-term.
Kurt: We have 3 co-founders: Nick, Hayden and myself. We’re all really passionate about helping people learn to become better with their money.
Nick and I come from a finance background – we used to work together at an investment office in Sydney. We realised that both of our social circles were experiencing similar problems when it came to learning to invest, despite being at different life stages (I was mid-20s and recently graduated Uni, Nick was early 30s and just started a family).
Long-story short, our friends were asking us to help them learn to invest and we had two options to choose from:
As you can see, both are bad options.
The learning curve for #1 is enormous and stressful, while #2 is more expensive and not how we invested ourselves.
We began to realise that there was this big gap in the market for a genuine long-term online broking platform – both for beginners and seasoned investors – and so we set about solving that.
This is where Hayden, our third co-founder, comes in. Hayden and I lived together in our first couple of years of university and he is the most talented software engineer I know. When Nick and I had this idea, we took it to him for advice on how the hell to go about getting it built.
Around this time I was also becoming more and more involved in the Aussie FI Community and saw that FIRE was doing an awesome job of helping people overcome the passive investing learning curve.
I then had the brainwave that Pearler should just start by building the perfect investment platform for FI and if we did that, we would be well on the way to having the ultimate long-term investing platform for all Aussies.
And that’s when I emailed you!
Kurt: Pearler exists to help everyday people get better financial outcomes.
Most finance companies are set up to sell financial products they own to fit people’s needs. Someone comes in, asks for a loan, an investment, or insurance and they get sold something that the company owns, even when a different product is more suitable, most of the time.
This happens because finance companies are conflicted; they make most of their money from the products they sell, so the advice they give often puts the interests of the company ahead of the interests of the client. This is even true for financial planners – around 85% are bank-affiliated!
And the truth is that a lot of good financial products exist! The problem is that there is no “best” ETF, savings account or loan – they depend entirely on the goals and circumstances of the individual!
So at Pearler, we have decided that rather than try to make products, we want to help people find them – ‘The right financial products at the right time, starting with investing’, is our go-to line.
Ultimately, we want to be the company that democratises access to reliable financial advice and helps the 99% take back control of their financial lives.
Actually, all three of us have dug pretty deep into our individual motivations and have posted them on our site. These may be of interest? If so, you can check them out here:
In terms of our values, we haven’t yet formalised these, but here’s an exclusive look at the draft version for you mate
Kurt: One word: Long-term.
We’ve literally designed Pearler from the ground up for long-term investors.
Most low-cost brokers focus all their energy on making the trading experience better. Limit orders, market depths, weekly performance updates, the list goes on… none of this helps a long-term investor!
We’ve got rid of all this trading crap and replaced it with genuine long-term investing features like Autoinvest, Goals and Shareable Portfolios.
Rather than go through everything line by line, here’s a summary from our pricing page:
And in terms of pricing, our fees are very simple – $9.50 per transaction.
We’ve also teamed up with Van Eck, ETF Securities and einvest to provide brokerage-free ETFs when investors hold for at least 1 year. More info here: Free ETFs with Pearler.
Kurt: Great questions Dave. We’ve put heaps of effort into getting risk and security right!
To make things easier, I’ll break this question up into three parts:
This first part is relatively easy. Pearler is a CHESS sponsored broker which means that our investors directly own their shares. It’s as simple as that. For those that don’t know what CHESS sponsored means, check out this detailed explanation.
In terms of cash, customer deposits are physically held in a Macquarie Bank Client Trust Account on behalf of our customers. The Client Trust Account contains an individual sub-account for each customer.
The Client Trust Account only holds customer deposits and is not co-mingled with Pearler business bank accounts. We’ve actually chosen to use a different bank altogether for Pearler’s operating expenses (like wages, rent etc).
The Client Trust Account is what allows us to set up a direct debit from your everyday bank account to your Pearler sub-account according to the investment rules and frequency you set.
The more popular alternative for online brokers – Cash Management Accounts – do not have the ability to direct debit from one account to another, but they do have some benefits like individual account numbers and direct ownership. For the full comparison between CTAs and CMAs, check out this detailed explanation.
At the end of the day, the account-type decision came down to automation or not – which made the choice very easy for us.
We’ve done a lot of work to ensure our platform is secure including:
While Pearler is small right now, we have put in place security protections that are best practice in larger companies. We are also constantly learning more about this topic and refining our systems and protections on an ongoing basis.
This includes working with the next generation of cyber-security providers to design a risk management plan to grow with us. One of our Beta-testers is actually an in-house security specialist for a Big 4 bank. After Hayden and I talked with him and implemented some of his recommendations, he’s now an investor on Pearler.
We’ve also consulted with cyber-security specialty agencies and are already planning for the next phase of investment and growth.
That’s the security summary! For those who’d like more detail, please check out this detailed post on security.
Kurt: Yeah, for sure! So Autoinvest direct debits from your linked bank account, then once that direct debit clears in your Pearler account we invest it in your target portfolio, according to the investment rule you’ve set.
At the moment we have 4 rules:
1. Single share furthest below target weight
2. Single share of my choice from my portfolio
3. Rebalance to target weights
4. Equally across target weights
And of these, ‘single share furthest below target weight’ is the most popular. This option invests in the share that is the furthest behind its target percentage at the end of each period and so is perfect for those who wish to optimise brokerage while still rebalancing their portfolio (e.g. almost everyone pursuing FI!).
This option makes it possible to set and forget completely with a target portfolio of ETFs (or stocks, or a mix). The only work you need to do is set up your target portfolio!
Here’s how Autoinvest looks on our platform:
As for why don’t others provide this? Well, it’s a good question.
Big 4 brokers have the account infrastructure to implement this feature, so it’s definitely possible on their end. We think the key reason they haven’t is because they are concerned that if they were to promote passive investing strategies that would reduce brokerage income.
To implement ‘Autoinvest’ well, most brokers would need to build an entirely new platform and interface because investing behaviour is so different from trading behaviour – like CommSec have done with CommSec Pocket for example.
However, on Pocket there’s only 7 ETFs to choose from and it’s expensive for large investments. From where I’m sitting, it seems like CommSec doesn’t want their existing customers moving across to Pocket. Active investors make more trades than passive, after all…
In terms of other Aussie ‘startup’ brokers, it’s actually very difficult for them to provide the Autoinvest feature. The reason is that they use Cash Management Accounts for their client cash holdings, which aren’t direct debit friendly.
The easiest way to direct debit is to hold client funds in a trust or pooled account, like we do (further information). So yeah, it’s extremely hard for these brokers to implement Autoinvest with their current infrastructure & it’s also very hard to switch.
The reason why most startup brokers go with CMAs is they are much easier to get setup – you simply plug straight into a bank’s API. On the other hand, Client Trust Accounts require sub-ledgers and sub-accounts to be built, it’s extremely heavy-lifting. Unless you have ‘Autoinvest’ front-of-mind right from the beginning, CMAs are the obvious option.
Kurt: The FI community is solving many of the problems that we and our friends faced. In particular, overcoming the enormous investing learning curve to getting started and teaching people how to invest the right way (incremental amounts in diversified portfolios, for the long-term) at scale.
And we’re aiming to make it easy for every Aussie to intelligently invest in shares and get millions more Aussies investing.
So since FI is already bringing thousands of Aussies into the sharemarket and teaching them how to invest intelligently right from the start, we think that if we can make it easier for FI to spread, we will be well on the way to achieving our aim.
For us, it’s all about the number of investors, not the number of trades. If we have one million investors each making one investment per month we’ll have one million investments per month running through our platform – and that’d make us a very successful company!
And one million investors might sound like a pipedream, but listen to this. In Australia there are over 400,000 18-24 year olds intending to buy ETFs in the next 12 months!
Pearler is without a shadow of a doubt the best place to invest in ETFs – so we just need to get our name out there and we think by focusing on serving the FI community we can do just that.
Kurt: As long as you can keep the secret mate.
So there’s the features you might already expect that are on our roadmap, like:
By the way, you can view the Pearler Live Roadmap at any time.
The aim of these features is to continue to make Pearler a better long-term investing platform.
And this is where it gets really exciting. We think that as we build our long-term investing platform, we will be able to expand to include other financial assets – superannuation, loans and insurance, for example – and help guide decisions in these areas too.
Essentially, we think Pearler can become a personal finance marketplace – a one-stop shop for all financial products like investments, loans, insurance and a place you can find peer-reviewed high-quality financial services too, when you need them.
Our ultimate goal is to be the company that democratises access to reliable financial advice and helps the 99% take back control of their financial lives.
And now you know how we plan to do it!
I’d like to thank Kurt for being such a good sport and letting me grill him with the important questions, haha!
I hope you found this Pearler review (and interview) informative. It’s great to see there are people working on ways to make investing easier, simpler and more automated.
Update March 2021: Pearler continue rolling out new features, which you can read more about in this article: Why I Moved My Investments Over to Pearler.
I really like what Pearler is doing and the direction they’re heading. I’m excited by how this platform can improve the investing experience for a lot of Aussies, while removing all the noise and trading-focused features.
I’ve been using Pearler for a while now, including Autoinvest. It’s amazing seeing your money get invested automatically into your chosen investments with zero effort or action on your behalf!
If you want a broker that’s focused on long term investing rather than trading, Pearler is an ideal choice. Sign up with code COMMUNITY for $10 free brokerage credit to get started. Again, this is not an affiliate link and I do not receive anything if you sign up.
Thanks for reading, and happy investing!
Why deliberate spending is my favourite money management style. What it really means and how you can use it as your situation and priorities change over time.
My thoughts on ‘The Great Taking’. An idea that the masses will lose untold amounts of wealth in the next financial crash, due to a deliberate plan by mysterious figures.
Get my latest content and thoughts straight to your inbox.
A fresh dose of financial motivation to power your journey.
Thanks guys auto-invest is very useful.
Thanks McLeod, glad you’re enjoying it! 🙂
Interesting interview, cheers! It seems like a really obvious gap in the market for an investing platform aimed at passive / long-term investors. I’m surprised this kind of thing hasn’t been done sooner at this scale, so well done to the team.
Couple of questions:
1) Will the automation system work without using direct debit? My investing amount will always be different each iteration, so I wouldn’t feel comfortable having a set amount being direct debited, unless I’ve manually determined it’s the correct amount then and there. So could I manually transfer some funds and still have the automation kick in when the funds clear, and invest on my behalf?
2) Are the team hiring in the tech / product / PM space? ????
Thanks Nick, appreciate your support 🙂
1) We don’t at the moment, though we do have plans to solve for it. One work-around in the meantime is to set aside the base amount you know you can invest each period & manually invest the excess at whatever pace suits you.
2) We are hiring in both tech & product. Right now, our ideal hires would be willing to work for us outside their normal 9 to 5, with scope to come on full-time late 2020 or early 2021 (pending fundraising). For product we’re looking for someone who’s senior & has experience with strong network effects. For tech we’re looking for multiple people – both senior & junior. If you’re interested please shoot us an email at community@pearler.com 😎
Interesting, I’ll check it out.
What happens with shares held with another broker in the same ETFs you want to keep investing in?
Is it easy to keep/see them all together? eg if someone has already purchased shares through Commsec will those shares be visible through Pearler once they open an account and invest there since the account is in the same name?
Hey Beth. Nah unfortunately you’ll only see the holdings you’ve purchased through each particular brokerage account. If you would prefer to keep just one account, the way to do that is to transfer your existing account across, which means your HIN (holder identification number) will remain the same and you can stick with having everything visible in the one account. Hope that helps, and maybe Kurt can correct me there if that’s wrong…
Yeah, that’s pretty much it Dave! The term is ‘HIN rollover’ & doing one of these on Pearler will transfer some or all of the assets you have held with another brokerage onto your Pearler HIN. Your HIN actually does change, but that’s just a semantic.
It would be nice to see rest of the portfolio without transferring it over due to a few reasons.
1. Pearler being new, I don’t trust it to transfer my existing portfolio over, no matter how much you assure me that it’s all safe. I would need to try it out for some time, make sure it’s all good to build trust in Pearler.
2. I might have shares/assets that can’t be transferred over like international shares, mutual funds, shares within a trust, cash, property etc.
Let’s say I want a portfolio which is 20% cash in my bank account, 40% property my house, 20% VAS, 20% Netflix shares.
I want to use Pearler to make sure my VAS is at 20%. Currently it’s impossible, but I think pretty much all of your customers have this as their reality as opposed to them having all their portfolio in Pearler.
As far as I know, there’s no platform which offers the ability to see everything owned through other brokers, accounts etc. It would be nice, but it might require a lot of data sharing, which most institutions aren’t keen to do with each other (if I had to guess). Maybe Kurt can shine more light on this! Unless I’ve misunderstood what you mean…lol.
Re concerns/feasibility of data sharing for this, I think being able to manually punch in your other holdings for now would be “good enough” to get a good feeling of letting autoinvest/balance do its magic until we feel comfortable roll them over?
Likely useful feature for those who cant (or can’t be bothered!) going forward as well.
Yep, Dave’s on the money here and so too is Debt King – a big thanks to you both for your comments.
Specifically, we plan for you to be able to sync all your financial accounts on Pearler – super, investments, loans, insurance etc (part of the personal finance marketplace I mentioned in the interview). As Dave alluded to, this has historically been very heavy lifting from a technical perspective, but recent Open Banking reforms are about to make this process much, much easier.
I can’t give a timeline because Banks are yet to fully-adopt the reforms, but over the coming couple of months we’re going to add in a way for people to manually punch in their holdings to make it easier to build trust with our platform, as Debt King suggested ????
Why don’t you open a Sharesight account and list all of your investments there? Then you’d be able to keep an eye on all of your shares in the one place (Sharesight), even though parcels of them may be in two or more places (eg. Commsec and Pearler).
Does that make sense?
Thanks for this suggestion FDJ! I think you can even enter other assets too. It’s possible S wanted to be able to input all holdings and then have autoinvest choose what to buy based off the ‘total portfolio’ when deciding what to buy. Maybe he’ll come back to expand on his comment.
Hey Kurt, sounds like a good product-market fit. What’s your monetisation model in the future? As you have alluded to, volume trading is king for most brokerage hence they are designed the way they are. Your current brokerage fees are similar to SelfWealth. By the way, love how you are mentioning about trust acc, sub account and Cash Management! Spent my previous life in transactional banking!
Hey Li! We definitely hope so 🙂
Are you talking about shares? Or for the other elements of the personal finance marketplace we hope to build?
For shares, CHESS sponsorship has high fixed costs which makes ‘free’ prohibitively expensive to do the same way as say, Robinhood, has done (Custodian structures allow brokers to monetise in other, often morally dubious, ways – you might know about this given your background?). That said, we are currently working with a number of Aussie ETF providers to try and bring brokerage costs down for long-term ETF investors – stay tuned 😉
For our future personal finance marketplace, it’s hard to give a blanket answer on that because we’ve still got a long road ahead of us. Still, we do have some clear guidelines:
1) Monetisation incentives need to result in our customers getting the best financial outcomes
2) Pricing needs to be completely transparent
#1 might sound obvious but almost every comparison website out there promotes financial products that pay them the most, not that are best for the person who’s searching.
Hope that answers your questions! Let me know if not 🙂
Thanks for your reply, Kurt. I am asking about the monetisation of the business as a whole. At the moment you only charge the same brokerage fees as SelfWealth which made me wonder about your business model given you mentioned serving as many investors and not about trading volume. Your current pricing is not quite reflective of that and I reckon it will evolve. I should clarify my questions aint very FI ,I’m just a curious Product Manager who has taken care of end to end product development with modelling. Happy to take this offline 🙂
Hi Li, great insight & would love to! Pls shoot me an email at community@pearler.com and let’s take it from there 🙂
It’s an interesting concept but not for us. Our finances fluctuate too much over time. So for simplicity I just transfer the money and make the trade whenever I have $15k ready to go. That can take anywhere from 1 to 3 months depending on bills, overtime, dividend payment dates, etc.
Another factor for my wife and I is that we make regular large purchases well in excess of $17,500. For example our tax refunds, sale of an IP, work bonus, etc. Due to their pricing structure, these trades would cost more than Selfwealth currently does. Not drastically more, but still worth considering.
That makes sense Adam. Making such large purchases is certainly a good position to be in 😉
I find myself doing a mixture of automated purchases and additional random purchases on the platform since our monthly finances also fluctuate quite a lot.
Great to hear Pearler are bringing international investing to one platform too. Looking forward to checking it out in the next few months. Automating regular investing really appeals to me – avoids procrastination, life and worry over market conditions getting in the way. I loved microinvestments for this reason – but yes, got too expensive quickly
Yep, I think the option to automate is pretty handy for many of us. Saves overthinking and procrastination like you said, turning investing a locked-in monthly habit, which is what it should be 🙂
Thanks Aussie Doc – keen to get you on! 🙂
Looks very interesting. I’m investing through my company though. Sounds like it’s a way off. Tip in $10k every 4 weeks using SelfWealth so it’d be good to compare fees.
Hi Sol, yeah it’s a couple of months away. You’re still more than welcome to sign up, reserve your spot & test out the platform though. Same price as SelfWealth for a $10k investment – $9.50.
G’day Dave
Good write up. Have you shifted your whole portfolio over?
Cheers
II
Hey, cheers mate. Nah I haven’t – just opened a new Pearler account in April and I’ve been using that for all new purchases since then (other accounts still at Selfwealth) 🙂
Does that use the same HIN?
This is a big game changer within the FIRE community and following the tenet of “Keeping It Simple Stupid” and consistent regular investing throughout your financial journey. Well done lads.
Kurt, I really appreciate your company’s values and from face value your genuineness to help the everyday Aussie with . I shall have a gander using SMA’s link.
Q: I understand the company is still quite young – is there anyway that us non-FI bloggers to invest (besides using the product of course) in the company at this stage?
Hi Elim, thanks for your support & kind comments! Look forward to getting your feedback on our platform 🙂
In terms of investing in us as a company – we intend to do some sort of equity crowdfunding in the next 12 months & will make sure to keep all our users posted on that. We aim to have finished our Beta by this stage & be ready to expand outside the FI community with features like multiple portfolios & multiple goals.
That said, if you or anyone who is reading this is classified as a sophisticated investor and is interested in getting involved right now, please email us at community@pearler.com ????
Hi, the only question that was forefront in my in my mind after reading this article was, fees? I’m sure I could hunt online for the fee but it would be good to know (or at least give an idea of) fees upfront.
Also, will you be doing a referral program like SelfWealth offers? I have personally never paid a cent of brokerage with SelfWealth as I always have so many more free trades than I ever make. (One of my top skills is sales and marketing and as I am a big user of SelfWealth, I find it easy and rewarding to promote.) Is there a similar offering?
I should note that the idea of auto invest is very appealing and I’d love to get involved. May I ask what you mean when you say join now and “skip the queue?”
Thanks ????
Hi Lucy, great question! Can’t believe we forgot to include that! ????♂️????
Our pricing structure is very simple $9.50 for transactions that are less than $17,500 & 0.055% for transactions that are more.
Because we’re in Beta, right now we don’t have any customer referal incentives (in fact we limit the amount of referrals each new customer has). In the future, we definitely plan on introducing incentives though – not sure what they will be just yet.
It would be really great to get your feedback on this & also, if you’re currently managing to onboard numerous people per month to SelfWealth, I’d be more than happy to sign you up to our Partner (affiliate) Program once you start investing with Pearler. If you are interested, please apply here: https://pearler.com/partners ????
In terms of ‘skip the queue’, at the moment we’ve got a waitlist but we’re letting the first 100 signups from this post skip it!
Thanks Kurt,
I followed your given link to sign up to the affiliate partner program and am currently awaiting approval, upon review of my application.
Kind Regards,
Lucy
Gonna watch this with interest! Low fees and auto-invest functionality – this really is shaping up to be a pearler!
Haha, you sound as excited as we are!
I would like to see this work on a model similar to Ratesetter (now called Plenti). When you have some spare cash you invest. I cant afford to commit to the regular deductions at the moment. Why not have it both ways. Offer both systems and perhaps point out advantages for one over the other to tempt commitment.
Perhaps this is already being considered.
Good luck with Pearler, its sounds very promising I will follow it closely and may still commit further down the track
Thanks for your comment Retromum. Just to clarify – are you wondering if you can make one-off investments on Pearler?
If so, yes, absolutely! Autoinvest is just one feature. You can still invest the old-school way (one-offs) too ????
Hi Dave / Kurt,
Great post.
Two questions. Can you please provide confirmation once trust accounts are available?
Also, it would be really handy to have a deposit / BPAY option for investing. Instead of direct debit, we could transfer funds to an account, and then ETF’s would be purchased the following trading day.
Like a way of Vanguard Managed Funds, but for ETF’s.
Finally, if we could have an Australian version of Personal Capital for tracking net worth, expenses, etc, that would be amazing.
Thanks
Hi Matty, I’ll absolutely let Dave know once trusts are available! Hopefully he passes it on ????
In terms of your BPAY/deposit comment – can you give me a bit more context please? I’d like to understand your use case!
Currently how we’ve set things up you can do one-off direct debits for one-off investments (like normal, but instead of logging into your bank to do it you do it on Pearler). For Automations, you can simply send cash to the linked bank account & then Automate from there if you wanted to use multiple accounts to send cash to invest with regularly.
So yeah, what’s your use case?
Noted on re. Personal Capital! It’s definitely on the list 🙂
I’m with Matty, hopefully one day we get an Aus version of Personal Capital
With Pearlers Auto-invest or XFER’s is this done from Bank to Pearler via OSKO or similar real-time payments, or is there delays?
Hi Baz, re. Personal Capital – workin on it! 🙂
Re. transfers – at the moment we use Macquarie Bank’s direct-debit rails. We will definitely integrate real-time payments via the NPP at some point in the future – these features aren’t available for the accounts we’re using yet which is why they haven’t been built-in from Day 1
Hi Dave, I think you should give Commsec Pocket another look at. Serves me just fine considering I am buying $1,000 of IOZ (0.09% MER) every fortnightly payday for $2 brokerage, and has the auto-invest feature to boot. I am usually a huger stresshead, so having brokerage cheap enough to enable me to economically purchase fortnightly and not worry about timing the market is awesome. I do admit their international offering could be better, but for a plain jane aussie index fund I am pretty happy with commsec pocket.
Cheers Marko. Honestly I do think Commsec pocket is a decent choice if you’re just using it for that size purchase of Aussie shares, so I can definitely appreciate the appeal if you already bank with them.