I have now been investing with Pearler for around 9 months! The platform has continued to improve since I signed up.
My original Pearler review can be found here. I wrote the original before I formed an affiliate relationship with Pearler. As time goes on my feelings have not changed.
As of March 2022 ASIC have made it clear affiliate relationships with financial products is not acceptable for finance bloggers without an AFSL, so there are no longer affiliate links.
I will continue to update my Pearler review in this article.
Pearler Review: The Bottom Line
Pearler designed its platform for long-term investors mainly interested in passive ETF securities. The ability to automate investments regularly is unique and the big selling idea of the platform.
They based the platforms on the needs of the financial independence crowd. But you don’t need to be a hard core FIRE enthusiast to use Pearler’s auto-invest feature.
Most investors perform dismally over the long term because they:
- Fail to stick to the simple plan
- Pick individual stocks and underperform the market
- Buy stocks impulsively based on hunches and media articles
- Waste much of their gains on brokerage fees
- Panic when the market crashes and sell at the worst possible time
- Fail to invest at all, because it’s too complicated and risky
Pearler aims to:
- Prioritise automated investing to help investors stick to the plan
- Providing a simple platform that’s easy to use
- Encouraging long-term investing in diversified portfolios of index ETF securities
- Forming a “Pearler community” of like-minded long-term investors
- Charge low (and decreasing) Pearler brokerage fees
What is Pearler?
Pearler is an online broker for long-term Aussie investors. It was founded in 2018 by three friends based in Sydney. It allows investment into a variety of Australian stocks and ETF products directly.
Pearler Review: Automated Investing
Pearler is the only broker to support automated investing. Automation is an incredibly powerful tool in helping investors resist the urge to self-sabotage. It’s the number one way to stick to a long-term investing plan.
If you have to cancel a direct debit to skip an investment, you are far more likely to stick to the plan of investing every quarter. If you have to press “buy” each quarter, it is more likely you will find an excuse not to. There are always competing priorities for our money.
Starting investing in the share market for the first time is initially exciting, but it quickly gets a bit boring. Once your balance starts to build, it doesn’t seem to grow much on its own and contributions don’t increase the balance quickly either. Once you get past this painful part, the growth in your investments will eventually be enough to encourage you.
But you’ve got to get past the boring painful bit. Automation will help.
Does Anyone Else Offer Automation?
At the time of writing, none of the other Australian trading platforms offers a fully automated investing experience.
Vanguard personal investor allows automated bpay or direct debits into its managed funds or cash management account (earning 0.35% interest).
It is easy to automate investing into super, through salary sacrifice or regular bpay deposits. It may also be the most tax-efficient way to invest for double-income couples.
My $115/ fortnight spouse super contribution (which attracts a $500 tax annual rebate) leaves my account quietly. Every few months I have to check it’s still working as I don’t recall noticing it!
Stealth investing is a thing.
Brokerage Fees vs Other Online Brokers
Pearler has competitive brokerage fees of $9.50 for an unlimited investment amount.
The fee is around half of Commsec brokerage and on par with Self wealth. Even cheaper brokerage is possible through non-CHESS sponsored accounts.
Investors don’t legally own the shares or ETFs in their non-CHESS sponsored account though.
Review Pearler: Free Brokerage
Pearler offers selected brokerage free ETFs with three ETF managers as long as you hold the investment for at least a year. You will have to pay brokerage on the eventual sale of assets. The brokerage-free ETFs I looked at had slightly higher management expense ratios (MER), around 0.4%.
The graph below shows investment returns paying brokerage and MER of 0.2% vs brokerage-free ETFs and MER of 0.4%. In this scenario, the investor is $1000 ETF every month. The brokerage-free option is advantageous in this situation.
In the next scenario, the investor purchases $3000 four times a year to save on fees. Paying brokerage is advantageous after a few years in this situation.
Whether the brokerage free ETFs are right for you probably depends on how much you are investing, how often, for how long, and whether the ETFs available suit your needs.
Is Pearler CHESS Sponsored?
Pearler Investments is a CHESS-sponsored broker. CHESS Sponsorship means you legally own the shares. If the Pearler platform collapses, your shares can be moved to another brokerage account via a share registry. In the case of Pearler and Commsec, Computer share is the share registry.
Some trading platforms are not CHESS Sponsored (notably Superhero) which means investments are held in trust for you.
A couple of days after purchasing your shares, you will receive a letter from Computershare, the CHESS registry.
If you wish to set up dividend reinvestments, you need to log in to Computer share and register for dividend reinvestments for each investment individually. It’s not hard to do, just worth knowing.
I had assumed as I owned the same investments through Commsec, the dividend reinvestment plans would continue with Pearler. Wrong! I had to work out how to deposit a cheque in 2021.
Pearler Review: Set Up Hassle
The actual sign-up process was quick and easy, I was able to complete it all online in less than an hour. Opening my Commsec account a few years ago seemed a lot more challenging. The set-up process with Pearler was far easier. It all seemed intuitive.
You need to verify your identity and link a bank account. Pearler makes the required steps as easy as possible.
Pearler offers the ability to share your profile with friends, but the privacy level is up to you. Adjust your profile between “Public”, “Within Pearler”, “Unlisted” and “Private”.
Accounts Available with Pearler
You can open an individual or joint accounts with Pearler.
A Self-managed super fund or trust account is also possible with Pearler.
You can open a minor’s custodian account. The taxation here gets a little complex, and it’s definitely worth checking with your accountant before opening an account.
Pearler Review: The Trading Platform
Pearler is a long-term investing platform. It is designed as a simple interface, in contrast to other platforms designed for short term traders.
Pearler provides the information needed by long-term passive investors.
Pearler now displays the live market price for instant direct buy/sell screens. If you are making direct stock investments, the exact price may be important to you.
Pearler displays CXA Stock Exchange (CHI-X) end-of-day market prices elsewhere on the platform, which may vary from the live price by small amounts. As a long term investor, this is more than adequate for me.
On opening your Pearler account, you come to the Dashboard where your current balance is displayed along with historic progress. You have tabs for Auto invest, invest and transactions.
Auto invest is where you can set and adjust your regular direct debit requests to Pearler.
Invest is where you can directly buy / sell with instant deposits.
Transactions will show all movement of money in and out of your account.
Many online reviews will talk about how expensive micro-investment apps are. Certainly, once you get a certain amount invested, and over the long-term, they are more expensive than having your own brokerage account. But they can be the easiest way to end procrastination and get started. You can also generally direct debit into them, and automation is a very powerful tool in investing.
You could also reduce the cost with RAIZ, which has a “RAIZ rewards” section. If you don’t already use cashback, these savings can fully cover your RAIZ fees for some time (particularly for families who tend to spend more).
Pearler are releasing a micro-investment account, where new investors can start their journey to financial independence with as little as $5. The full details are not yet out, but watch this space!
This has the potential to take new investors from their very first investment as a student to building financial independence with the Pearler personal finance marketplace. I’m looking forward to find out if Pearler can complete with similar products already on the market.
Choosing a Target Portfolio
Seasoned investors can simply go to “Auto-invest” on the investing platform and search for the “ticker symbol” (abbreviated code) for the ETF securities or individual stocks they want.
You get to choose what percentage of your target portfolio you want to allocate. Your Pearler account now allows you to compare diversified portfolios with multiple target portfolios calculators.
Remember to consider any other financial assets as part of your overall asset allocation eg super, property, cash. If you have a large cash emergency fund in a bank account, do you really need some of your investment portfolio allocated to cash?
Most beginner investors, as well as financial independence seekers, will choose a simple allocation to ETF securities.
Methods Beginner Investors Have Selected a Portfolio Allocation:
- Copying a micro-investment portfolio allocation. They are generally allocated to a range of ETF securities. This is simple to copy the asset allocation in your broker account
- Starting with their super portfolio allocation. Either copying the allocation or adding ETF securities that are inadequately represented.
- Choose a Vanguard diversified investment product that suits their risk profile. Buying through Vanguard, or copying similar allocation with a broker
- Based on reading eg Simple Path to Wealth
Pearler Review: Template Portfolios
If you click on the portfolio and select to adopt it, Pearler automatically adjusts your portfolio allocation to match.
It’s important not to get stuck trying to achieve perfection.
Set a limit on your learning time, make a simple asset allocation and set it up. You can always adjust as you learn more. Or get professional advice. Just don’t leave it in the too hard basket (the years pass quickly!)
You can view profiles and portfolios of other Pearler investors who have chosen to be public. The profile sharing feature is not for copying someone else’s asset allocation. The idea is to allow comparison and perhaps encourage discussion and investigation.
Pearler Review: No research reports
Pearler has no due diligence and no research on the website.
The other big online trading platforms such as Nabtrade and Commsec display data from Thompson Reports, Morningstar, and Trading Central. These big platforms provide lots of data for individual share pickers to delve into.
All this is absent in Pearler. It does not even display a PE multiple or volume on their website. This keeps the platform simple, without distractions.
Auto Invest Feature
You set your automated investing to invest by direct debit regularly by any set number of weeks or months.
In an ideal world, many of us would direct debit a small amount each payday into our Pearler account. However, paying brokerage monthly (or fortnightly!) is not cost-effective unless you’re investing large amounts each time.
The more you are investing each time you pay brokerage costs, the better deal you are getting. But the more time your money sits outside the market before investing, the longer you are missing out on market returns.
Pearler has a handy Investing Frequency calculator to work out the optimal frequency of investing for you. Mine is ~ 7 weekly.
Your Auto-Invest Cash Takes 2 Days to Invest
Your cash is invested according to your portfolio preferences.
If the share price doesn’t multiply neatly into your investable cash the leftover cash will remain in the cash account until you next invest. I have only had up to $75 in my cash account so far.
Your cash deposit is initially cleared into a Macquarie bank client trust account. This is not in your own name but held in trust on your behalf.
The money is held here until (for up to two days) Pearler invest your cash. You receive an email to confirm receipt of the cash and then again when it is invested.
You can choose to invest immediately or have them hold your cash until you reach a prespecified sum (say $5000) to save brokerage.
Manual Instant Pay One-off Investments with Pearler
Although automated investing is the number one feature that makes Pearler popular, it is sometimes handy to be able to buy ad hoc investments.
Pearler now offers instant deposits through OSKO or Pay ID. This invests your money immediately at market price, known as a market order.
Pearler has introduced the ability to use a limit order. This is when you set the price you would like to pay (below the current market price). The purchase goes through if the price drops to your limit.
If the price never drops to your “ideal price” you don’t get to purchase the investment.
For ordinary times, most people use a market order as they know the rough price, and want the order to go through (which it will as long as someone is selling the investment you want).
Pearler now offers US shares through the NASDAQ and NYSE. Brokerage is $6.50 + 0.5% margin on the foreign exchange, currently ~0.37% of your investment amount. Superhero advertises free brokerage US investing but charge a 0.5% margin on foreign exchange.
In case anyone is suffering from the same misunderstanding I did, it is not necessary to invest in the US stock exchanges in order to purchase the US or international index ETF securities or managed funds. These are available through the ASX.
US investing is for those wanting to invest in specific companies, such as Google.
Mobile Phone App
Pearler obviously had to launch an app. It works well, is easy to download to your phone as is pretty much an identical replication of the easy-to-use website.
This is useful for those who don’t own a computer, but otherwise a dangerous temptation to check your portfolio several times a day!
I don’t need the encouragement!
If you have more willpower than me and think you’ll find it useful, download the app. For the weak-willed, keep investing apps off your phone.
Pearler Integration with Sharesight
Pearler integrates seamlessly with sharesight. This is an easy process to set up, involving just a few clicks on your Pearler platform.
At the end of the tax year, I printed out the promptly provided end-of-financial year summary and delivered it to my accountant. This provided all the information required for my accountant to claim franking credits and submit information accurately.
Are Your Investments Safe with Pearler?
Sanlam Private Wealth Pty Ltd is the Australian Financial Services Licence holder for Pearler Investments pty ltd. Pearler is an Authorised Representative of Sanlam Private Wealth.
Pearler is a CHESS-sponsored broker. This means the investments legally belong to you and can be transferred to another investing platform whenever you like.
Pearler has bank-level security with 2-factor identification for changes to auto-invest or one-off financial transactions.
Phone contact, email and online chat directly from the website (the easiest way to get a response). This has been fabulous so far.
I provided feedback and received a response within an hour. Initially, the auto-invest had limited flexibility, I let them know I would like to invest 7 weekly (random!) and they quickly reassured me they were already working on it.
Within days, the auto-invest function had changed to a completely customizable number of weeks or months. Impressive!
Financial Independence with Pearler
Pearler is an investment platform designed for financial independence or other long-term investing goals. You can purchase exchange-traded funds, US and Australian direct shares.
Pearler focus on low fees, automated long-term investing, and easy tax reporting through Sharesight. It is a secure, safe, and popular online broker.
Pearler is growing and improving rapidly. Pearler investors now have over $140 million invested!
If you are a long-term investor looking for a broker with automated investing, Pearler is worth looking into.
Aussie Doc started investing with Pearler in January 2021. I use auto-invest to regularly add to my small, but growing portfolio of ETFs. We are considering opening a small custodian account in Pearler for children to watch some of their education funds grow over the next decade.
Aussie Doc Freedom is not a financial adviser and does need offer any advise. Information on this website is purely a description of my experiences and learning. Please check with your independent financial adviser or accountant before making any financial decisions.