This Pearler review is based on my personal experience with Pearler, but I may be unconsciously biased.
The founder, Kurt Walkom, reached out to myself and other Australian financial bloggers to write the Aussie FIRE book. I received compensation for writing a chapter of the book.
I confess I was happy with Commsec at the time. My commsec account had been a hassle to set up. Despite Self-wealth’s significantly cheaper brokerage, given I don’t trade often, the hassle of switching didn’t seem worthwhile (lazy, I know).
Pearler Review: What Interested Me About Pearler
When I heard about Pearler’s auto-invest feature, however, I was curious. Automating investing is the most effective way to ensure you follow your financial plan. Neither Commsec or Self wealth offer auto-investing. I do already have investments with Commsec, and planned to stick with a single platform to keep things simple.
There is a good chance, however, without auto-investing, I may find other things to spend my cash on. Every planned investment will require conscious effort. Each time, I need to ignore the media screaming (as they do) about the impending market annihilation. I will also have to practice delayed gratification, and choose to invest rather than buy a new sofa.
In contrast, it occasionally occurs to me I haven’t noticed the direct debit for my spouse super contribution. I check to make sure it is still active, and it just quietly leaving my account unnoticed. To be fair, it is only $115/fortnight, but this maximises the spouse super contribution.
Other Auto-Investing Platforms
When I started auto-investing larger amounts (not so long ago) with RAIZ (then Acorns), the $1000 leaving my account was too large to forget. But my investments grew at a surprising rate (Dec 2017-Feb 2021). I withdrew those for an investment property deposit, but now with two investment properties (almost) purchased, I’m ready to invest in the stock market long term.
The micro-investment platforms, such as RAIZ and Commsec pocket allow automated investing, and are a good way to start investing with only small amounts. They do, however, have a limited range of investments.
RAIZ have a selection of preformed portfolios, that you select from based on risk tolerance. Once investing significant amounts of money, fees on these platforms become more expensive than paying brokerage (particularly over the long term).
Commsec Pocket have seven ETFs to choose from. Regardless of the platform, be aware you always pay the underlying ETF management fee (often 0.2-0.6%).
These platforms are ideal for beginners investing small amounts. A limited choice is actually an advantage when the investment options seem overwhelming. But as investors learn more, and become more comfortable, most will look for more control over their investments.
Pearler Review: Why are they Different?
Pearler are offering a low cost auto-investing platform. You can buy any investment on the ASX (and in the near future US investments). Global ETFs are available on the ASX, so you don’t necessarily need to have access to an International broker to buy international assets.
Set Up Hassle
Pearler is still undergoing Beta testing, and there is a waiting list to get onto the platform. This link to Pearler will get you prioritised.
The platform is changing and growing fast. Many minor issues have already been ironed out, but the team are still optimising the platform.
The actual sign up process was quick and easy, I was able to complete it all online in less than an hour. I can’t remember the exact dramas with Commsec, but they weren’t experienced with Pearler. It all seemed intuitive.
Once you’re signed up, you are encouraged to create a profile. Pearler offer 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”. See this article to explain more.
Designing Your Portfolio
You can view profiles of individuals who have been chosen to be public. I can see Aussie Firebug and Dave from Strong Money Australia’s asset allocation. I’m not sure if this is an advantage. You have no idea of the profile’s personal circumstances, and how they may differ from yours.
The profile sharing feature is not designed so that you can copy someone else’s asset allocation. The idea is to allow comparison, and perhaps encourage discussion and investigation.
Rather than looking at individual investments, you can also go to the “Shares” tab and find selections of ETFs, LICS and shares based on popularity on the dashboard. Maybe a good place to start if your looking to narrow down the selection.
Once you have chosen the assets you want to invest in, set your target allocation. This is the ideal proportions you would like your investments to contain.
If you are stuck designing your asset allocation, spend a weekend working through the excellent content at Passive Investing Australia. It’s important not to get stuck trying to achieve perfection. Stop procrastinating. Set a limit on your learning time, make a simple asset allocation and set it up. You can always adjust as you learn more.
Purchasing Your Investment
You can buy shares / ETFs as with a normal broker with Pearler, but the whole appeal of the platform is the ability to automate. If you want to make a one off purchase, simply go to the “Shares” tab, search for your investment abbreviation (ticker) and press buy.
Pearler Review: Fees and Investing Frequency
You can now set your auto-invest feature up to invest regularly any number of weeks or months.
In an ideal world, many of us would direct debit a small amount each pay day into our investment account. A small amount this regularly ($1K/month) is easier to budget for than a larger lump sum less regularly ($3K/3months).
Paying brokerage monthly (or fortnightly!) is not cost effective, unless your investing large amounts.
Pearler have a handy Investing Frequency calculator to work out the optimal frequency of investing for you. Mine is ~ 7 weekly.
Pearler Review: Auto-Investing Options
When you click on “auto-invest”, you will be offered this choice.
For those that are happy lump summing a decent amount at a time, and are happy with their ability to manage cashflow well, investing immediately is the ideal option.
When your money is transferred into Pearler, it is cleared into a Macquarie Bank Client Trust Account. This is not in your own name, but held in trust on your behalf. Pearler discuss why this is safer now than ever before here.
The money is held here until the investment is purchased, when the shares/ETFs/LICs you have ordered are registered to you via the CHESS system. This is the most secure way to own shares, because if your broker goes bust, you can move shares to another broker using your share registration.
The money takes two days to clear before it will be invested. Pearler is not designed for rapid trading, but that suits most long-term investors fine.
If you have set up the auto-invest feature, your cash will be automatically invested according to your portfolio preferences.
There will be cash left over, if the share price doesn’t multiply neatly into your investable cash. This waits in your cash account until the next time your due to invest.
Invest Once Your Cash Account Reaches Your Threshold for Investing.
This option is all about fees, and your ability to manage your cashflow. If you are worried about a large amount of cash being direct debited every 3 months, Pearler offer this option.
You can direct debit cash into the Macquarie Bank Client Trust Account to wait until you have amassed enough to hit your investing threshold. As described above, this account isn’t actually in your name and currently pays 0% interest (Pearler are trying to improve this).
I would not be keen to have several thousand dollars sitting in an account (not in my name) earning 0% interest.
If you are keen to direct debit your savings out every pay to enable you to manage the budget better, I’d suggest setting up a separate Offset account or high interest online savings account.
You can debit your investment money to your new savings/offset account every pay, before it’s transferred to Pearler at the optimum frequency.
Brokerage and Brokerage Free ETFs
Pearler charges $9.50 per transaction up to $17,500 which is excellent value. The more you are investing each time you pay brokerage, 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 are offering brokerage free ETFs with three providers. These providers have agreed to pay the brokerage fees to Pearler on your behalf, as you long as you remain invested for at least a year. You will have to pay brokerage on eventual sale of the assets.
Not all ETFs are offered brokerage free on Pearler, but perhaps more will be over time. 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 no brokerage 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 brokerage. 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.
Pearler Review: Auto-Invest Strategies
You have three ways to instruct Pearler to invest automatically. The first “Lowest share” means your next investment will go to the asset furthest below it’s target allocation. “Rebalance” means potentially splitting your investment to achieve the closest possible to target allocation. “Equal invest” means spreading your investment between the assets in your target portfolio. The first is the most cost efficient and popular.
Pearler Integration with Sharesight
Pearler is integrated with sharesight. I haven’t got around to setting this up yet, but tracks your investment and summarises all the information (even from multiple brokers) for an easy tax return.
This is particularly useful for those wish to keep another broker for fast purchases when the market drops, or because it was so painful opening your Commsec account you can’t face closing it.
Although, if you want to keep it really simple, you can move your shares from one broker to another to keep them all on one platform.
Pearler Review: Is Investing with Pearler Safe?
I am fairly cautious around all things finance. Signing up and investing with a brand new broker seemed risky.
Aussie Fire bug, Dave at Strong Money Australia (see his interview with Pearler founder Kurt), Captain FI (see his Pearler review) and Serina Bird at The Joyful Frugalista have all started investing with Pearler.
On noting investments brought through Pearler were CHESS sponsored, I felt more confident. I received confirmation of my investment and HIN (holder identification number) by snail mail from the ASX a few days later.
I am not sure how long it took, as it took me a couple of weeks to find my Computershare login and get round to checking the investments were registered – but there they are, right next to the ones purchased from Commsec.
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 completely customisable number of weeks or months. Impressive!
Pearler is still early in it’s journey, but growing rapidly. It’s building a customer base and trust by focussing on what younger (particularly financial independence chaser) investors want and need. The broker has just hit $2 million invested. If you’re looking for a broker for automated investing, Pearler may be the right fit. Sign up and check it out today.
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 changes.