*This post may contain affiliate links. This mean if you purchase through the link I will receive a commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.
This is the original Pearler review.
I have since become a Pearler affiliate. I have left this article intact as there is obviously more of a conflict of interest now (as for the other Pearler reviews online). But there have been more features added to the platform.
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).
Edit 4/3/21 – I didn’t realise this initially but have received brokerage credits from readers clicking through this article. Anyone who signs up using my link* will receive a brokerage credit, and I will too. 2022 Due to recent AHPRA changes, it is clear this is not allowed. Edit 08/4/21 – I have been offered and signed up for an affiliate relationship with Pearler. This means that if you sign up using my Pearler link, I will receive a small financial compensation at no cost for you. This is how blogs like this make the time commitment worthwhile. This is obviously a potential incentive for me to recommend Pearler. For full disclosure, I make to this post beyond this date I will have in green font.
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 nor 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 it’s enough to maximise 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.
Read my overview of stockbrokers here.
Pearler Review: Why are they Different?
Pearler is 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
The platform remains an invite-only community, but This link to Pearler will get a free brokerage credit.
The platform is changing and growing fast. Many minor issues have already been ironed out, but the team are still optimising the platform.
Things seem to be working pretty smoothly now. They are still open to feedback but the testing mode is finished.
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 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”. 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 you’re 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 payday 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 you’re investing large amounts.
Pearler has 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 cash flow 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.
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 you’re 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 cash flow. If you are worried about a large amount of cash being direct debited every 3 months, Pearler offers 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. Brokerage is now $9.50 for an unlimited amount, even better if you have a lump sum you wish to invest. 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 is offering brokerage free ETFs with three providers. These providers have agreed to pay the brokerage fees to Pearler on your behalf, as long as you remain invested for at least a year. You will have to pay brokerage on the eventual sale of 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 its target allocation. “Rebalance” means potentially splitting your investment to achieve the closest possible 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’s rebalance option means you can capture the advantages of rebalancing – lower volatility and risk, without the extra cost. For those without a significant Super balance, this could be all the rebalancing needed for several years.
Pearler Integration with Sharesight
Pearler is integrated with share sight. 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 who 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.
Tax preparation this year has was easy with the share sight integration. I just signed into Pearler, then share sight and printed off the reports for my accountant. These reports were available far more promptly than my previous experience with micro-investment apps RAIZ and Stockspot.
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 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. CHESS Sponsorship means you are officially registered as the owner of the shares. If the brokerage platform collapses, your shares can be moved to another brokerage via the share registry (eg Computershare).
I received confirmation of my investment and HIN (holder identification number) by snail mail from ASX a few days later.
It took 2 days from cash being direct debited out of my account for it to clear in my Macquarie cash account on the platform and was invested later that same day. 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 a completely customisable number of weeks or months. Impressive!
Pearler is still early in its journey, but growing rapidly. It’s building a customer base and trust by focussing on what 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.
Updates from August 2021.
23/08/2021 Pearler are now offering access to the US stock market for just $6.50 AUD brokerage! You can invest through international ETFs through the ASX, but if you want to buy individual shares in apple, google etc this is now possible through Pearler.
Pearler have created a mobile app. I personally don’t need any encouragement to check my holdings too often, but a mobile app will appeal to many. I will produce an updated review once I’ve had chance to check it properly.
Vanguard have much improved their personal investor offering also. If you plan to only invest in Vanguard ETFs, it’s definitely worth looking at Personal investor again (Brokerage free and no management fee!). For any other non-Vanguard purchases they are still charging an annual management fee (boo!) of 0.1% along with $9 brokerage. I’ll have to follow up with a Pearler vs Vanguard Personal investor article.
*15.07.21 Article updated – Pearler links redirected to Homepage rather than sign up page.
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.