MarketsFlow fee module to be released tomorrow

Hi all,

I am really excited to announce the launch of our fee module tomorrow. We have spent quite a few painstaking days getting it developed. It does all the intelligent calculations on daily management and performance fees, taking into account the inflows and out-flows, performance and hurdle rates. The clients will now be able to see the fees on their web platform initially before we roll out on the app, which should be next week.

When you are developing complex solutions, it always helps to have smart people around :slight_smile:

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Hi Tom, is the update released?

Hi Jan_k,

Welcome to the forum :slight_smile:

Unfortunately we were not able to roll out the fee module today due to some testing issues. We hope to have it released next week.

Hi @tom_mf,

Will the investor discounts be included within the fee module as well?

hi @JamesWhitt

Yes, we are integrating investor and any other bespoke discounts into this fee module.

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Good stuff. How will you be billing - will it be on a monthly basis for performance and a daily average for the management charge, also billed monthly?

Thanks. So we charge monthly one time for management fees (calculated daily) and for performance at month-end. The system auto-calculates any inflows or outflows along with applicable discount variations, and tier movements. No doubt the process has been tedious, but I must admit I have enjoying working on it with Mario and Anton.

Please see a screen grab of the client fees section on the web platform. APp will soon follow.

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Looking good!

It would be nice to see this on percentages as well, so if your portfolio has grown over a period with x%, that the impact of your charges is that you actually have experienced y% growth. Like a gross and net growth %.

It allows you to easily see in how far the charges are eroding the growth, which is a hot topic with the FCA at the moment.

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Agreed - it looks good!

I also agree with @Martijn, showing that breakdown would be very informative.

It’s nice from an investor’s point of view to know that some of the value of the fees I’ll be paying out of my account will also be boosting my equity value :wink:

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Thanks Martijn,

Good point we will be showing growth in % terms, so that it is clearly visible to clients the absolute net growth of their portfolios.

I strongly believe that MarketsFlow charges are fairy priced compared to the growth experienced by the client’s portfolios. Please bear in mind that performance is only applicable on growth, and moreover we apply hurdle rates.

As an example, if a clients portfolio at the highest fee tier delivers a gross return of 27%, then the net returns are 22% after our fees.

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Thanks @JamesWhitt

I completely agree, our principle goal is to ensure that we make money for our clients and in the process charge fees from the returns generated as a result of our USP, technology and competence.

No performance, no performance fees. Our incentives are most closely aligned to our clients goals.

In the above live example, the client generated gross returns of 1.33% returns in the month of June, the net returns are 1.03% after our fees. As you can see the equity value is boosted net of fees.

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I agree with the comments this looks really good, and fundamentally shows the clear route to profitability for MarketsFlow further down the line.

It works well, certainly for investments outside a tax wrapper, like GIA. For those within a tax wrapper like ISA investments, I have always favoured paying fees & charges that relate to the ISA investment from sources outside the ISA. Thus maximising the funds within the ISA. Is this a feasible option, or unduly complicating things?

As put options cannot be written within an ISA investment, an arrangement to pay fees outside the ISA environment might help to partially bridge the gap between the performance relating to GIA and ISA investments.

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This is really nice! Everyone wins

Thanks @Curious1

Regarding the fees for ISA to be paid outside the wrapper, we could look at having a debit/credit card on file for fees charging. Is this what you were thinking?

If I understand this correctly, the reason would be to ensure that the investment value compounds without the impact of fees. Our fees for ISA’s are 1% for Management flat (no tiers) and for 1% for performance.

The fee structure has been built to ensure compounded growth for the investment portfolios at a net value, unless there is a drawdown.

With any investment your capital is at risk!

I totally appreciate that, but it’s just more for transparency and ease of understanding from an investors point of view. It also helps you differentiate more easily with other providers, who pretend to have good returns, only for them to massively eroded by hidden fees, or fees that I geared up to take out a major chunk of your investment.

MoneyBox springs to mind - their fees seem reasonable, but given small pot sizes they end up screwing people over, yet most are none the wiser. NutMeg is another one, fees seem reasonable, but for what you get from them, they are not.

You offer a higher likelihood of much much better returns, at a slightly higher price point. That needs to come across loud and clear so you demonstrate your value over and over again - and that ultimately drives retention and higher AUM.

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Tom,

Yes, the opportunity to pay any fees by Debit Card would work extremely well, with a MF default option to collect fees due directly from the ISA if the Debit Card route did not work for any reason . All funds that the investor wished could then be kept within the ISA tax wrapper, if they were enabled to pay fees separately.

Although, the fees are very competitive and reasonable - if as an example an investor had £100,000 in an ISA, and a total of 2% was due in fees, the £2,000 would amount to 10% of the current ISA yearly allowance. There are a lot of ISA investors in the UK that have built up funds in excess of £100,000 and the Debit card solution for payment of fees would work well for many of them, potentially significantly boosting compounding.

Also I could see the Debit Card solution for fees alleviating a bizarre “mirage” type effect on the funds paid/fees paid into the MF ISA. To attempt to explain what I mean: if say an investor is obtaining an ISA return with a competitor that does not make him/her happy and it totals funds of £80,000, but it has low fees (say a self-select ISA) and they then switch the whole £80,000 to a MarketsFlow ISA, which gives a 5% better return overall.

Then the investor pays in his/her full £20,000 ISA Allowance to the MF ISA, there may be an inclination to feel that the £20,000 additional funds paid in becomes the bearer and focus of the overall additional fees charged by MF, rather than the investor seeing the fees being proportionately borne by the now £100,000 investment in MF. This effect would be completely deflected if the fees were paid separately by Debit Card.

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