According to Bloomberg, there’s more than $600b in corporate bonds (including mortgage-backed issuance) outstanding in Australia — that’s around 30%…
Written by Katherine Sadler Published: August 27 2019 Investments
Within the Cashwerkz platform allocating and redeeming term deposits or cash takes just three clicks, an approach that is reshaping the landscape and treatment of this asset class.
With low interest rates affecting investment returns and investor sentiment, term deposits are an enduringly successful and reliable solution. But visibility on products is low, and portability of funds is cumbersome.
“There is $2.2 trillion sitting in term deposits in Australia, across all segments,” John Nantes of Cashwerkz said, “Yet many advisers and investors aren’t accessing the best rates and returns because they don’t know what’s available and moving money is historically arduous.”
The Cashwerkz platform aggregates cash investment products including term deposits from different Authorised Deposit-taking Institutions (ADI) via an online portal. Importantly, Cashwerkz doesn’t touch the transaction. The facility acts as a conduit for transfers to be made directly from an individual’s bank account or trust to the chosen financial institution without receiving or handling the investor’s money.
“Within three clicks, you can buy a cash or term deposit solution. The only other way you can do that these days is either manually … So you go into a bank, you have to go through a manual process to execute with paper-based solutions and so forth. Or, typically you’re doing it through a platform. The problem with other platforms is the fee margin that’s eating into your real return.”
The Hayne Royal Commission points towards models like Cashwerkz as the future, namely because the customer doesn’t incur the fee (the ADI does) and the platform is institution agnostic, allowing freedom of choice for the customer or adviser.
Nantes said the platform is a particularly valuable tool to assist advisers in satisfying the best interest duty under the Future of Financial Advice legislation.
“If you use Cashwerkz as an individual, you’ll have an array of banks and their products, and an array of rates. You get to make a decision in your best interest. If you are a financial adviser, you actually get to make a decision for your clients in their best interest.”
“Cashwerkz is transparent and auditable, so using the platform means you can literally prove you’ve done the right thing by your client in this particular asset class because you’re agnostic to the bank and you’re making a choice based on the best outcome possible,” he said.
The efficiency and transparency Cashwerkz offers is getting traction in the industry. Investments placed on the Cashwerkz platform has grown from A$1 billion at the end of October last year to $1.5 billion in January this year.
“We’re in the business of solving problems through technology, which we’ve done for self-managed super funds, be it the trustee, be it the accountant, be it the adviser, custodians, or investment fund managers.”
The platform acts as a marketplace that aggregates offerings – 16 ADIs are on Cashwerkz today with many more coming on to the platform imminently. It makes visible the ADIs products and their performance, spanning anywhere from zero months to a year.
The identification process that enables smooth movement between ADIs is the crucial security link that powers Cashwerkz as a secure conduit.
“Let’s say you had a self-managed super fund and you wanted to place $200,000,” Mr Nantes explained.
“Step one, we identify you. Step two is a menu of options, and you might select a rate of 2.7 per cent for three months for the $200,000 with bank A because it has the best rate for three months, “ he said.
“So you click through, and the money comes from your existing self-managed super fund cash account to your new self-managed super fund term deposit. Then you get confirmation of the transaction from us, and confirmation from the ADI as well.”
For advisers, reporting on all of clients returns and performance is an added benefit for transparency and efficiency.
“If you’re an accountant with 100 self-managed super funds, you will have an array of cash and TD solutions. You can see all of that and get regular reporting on the total position with Cashwerkz, which helps you in terms of administration and visibility.”
In a low-yield environment the difference between 2.3% and 2.9% year on year on year over a period of time adds up. And that’s Cashwerkz objective.
“A few percentage points makes a significant difference in the overall return of your portfolio over time.”
“The feedback about creating that transparent marketplace has been energising to say the least,” Mr Nantes concluded.
For further information or to request a platform demonstration, contact Rob Hay on 0423 345 975.