Sharesies Fee Changes

[Hectorplains]

It was well worth considering the whole thing though.  I also think the point I made in the post #2 above about the prospect of Sharsies entering receivership at some stage is a very pertinent concern.

Conclusion - For me, lets see what Jarden do with their Hatch thing next year.

That would be a disaster for the NZX. Participation rates took decades to repair from  the legacy of distrust created by the 1987 share market crash and by the 2006 to 2010 finance company collapses. 

[Basil]

Its funny how moving from a zero interest environment to one where you can easily get 4-5% interest on your money, changes EVERYTHING lol.  Methinks a lot of companies are going to find themselves in a whole different world now that people aren't prepared to hand over their dosh in return for nothing but a future promise of a return.

You better send that memo to Kathy Wood at the ARK innovation fund, It seems her earlier one got lost in the mail lol.    Down more than 65% this year, WOW, I bet investors are "thrilled" with that!

[Hectorplains]

https://www.nzherald.co.nz/business/sharesies-announces-restructure-redundancies-likely/GSFASJY7UVFOVIQ7SYB3DCY73Y/

Announcing staff layoffs as part of a wider restructuring - no details as to what else this entails but it's hard on the heels of their fee increases this week.  Your concerns appear to be even more... pertinent, Basil.

[Minimoke]

https://www.nzherald.co.nz/business/sharesies-announces-restructure-redundancies-likely/GSFASJY7UVFOVIQ7SYB3DCY73Y/

Announcing staff layoffs as part of a wider restructuring - no details as to what else this entails but it's hard on the heels of their fee increases this week.  You concerns appear to be even more... pertinent, Basil.

if it was me I'd be getting my shares out of the trust and into my own name.

[Basil]

I've watched a video or two of the founders and what they are trying to achieve, and I admire their vision and goal of making investing accessible to all. 

Trying to service the needs of micro investors in a profitable way, and seeing the vitriol some of them post when the fees changed to something that still looks extremely cheap), I suspect the founders however well-intentioned and idealistic they may be, are really in a very, very difficult fight for their invested capital to try and make their business model profitable.

The founders can expect even more vitriol from micro investors when they inevitably have to adjust their fees upwards again to something that has a more realistic chance of being sustainable.

[Raven]

Yes I suspect the founders will have lost their capital. I'm not too concerned about Sharesies going bust. I don't think it's that likely and trust that the trustee system will safeguard my shares, but I've only got a small percentage of investments with them. I quite enjoy making a daily "cup of coffee" investment each day. Instead of buying a coffee I buy $5 worth of a small "play for fun" portfolio of AUS and US shares.

I agree the level of vitriol is very high.

[Minimoke]

Yes I suspect the founders will have lost their capital. I'm not too concerned about Sharesies going bust. I don't think it's that likely and trust that the trustee system will safeguard my shares, but I've only got a small percentage of investments with them. I quite enjoy making a daily "cup of coffee" investment each day. Instead of buying a coffee I buy $5 worth of a small "play for fun" portfolio of AUS and US shares.

I agree the level of vitriol is very high.

I'm quite sure your shares are "safe"

But shares are quite a liquid asset class. Who knows how long it would take to get your shares out of the trust if Sharesies did go bust. I can't imagine it would be done over night. And what value would those share be when the are liquidated?

Use MFB as an example. Say you hold and on the same day they declare significant profit down grade, Sharesies folds. What then

[KW]

Yes I suspect the founders will have lost their capital. I'm not too concerned about Sharesies going bust. I don't think it's that likely and trust that the trustee system will safeguard my shares, but I've only got a small percentage of investments with them. I quite enjoy making a daily "cup of coffee" investment each day. Instead of buying a coffee I buy $5 worth of a small "play for fun" portfolio of AUS and US shares.

I agree the level of vitriol is very high.

The shares may be safeguarded but if the company goes bust they will need to be distributed.  This means selling them as many people wont have enough shares to have a minimum parcel to hold under their own name, or a brokerage account to transfer them to.  So if Sharesies dump all their shareholdings on the market they will depress the share price significantly since the NZX is very low volume. 
Secondly, they may not be safeguarded - they may have been used as collateral for loans, in which case a secured lender will have first dibs on them.  This is standard practice for brokers who operate margin accounts (those that allow you to buy then pay, rather than paying then buying). 

[Basil]

I'm inclined to agree with KW's cautionary post above.   From vague memory wasn't there a thread in the other place about the Halifax N.Z. brokerage that failed and if I recall correctly, didn't it take years to sort that mess out?

[Raven]

Basil, KW & Minimoke - all fair comments, and I would definitely be getting out if I thought there was a genuine likelihood of Sharesies platform collapsing.

[Basil]

I'm quite sure your shares are "safe"

But shares are quite a liquid asset class. Who knows how long it would take to get your shares out of the trust if Sharesies did go bust. I can't imagine it would be done over night. And what value would those share be when the are liquidated?

Use MFB as an example. Say you hold and on the same day they declare significant profit down grade, Sharesies folds. What then

I think in any potential liquidation the shares would be distributed out of trust / nominee company, in-specie to individual shareholders but with their platform having overseas shares and the numbers of investors this process, if it ever happens, that could take a very long time. 
Just a thought.  I think Sharsies lost $26m last year, (from memory). With the downturn in the market maybe they will lose more this year?  How long are those sorts of losses sustainable?

[Onemootpoint]

From Sharesies T & C's, parts 3 and 4:

If we become insolvent or otherwise materially default on our obligations, your Wallet and Portfolio will be protected from the claims of general creditors, including any bank holding your money and CDO for any money or Shares held in the NZX depository account.



 We will keep detailed records of all money in your Wallet and Investments in your Account. The money in your Wallet and Investments in your Account will be held on bare trust for you by Sharesies Nominee or another approved third-party custodian, at our direction.

Sharesies Nominee is a non-trading company that exists to hold our clients' money and Investments secure and separate from our own (although we may hold a buffer of our own money in the same account).

[Waltzing]

 hopefully the nomiee company protects the holders as the damage to the NZ market doesnt bare thinking about...the average punter has taken decades to come back to the market.

[Minimoke]

The shares may be safeguarded but if the company goes bust they will need to be distributed.  This means selling them as many people wont have enough shares to have a minimum parcel to hold under their own name, or a brokerage account to transfer them to.  So if Sharesies dump all their shareholdings on the market they will depress the share price significantly since the NZX is very low volume. 
Secondly, they may not be safeguarded - they may have been used as collateral for loans, in which case a secured lender will have first dibs on them.  This is standard practice for brokers who operate margin accounts (those that allow you to buy then pay, rather than paying then buying).

I get your point about minimum shareholding - I don't know how they would handle that. But first though is they would distribute out to the owner and that minimum then became their problem. Which means brokerage might be more than shares are worth. There maybe something in fine print (that I can't be bothered looking up) that allows trustee to sell in the absence of owner instruction.

And I gather distribution is out to the owner. Who Is the shareholder. But to distribute the owner needs to have a CSN. If Raven, for example, doesn't have a CSN then no distribution until that is done. Which further delays the process and adds to trustee costs.

I don't share Ravens confidence - these low margin platforms seem very vulnerable to me.

[Raven]

Minimum shareholdings and no CSN's would well complicate things.

Given Sharesies claims about half a million users I suspect that their demise would actually become a political problem. As has been pointed out, the reputational damage to the market would be substantial. Obviously not the in the same league as a major trading bank collapse, but perhaps similar to one of the smaller ones going under. I wouldn't be surprised if some sort of white knight rescue package might be cobbled together to allow a more orderly wind-down before an actual collapse occurred.