From the AFR today:
Mark Bouris’s wealth management group Yellow Brick Road has launched the first of a range of money funds aimed at the market for savings. Mr Bouris, who is adding one new branch a week to his 120-branch network on average, believes changes in the economy mean that the best growth in financial services will be savings and deposits, rather than mortgages and investment products. “There is a big fight with banks for deposits now as there once was for mortgages,” Mr Bouris said.
Yellow Brick Road’s first fund, Smarter Money, is mimicking bank savings products by using a unit trust that has returned 6.2 per cent to 6.7 per cent after fees by buying bank and some senior corporate debt at institutional prices. Holdings can be withdrawn at three days’ notice.
“There is not a bank cash account anywhere near that,” he said.
Yellow Brick Road had in the 1990s provided mortgages through the then-booming securitisation markets – or on-selling of mortgages packaged into tradeable bonds – which could undercut the rates that the big banks charged.
Mr Bouris said he was now using other financial instruments to deliver higher savings interest rates to consumers. “I have done the reverse of what I did with securitisation,” he said.
The Smarter Money launch is planned to be the first in a range of savings products that will evolve in response to customers’ appetites for risk and reward. The next product launch is not expected until next year.
Mr Bouris has a media profile as a newspaper columnist and host of Nine Network’s reality TV show Celebrity Apprentice. Nine Entertainment Company is a cornerstone investor in Yellow Brick Road (YBR), with a 19.99 per cent stake.
YBR posted an operating loss of $3.4 million for the December half due to heavy investment expanding the network of advisers and offices.
It has 120 branches across five states, an increase of 50 branches this financial year, and is on course to reach 150 by December. Mr Bouris is confident it will eventually have more than Wizard’s 240-strong network.
“We can do with savings products what we did with mortgages for Wizard,” he said.
The licensee adviser model is fee-for-service – with the exception of exempted mortgage and insurance products – and the absence of any legacy products means it is “future of financial advice” compliant.
His advisers typically target clients with $1 million, or less, which has been largely untapped by the major wealth managers.
